In the spring and summer of 1942 the German military forces in north Africa and southern Russia made significant advances. In June the German army reached EI Alamein, only seventy miles west of Alexandria, while in August the German army reached the outskirts of Stalingrad. As a result of these German advances, Britain, which was the allied country with primary responsibility for defending the Middle East against the Axis powers, became concerned about the possibility that the German air force might attempt to bomb the oilfields and oil refineries in the Middle East in order to deny the oil in that area to the allied governments. Britain was also alarmed about the possibility that, instead of bombing the oil installations, the Germans might attempt to capture them intact in order to utilize the oil for their war machine. In 1942 total Middle Eastern oil production constituted only about six per cent of total world oil production. However, all Middle Eastern oil was refined locally - about two-thirds at Abadan in Iran - and played a vital role in the conduct of British military operations in the Middle East and southeast Asia.1 In 1942 Britain had troops stationed in Iran, Iraq, Egypt, and Bahrain, the four main Middle Eastern oil-producing nations, and thus was well placed to defend and, if necessary, to destroy the oil facilities in those countries. However, at this time Sa'udi Arabia, the remaining Middle Eastern oil producing nation, was a neutral power with no British or American troops stationed on its territory. As a result of Sa'udi neutrality it was difficult for Britain to defend the Sa'udi oilfields against German air attack. It was also difficult for Britain to make the necessary preparations to destroy the Sa'udi oilfields in the event that the German army advanced into the Arabian peninsula. The purpose of this communication will be to discuss the manner in which the British government attempted to deal with these problems. It will also discuss the reaction of the United States government and the American-owned oil company in Sa'udi Arabia to this situation.