Following the foundational period, APOC entered an era of significant expansion and consolidation, transitioning from a nascent enterprise to a major global player in the interwar years. The British government's controlling 51% stake, acquired in 1914, provided a unique and stable capital base, enabling sustained investment in exploration, refining capacity, and the development of extensive international distribution networks. This state backing allowed APOC to undertake large, long-term infrastructure projects with less financial risk and a clear strategic mandate, contrasting with the purely private enterprises of competitors like Royal Dutch Shell and Standard Oil. The Abadan refinery continued its rapid expansion, becoming by the mid-1930s one of the world's largest industrial complexes, processing over 8 million tons (approximately 60 million barrels) of crude annually, employing tens of thousands, and producing a full range of products from gasoline to asphalt. Its strategic location and deep-water port facilities were crucial for global distribution. New fields were discovered in Persia, such as Naft Safid in 1928, Gach Saran in 1928, and Haft Kel in 1930, significantly augmenting the prolific Masjid-i-Sulaiman reserves and ensuring a robust and diversified supply of crude oil amidst rising global demand. These discoveries often involved overcoming significant geological and logistical challenges, pushing the boundaries of contemporary exploration technology, including seismic surveys and advanced drilling techniques.
The company began a systematic effort to build a global brand and retail presence. While the company was known as APOC, its products often carried the 'BP' (British Petroleum) marque, a brand strategically resurrected from an earlier acquisition in 1917, particularly for gasoline and lubricants sold through a growing network of service stations across Europe and parts of Asia. This branding initiative, which started in the 1920s, aimed to establish a recognizable identity for its products in competitive consumer markets. Marketing campaigns featured distinctive green-and-yellow livery for pumps and service stations, emphasizing product quality, such as "BP Ethyl" gasoline. Beyond Europe (e.g., France, Belgium, Germany, Switzerland) and parts of Asia (e.g., India, Ceylon), APOC also expanded its retail footprint into Africa and Australasia, often through subsidiaries or joint ventures, meaning BP branded products were available in dozens of countries by the late 1930s. APOC faced fierce competition from established players like Royal Dutch Shell, Standard Oil companies (Esso, Mobil), and newcomers such as Texas Company (Texaco) and Gulf Oil, spurring innovation in refining and marketing strategies. APOC's strategic focus extended to acquiring and integrating distribution assets, including retail outlets, storage terminals, a dedicated tanker fleet for global shipping, and bunkering facilities at major ports, effectively extending its value chain from wellhead to customer.
During the 1930s, however, the relationship between APOC and the Persian government, now under Reza Shah Pahlavi, became increasingly strained over the terms of the D'Arcy concession. Reza Shah, a modernizing nationalist, increasingly viewed the 1901 D'Arcy concession as a relic of colonial exploitation. The original agreement granted Persia only a fixed royalty of four shillings per ton of oil, irrespective of APOC's massive and growing profits or fluctuations in global oil prices. Furthermore, the Iranian government had no oversight of APOC's financial records or operational decisions, contributing to a deep sense of injustice. The Iranian government, seeking a larger share of the profits and greater control over its natural resources, initiated negotiations to revise the 1901 agreement, which was perceived as highly inequitable. Following Iran's unilateral cancellation of the 1901 concession in November 1932, and subsequent mediation by the League of Nations, these negotiations culminated in a new concession agreement in April 1933. While extending the term of the concession for another 32 years (until 1993), it significantly increased Iran's financial share. The royalty payment shifted from a fixed per-ton rate to a minimum payment of £750,000 per annum plus a percentage of the company's net profits, with a guaranteed minimum annual payment. Crucially, the concession area was drastically reduced from an initial 480,000 square miles (almost half of Iran's territory) to approximately 100,000 square miles in the southwest. This revision, although a compromise, reflected a global trend of resource-rich nations asserting greater control over their natural assets, exemplified by events like Mexico's nationalization of its oil industry in 1938. In recognition of the country's change of name from Persia to Iran, the company formally changed its name to the Anglo-Iranian Oil Company (AIOC) in 1935, reflecting the evolving geopolitical landscape.
