Saudi Arabia, Iraq and Iran become key nations in international power politics because of their vast supplies of oil. Industrialized economies by the end of the Second World War were dependent on oil. The colonial policies of Britain and the United States sought to keep oil prices cheap. However, states such as Iran and Iraq wanted more control over their own petroleum resources and more of the wealth generated by the sale of oil.

Iran is invaded by British and Soviet forces in 1941 to secure its oil fields, and Shah Reza is forced into exile. His son, Mohammed Reza takes the throne as puppet ruler of the British. In 1951, Prime Minister Mossadeq attempts to end control of the Iranian oil industry by the British Anglo-Iran Oil Company. The prime minister also attempted to implement democratic reforms to limit the absolute power of the shah. A crisis results between the Iranian nationalists, and the British and Americans.

Finally, in 1953, a military coup sponsored by the American CIA forces Mossadeq from power.

Following a campaign of terrorism, in May 1948, the state of Israel was created, under the leadership of Ben Gurion. Jordan and Egypt attacked Israel, but were defeated. About 1 million Arab Palestinians, denied most political rights in the new state, fled Israel, and many others were forced to live in refugee camps.