British oil sources during World War 2

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Admiral Bloonbeard
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British oil sources during World War 2

Post by Admiral Bloonbeard » 19 May 2021 19:29

I saw this graph on Quora telling me British oil sources in World War 2 : Image

and I'm asking how true is that image? Does that image really represent where Britain got their oil in World War 2 and what are the sources to back it up? Also, why did the British switch from using Middle Eastern and Latin American oil to oil from the USA?

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Re: British oil sources during World War 2

Post by Rob Stuart » 19 May 2021 23:19

I presume that the graph shows only where the United Kingdom got its oil. Assuming that this is the case, then I'm pretty sure that the lack of shipment of Middle Eastern oil to the UK is due to two factors:

1. The Japanese conquest of Borneo, Burma and Sumatra meant that India, Ceylon, Australia, New Zealand and the other British territories in Asia became dependent on fuel from the refineries at Abadan, and in fact probably needed Abadan's entire output. For more details see "The Royal Navy in Eastern Waters" and the pertinent books by Ashley Jackson.

2. The Allies' serious shortage of tanker tonnage meant that the UK's oil had to be obtained from the nearest possible sources.
Last edited by Rob Stuart on 20 May 2021 15:23, edited 1 time in total.

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Re: British oil sources during World War 2

Post by OpanaPointer » 19 May 2021 23:35

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Re: British oil sources during World War 2

Post by Peter89 » 20 May 2021 11:15

Shipping oil from the Middle East to the British Isles would make no sense, because the Mediterranean was closed, and also units were there to use up much of that fuel, not to mention units in the Raj and the PTO.

The fall in imports of Latin-American oil is also sensible; Britain was exhausting its foreign currencies, and they couldn't buy whatever they want and whereever they want. Also: the currencies were not convertible in 1940 in today's sense (even though the GBP and the USD were the most convertible ones). If Britain wanted to buy something in Mexico, they had a few options only. One was to sell something to Mexico (which they paid for in pesos), and then the Brits could use those pesos to buy oil in Mexico. Another option was a loan; the British wanted to buy oil, but couldn't sell anything to Mexico; but a bank in Mexico agreed to lend pesos to Britain, for which the Brits could buy oil. This happened mostly with international banks, who could easily transfer that loan to other parts of the world, where GBP was accepted as payment. So, for example, a Mexican bank could lend Britain 1000 pesos for 1000 GBPs, but if, for example, Venezuela wanted to buy something from Britain, then the Mexican bank could give the loan to Venezuela in form of GBPs. Another option was to use firms, which was very important in case of oil production, because, for example, the IPC had a fairly large British share, but the same goes for Bahrein, etc. The point was that if Britain wanted to buy oil from Iraq, it didn't necessarily need to pay for it in iraqi currency, if the company was in British possession and it wanted to realize its profit in GBP. Another version was to have a subsidiary in your country, which was relevant in case of the SKF and the ball bearing industry. SKF had a subsidiary in both Britain and Germany. If the British wanted to buy Bofors guns, in theory they could pay for that in GBP because they could pay to the SKF in Britain, which operated - had to pay wages, taxes, etc. - in GBP.

Long story short, by far the best option for Britain was to import oil from a military ally, for whom they could pay after the war (in fact the final payment took place in 2006). Other economic options existed, but were limited.
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Re: British oil sources during World War 2

Post by Rob Stuart » 20 May 2021 16:02

Peter89,

Your comments seem very reasonable to me, albeit I know very little about the financing of international trade, but I think I can add another point. A number of the oil producing territories in the Caribbean were Dutch. The liberation of the Netherlands depended on the UK getting enough oil not only for its survival but also for the military forces based there to conduct offensive operations. I would imagine that the Dutch would give the British every break they possibly could in terms of payment. There may even have been some payments in kind. For example, the British gave two N-class destroyers to the Dutch in 1942. They may well have been outright gifts, but perhaps they, and/or other military materiel, were payment in kind for some of the oil.