World War II once again underscored the company's strategic importance, with AIOC becoming a principal supplier of aviation fuel, bunker oil, and other petroleum products to the Allied forces. AIOC became a critical strategic asset; Abadan produced the highest-octane aviation fuel available at the time, vital for the Royal Air Force and other Allied air forces. Iranian oil accounted for a substantial portion of Allied petroleum supplies, with production soaring to meet the demands of mechanized warfare. The Abadan refinery and the Persian oil fields operated under immense pressure to meet wartime demand, often in the face of logistical challenges and threats to supply lines. Operating under the Anglo-Soviet occupation of Iran (to secure supply routes and prevent German influence), AIOC faced heightened security risks and intense pressure to maximize output. Daily production surged, and the Abadan refinery alone became a prime target for potential Axis sabotage. Logistics were complicated by disruptions to shipping lanes, requiring extensive convoy systems for tankers. AIOC's employee base, which had grown to tens of thousands, worked tirelessly to maintain operations. This period further solidified AIOC's reputation as a reliable and large-scale energy provider, essential to global conflicts and economic stability. Post-war reconstruction and the booming global economy, driven by rapid industrialization, the proliferation of automobiles, and the expansion of air travel, led to further growth. AIOC responded by aggressively expanding its exploration activities into new territories, acquiring interests or initiating exploration in promising regions such as Kuwait (through Kuwait Oil Company, a 50/50 joint venture with Gulf Oil, which became immensely significant), Iraq (through Iraq Petroleum Company), Trinidad, and Nigeria, aiming to diversify its crude oil sources. Concurrently, AIOC continued to enhance its refining and distribution infrastructure and develop new refining technologies.
Despite its operational successes, the post-war era brought an intensifying wave of nationalism across former colonial territories, and Iran was no exception. The Majlis (Parliament) and public opinion, galvanized by figures like Dr. Mohammad Mosaddegh and his National Front party, increasingly saw AIOC as a symbol of foreign economic domination. The 1933 concession, while an improvement, was still viewed by many Iranians as unfair and an infringement on national sovereignty, especially as AIOC commanded enormous profits (estimated at £200 million in 1950) while Iran's share was significantly smaller (around £16 million). Iran pressed for a 50/50 profit-sharing arrangement, similar to deals being struck in Saudi Arabia and Venezuela, but AIOC staunchly resisted. This sentiment culminated in the nationalization crisis of 1951. On March 15, 1951, the Iranian Majlis voted to nationalize the oil industry, followed by the signing of the Nationalization Law by Prime Minister Mohammad Mosaddegh on May 1. This bold act seized all of AIOC's vast assets in Iran, including the Abadan refinery, pipelines, and oil fields, unilaterally terminating the concession. This triggered an international dispute, with the UK government, a major AIOC shareholder, initiating a global embargo on Iranian oil, supported by the United States and other Western powers. This embargo effectively halted Iran's oil exports, as AIOC's control over shipping and refining infrastructure, coupled with its legal challenges in international courts, deterred most potential buyers. AIOC's crude production from Iran plummeted from approximately 30 million tons in 1950 to virtually zero by late 1951. The company was forced to rapidly accelerate development of its non-Iranian oil sources, such as in Kuwait, and acquire crude from other international majors to meet its contractual obligations and supply its global network. A protracted legal and diplomatic struggle ensued between Iran and the United Kingdom, involving the International Court of Justice and the UN Security Council, with AIOC's operations in Iran effectively ceasing. The company faced the unprecedented challenge of losing its primary source of crude oil.
The nationalization crisis profoundly disrupted AIOC's operations and forced a fundamental re-evaluation of its strategy. The deadlock was eventually broken in August 1953 by a CIA-MI6 orchestrated coup that overthrew Mosaddegh and restored the Shah to power, paving the way for a new agreement. The eventual resolution, facilitated by international diplomacy, came in 1954 with the formation of the Iranian Oil Consortium. Under this new arrangement, AIOC, while retaining a 40% stake, no longer held a monopoly over Iranian oil production. The consortium brought together eight major international oil companies: AIOC (40%), Royal Dutch Shell (14%), Compagnie Française des Pétroles (CFP, 6%), and five major American companies (Standard Oil of New Jersey, Standard Oil of California, Texaco, Gulf Oil, and Socony Mobil, each holding 8%). This structure reflected a new era of "Seven Sisters" dominance in the global oil market, where risks and benefits were shared among a powerful cartel. For AIOC, the 40% stake was a significant reduction from its former monopoly, but it provided a path back to Iranian oil revenues and re-established its presence in a crucial region. However, it meant relinquishing direct operational control over the Iranian oil industry, which was now managed by Iranian entities with oversight from the Consortium. This period, therefore, represented a significant breakthrough not just in terms of operational scale but also in strategic adaptation, forcing AIOC to accelerate its global diversification strategy, shifting its focus from being almost exclusively reliant on Iran to becoming a truly international entity with exploration, production, refining, and marketing operations spanning multiple continents. In response to these geopolitical shifts and to reflect its increasingly diversified global interests, the company officially rebranded itself as The British Petroleum Company Limited, or BP, in December 1954, marking its emergence as a significant, though restructured, international oil company no longer solely defined by its Persian origins. The name change symbolized a profound strategic recalibration: a move away from an identity synonymous with the fraught nationalization crisis, towards a more globally oriented, commercially diversified, and politically adaptable future, ensuring resilience against future geopolitical disruptions.