Files released to the National Archives under the 30-year rule show the intelligence agencies believed the US was ready to take military action to prevent further disruption to their oil supplies. It followed the decision in October 1973 by the Arab nations to slash oil production sending prices rocketing while imposing a complete embargo on the Americans over their support for Israel.
Edward Heath's Conservative government, which adopted a more pro-Arab line, was still forced to draw up plans for petrol rationing after panic buying led to shortages at filling stations in South-East England.
Although the war in the Middle East was over after three weeks, a secret assessment drawn up for ministers by the Joint Intelligence Committee - including the heads of MI5 and MI6 concluded the US would rather risk military action than be held to ransom again by the Arabs.
The report, dated December 12, 1973, and marked "UK Eyes Alpha", described the seizure of the oil-producing areas in the region as "the possibility uppermost in American thinking".
The JIC calculated the US could guarantee sufficient oil supplies for themselves and their allies by taking the oilfields in Saudi Arabia, Kuwait and the Gulf state of Abu Dhabi, with total reserves of more than 28 billion tons.
It warned the American occupation would need to last 10 years, as the West developed alternative energy sources, and would result in the "total alienation" of the Arabs and much of the rest of the Third World, as well as "domestic dissension" in the US.
However it said the administration of President Richard Nixon could be prepared to take the risks, if it was faced with the "dark scenario" of renewed Arab-Israeli conflict combined with further protracted oil restrictions.
It said that the US could even consider pre-emptive action if the Arab governments "elated by the success of the oil weapon" began imposing new demands.
"Even if this had not happened the US Government might consider that it could not tolerate a situation in which the US and its allies were, in effect, at the mercy of a small group of unreasonable countries," it said. "In view of the incalculable consequences of military action against the Arabs we consider that US intervention would probably come late as a move of last resort.