This paper examines the connection between the multinational oil companies’ negotiations with Middle East oil producing countries in 1970 and 1971 and Iran’s emergence as the U.S.’s primary security partner in the Persian Gulf. In January 1971, U.S. President Richard Nixon ultimately chose to back Mohammad Reza Shah rather than U.S. oil companies during negotiations with the Shah. This allowed Nixon to support the Shah’s military build-up in the Persian Gulf on the eve of British military withdrawal from the region. A serious obstacle to the Shah’s vision of Iranian military power emerged in the first quarter of 1970: The Shah did not have the resources to purchase the U.S. military hardware he believed Iran had to have to replace the British as the dominant power in the Gulf. This problem took shape as the Nixon Administration took office in the U.S. in 1969. The Shah believed this U.S. administration was predisposed to help Iran, because of the longstanding personal friendship between Nixon and the Shah. Yet in 1970, as the U.S. was in the process of reviewing its post-British Gulf policy, the U.S. defense establishment was questioning whether the Shah’s aggressive military spending was in the Shah’s best interest. Nixon wanted to help the Shah, despite the Pentagon's misgivings. But Nixon would not be able to secure Congressional approval to divert business away from Saudi Aramco to buy more Iranian oil. The British military withdrawal from the Persian Gulf contributed to the Shah’s increasing anxiety over the budget crisis he faced in 1970, which was a result of a shortfall of oil revenues and Iran's ambitious and rapid military spending. My argument bridges two separate historiographical literatures. First, it adds the political economy dimension to the literature on U.S.-Iranian relations during this period, building on Roham Alvandi’s Nixon, Kissinger, and the Shah (2014). My paper emphasizes that Iran’s military spending was not an inevitable result of an unbroken rise in Iranian oil revenues from the mid-1960s to the mid-1970s. Instead, the sources demonstrate Mohammad Reza Shah’s determination to assert Iran’s military supremacy in the Gulf despite Iran’s budget shortfall in 1970. Second, it contributes to the literature on the 1969-1971 oil crisis by explaining that Nixon broke with history in siding with the Shah over the U.S. oil companies in order to empower Iranian primacy in line with the Nixon Doctrine.