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Re: British oil sources during World War 2

Post by OpanaPointer » 20 May 2021 16:11

IIRC the destroyers patrolled the shipping lanes out of the Dutch oil fields. They knew the waters, they had local support, only logical to let them operate the ships.
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Re: British oil sources during World War 2

Post by Rob Stuart » 20 May 2021 17:37

OpanaPointer wrote:
20 May 2021 16:11
IIRC the destroyers patrolled the shipping lanes out of the Dutch oil fields. They knew the waters, they had local support, only logical to let them operate the ships.
Neither of the two N-class destroyers seem to have patrolled the shipping lanes out of the Dutch oil fields. They seem to have operated almost exclusively in the Indian Ocean and SW Pacific:

http://www.naval-history.net/xGM-Chrono ... -Noble.htm
http://www.naval-history.net/xGM-Chrono ... pareil.htm

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Re: British oil sources during World War 2

Post by EwenS » 20 May 2021 21:10

Rob Stuart wrote:
20 May 2021 16:02
Peter89,

Your comments seem very reasonable to me, albeit I know very little about the financing of international trade, but I think I can add another point. A number of the oil producing territories in the Caribbean were Dutch. The liberation of the Netherlands depended on the UK getting enough oil not only for its survival but also for the military forces based there to conduct offensive operations. I would imagine that the Dutch would give the British every break they possibly could in terms of payment. There may even have been some payments in kind. For example, the British gave two N-class destroyers to the Dutch in 1942. They may well have been outright gifts, but perhaps they, and/or other military materiel, were payment in kind for some of the oil.
It is a bit more complicated than it appears. While true that there were oilfields in both the Caribean and the DEI on Dutch territory, the concessions to extract it and refine it were granted to international oil companies. "Shell" was the major player in those two areas. Between 1907 and 2005 "Shell" had a complicated structure with two parent companies, Royal Dutch Shell (a Dutch registered company) and Shell Transport and Trading (a British registered company) but they operated as a single entity. RDS managed the extraction and refining side of the combined business while Shell T&T handled the transportation and marketing activities. The combined profits were then split 60/40 in favour of RDS. So the oil that came out of the Caribbean for example was economically already 40% British oil. When you begin to delve into which major oil company owns what concessions it very rapidly becomes very difficult to follow due to various parent / subsiduary relationships and joint ventures.

Not only that but the crude that comes out of the ground varies considerably from one part of the world to another. Each barrel will generate different amounts of petrol, diesel and heavy oil fuel suitable for ships. When it comes to fuel for ships for example it was often necessary to mix oil from different sources to produce a suitable ship fuel. So pre-war the main source for the Admiralty was the Abadan refinery owned by Anglo Persian but that would be mixed with oil from the DEI.

In 1939/40 Britain was drawing its oil from the DEI, Persian Gulf, Caribbean and US Gulf ports. One of the reasons for switching to drawing so much from the US was to maximise the use of the tanker fleet (how many loads could a standard sized c12,000 ton tanker haul per year). A "short" haul across the Atlantic beats a long haul from the Middle/Far East every time. Tankers became a critical factor especially after early 1942 and the losses suffered on the US east coast. Eventually however the massive 500+ US T2 tanker programme kicked in to replace several fold those losses. Transportation also led to various pipeline networks within the UK, USA and India for example to reduce the number of tankers required and speed up deliveries to the front line eg a pipeline from the Gulf to New York to bypass the possibility of losses to the tanker fleet on the US east coast.

Oil from the Persian Gulf was largely sent to India and Abadan became the main source of 100 octane petrol for the CBI being significantly expanded with US help in WW2. Other Gulf fields came on stream during the war.

Oil from fields in northern Iraq was piped across the desert to a refinery at Haifa for use in the Middle East. Aviation fuel for the ME also came from Mexico.

I started delving into this last year before lockdown and rapidly found I needed to lie down in a darkened room trying to untangle who owned what and where that production eventually went.

