US, Saudi Arabia Discuss Keeping Oil Market Supplied After Iran Sanctions

Daniel Fowler
July 12, 2018

US Secretary of State Michael Pompeo said on Tuesday that Washington may grant waivers to the countries that seek relief from strict oil sanctions that the Trump administration intends to impose on Iran from Nov 4.

Sanctions extending to the oil sector snap back on November 4 and the USA government has said it wants to zero out Iranian oil exports by then.

The secretary of State's comments came as the US steps up pressure on Iran after President TrumpDonald John TrumpMcConnell to meet with Trump's Supreme Court pick Tuesday Kavanaugh offers lengthy judicial record ahead of bitter confirmation fight Hundreds protest Kavanaugh's nomination outside Supreme Court MORE's announcement in May that he would withdraw from the 2015 nuclear deal with Tehran, which sought to curb Iran's nuclear ambitions in exchange for sanctions relief.

Iran's foreign ministry and the central bank have taken measures to facilitate banking operations despite the United States sanctions, Jahangiri said without elaborating.

The country supplied 18.4 million tonnes of crude oil between April 2017 and January 2018, but latest figures showed India's oil imports had declined by 15.9% in June, the first month after the U.S. said it would reimpose sanctions, Reuters reported citing data from shipping and industry sources. "The zero tolerance policy and the pace with which it is moving no doubt concerns Iran's current crude buyers".

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The embassy said Iran will do its best to ensure security of oil supply to India by offering various flexible measures which facilitate bilateral trade, particularly Indian exports to Iran. Overall purchases climbed on a higher intake of crude from Mexico, the United States and Azerbaijan.

According to NIOC, the bulk of Iran's shipments in June 2018 - about 62pc - were sent to customers in Asia while Europe accounted for 38pc of exports.

Since the USA signaled a harder line against Iran's oil exports last month, analysts have started to warn that many more Iranian barrels would be removed from the market than initially expected, and the thinning global spare capacity as Saudi Arabia and Russian Federation raise production would boost oil prices. The sources declined to be identified since they are not authorised to speak to the media. Indian state refiners had cut Iranian oil imports in the 2017/18 financial year because of a dispute over the development rights for an Iranian natural gas field.

India meets about 11 per cent of its crude requirement through oil imports from Iran and is due to buy 30 million tonnes of oil from Tehran this year. Indian refiners will likely gain more clarity on how much the United States would like them to cut after a meeting with U.S. officials scheduled for July 16 to 17, said an official with a state-run refiner who declined to be named due to the sensitivity of the matter.

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