November 4, 1979 mobs entered US Embassy by force. Few hours later, they set a part of Embassy on fire. Originally, 63 Americans were held hostage, but soon some were released and 50 remained.
Iranian Hostage Crisis had begun.
Only in Oct. 79, months after the Shah was forced to leave Iran, that US official learned about his cancer.
Oct. 23 Shah was admitted in NY Hospital, despite Carter initial refusal to let him enter the country.
Iran didn’t trust the Shah’s staying in the US and suspected that they were planning another plot against them. They insisted that Iranian doctors see him to confirm his illness and this resonated well with iranians since it reminded them of Mosadegh coup.
The Iranian hostage crisis lasted for 444 days. Khomeini knew and perhaps encouraged them in order to gain momentum and broaden his political base at home.
Nov. 1979, some 700 armed men seized the Great Mosque in Mecca in opposing S. Arabia’s link to the West. Things were getting worse for Carter.
December 1979, another shock. USSR invaded Afghanistan.
One year and a half after his departure, the Shah died in July 1980 in Egypt.
These entire crisis sent prices soaring again, and there were cargos selling at $50 a barrel.
Saudis again pushed to keep prices down from long-term economic fears, but others didn’t agree. In the OPEC meeting in 1980, Saudi wanted a stable price and called for 24 a barrel, but Iranians pushed for 5 more. This again showed the competition between the two oil powers.
April 1980, Carter mounted a military operation rescue with 8 helicopters and C-130’s in order to retake the US Embassy.
Two helicopters broke down on the way there. Another helicopter collided with C-130.
Iranians passing by in a bus initially saw this and it spread throughout Iran very fast.
Carter called the mission off because the mission required minimum six choppers. Iran took hostages in the street in order to stop further rescue attempts.
This panic soared oil prices again.
June 1980, OPEC met again and Saudis again pushed for stabilized prices. Again, no one listened and average price for oil of barrel was $33
1980, countries were close to celebrate the OPEC 20th anniversary in Baghdad, but things turned sour because Baghdad had smth else in mind.
IRAN v. IRAQ War
The same day of OPEC meeting, Iraq attacked many targets in Iran
This animosity ran over a long time between them. 5000 yrs ago, when Mesopotamia (Iraq) and Elam (Iran) slaughtered each other. There is a poem that describes the event of the city of Ur, destroyed by the soldiers of Elam.
Shah also had an issue with Baathist over Shat-al-Arab – river, that was agreed in 1975 – Algiers agreement.
1975 agreement was reached about Shat-al-Arab. Iraq recognized Iranian demands about the river and Iran (Shah) agreed not to support Iraqi Kurds that were seeking autonomy in Baathist infancy regime. Iraq immediately after the agreement took an offense at the Kurds (20% of Iraqi population). However, they agreed to expel Khomeini in shah’s request.
Saddam Hussein was beginning to take power in Iraq. He was ruthless when he took presidency in 1979 and destroyed anyone in its way. He employed only Tikritis, close family members where he came from, in the government and had only few people who he could trust.
1981, his views were obvious in his printed pamphlets “Three who God should have not invented: Persians, Jews and Flies.”
In 1978, Khomeini was expelled and he held Saddam responsible.
Saddam also feared Iran bc Iraq has a Shia majority and most sacred shrines are in Iraq.
1980, Saddam ordered the killing of a high Shia cleric and his sister. This incident worsened the two country relations.
Khuzistan was Saddams main objective to turn them against Khomeini (who were mainly Shia), and Khuzistan was where 90% of iran oil cam from. This however did not work since the people there saw Iraq as an invader, not savior.
Both countries attacked each other’s oil refineries and despite Iran’s shortcut in damages, Iraq’s almost halted. A major miscalculation by Saddam.
This sent prices soaring, yet again at $42 a barrel.
December 1980 another OPEC meeting sent prices $36 a barrel.
However, by the end of 1980, west had major stocks and demand was falling. IEA also planned on releasing oil stocks and discouraged panic buying. Saudis were also boosting production again to keep prices low.
As a result, OPEC oil demand fell drastically and their output was 27% lower than the year before. In the end, Saudi (Yamani) fears became true and OPEC countries saw another reality.