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Re: British oil sources during World War 2

Post by OpanaPointer » 20 May 2021 21:16

Rob Stuart wrote:
20 May 2021 17:37
OpanaPointer wrote:
20 May 2021 16:11
IIRC the destroyers patrolled the shipping lanes out of the Dutch oil fields. They knew the waters, they had local support, only logical to let them operate the ships.
Neither of the two N-class destroyers seem to have patrolled the shipping lanes out of the Dutch oil fields. They seem to have operated almost exclusively in the Indian Ocean and SW Pacific:

http://www.naval-history.net/xGM-Chrono ... -Noble.htm
http://www.naval-history.net/xGM-Chrono ... pareil.htm
=Blows my theory, now don't it. :milwink:
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Re: British oil sources during World War 2

Post by Peter89 » 26 May 2021 16:44

EwenS wrote:
20 May 2021 21:10

It is a bit more complicated than it appears. While true that there were oilfields in both the Caribean and the DEI on Dutch territory, the concessions to extract it and refine it were granted to international oil companies. "Shell" was the major player in those two areas. Between 1907 and 2005 "Shell" had a complicated structure with two parent companies, Royal Dutch Shell (a Dutch registered company) and Shell Transport and Trading (a British registered company) but they operated as a single entity. RDS managed the extraction and refining side of the combined business while Shell T&T handled the transportation and marketing activities. The combined profits were then split 60/40 in favour of RDS. So the oil that came out of the Caribbean for example was economically already 40% British oil. When you begin to delve into which major oil company owns what concessions it very rapidly becomes very difficult to follow due to various parent / subsiduary relationships and joint ventures.
To complicate it further, the British tanker fleet was substantially aided by the Dutch, Norwegian and Greek merchant marines.
“And while I am talking to you, mothers and fathers, I give you one more assurance. I have said this before, but I shall say it again, and again and again. Your boys are not going to be sent into any foreign wars." - FDR, October 1940

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Re: British oil sources during World War 2

Post by OpanaPointer » 26 May 2021 17:59

Prior to Pearl Harbor the US had priorities on its oil supply.

1. US Strategic Petroleum Reserve. King and Marshall were very clear about this being #1.
2/3. Either: Supplying England with needed petroleum OR US industrial requirements. (Depending on who you read.)
4. US private consumers. This would go from a close 4th to a distant 4th in Dec. '41.
5. Non-US/non-British demands. This was Japan and China mostly. Morgenthau wanted Japan to get zero POL from the US and public opinion was in line with that.
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Re: British oil sources during World War 2

Post by Rob Stuart » 26 May 2021 19:00

OpanaPointer,

Regarding the priority given to "Supplying England", what exactly did "England" mean in this context? Was it simply mean the British Isles, or did it mean Britain plus its dominions and colonies? I imagine it meant the latter, but can you confirm?

Both before and after Pearl Harbor, most "British" territories (e.g., Malaya (until it was lost), Australia, New Zealand, India, Egypt, etc) could be supplied from Middle Eastern or Far Eastern sources, but apart from the UK another exception was Canada, which, like the UK, had to get its oil imports from the Western Hemisphere. The article "WE'LL GET OUR OWN": CANADA AND THE OIL SHIPPING CRISIS OF 1942, accessible at https://www.cnrs-scrn.org/northern_mari ... _33-39.pdf, highlights the significance of the early 1942 tanker losses off the US coast for the Allies as a whole and for Canada in particular.

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Re: British oil sources during World War 2

Post by OpanaPointer » 27 May 2021 14:13

(For reference my above was during the Summer of '41, when supplying POL to Japan was being discussed.) That was how FDR et al. saw the situation. It may not have been dire for the Brits at that point but the US was going to do its best to fill in any shortfalls.
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Re: British oil sources during World War 2

Post by Urmel » 09 Jun 2021 09:32

Rob Stuart wrote:
19 May 2021 23:19
I presume that the graph shows only where the United Kingdom got its oil. Assuming that this is the case, then I'm pretty sure that the lack of shipment of Middle Eastern oil to the UK is due to two factors:

1. The Japanese conquest of Borneo, Burma and Sumatra meant that India, Ceylon, Australia, New Zealand and the other British territories in Asia became dependent on fuel from the refineries at Abadan, and in fact probably needed Abadan's entire output. For more details see "The Royal Navy in Eastern Waters" and the pertinent books by Ashley Jackson.

2. The Allies' serious shortage of tanker tonnage meant that the UK's oil had to be obtained from the nearest possible sources.
Also, in 1942 lend-lease had replaced cash-and-carry, meaning that purchasing oil in the US no longer meant forking over foreign reserves. Middle East oil was partially UK government owned and could presumably be paid in Sterling, since the operator company was British.
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