Published: Wed, July 04, 2018
Markets | By Otis Pena

Trump administration seeks to drop Iran's oil revenue to nothing


Oil prices climbed down from their 3 ½ year high to reach US$73 per barrel, with Brent trading at US$76.96 Tuesday afternoon.

Saudi Arabia's Oil Minister Khalid al-Falih arrives for an OPEC meeting in Vienna, Austria, June 22, 2018.

Saudi Arabia has been pumping around 10 million bpd in recent months and sources close to its oil policy have said it could raise output to 11 million bpd. On Monday, Hook expressed confidence that the USA sanctions policy would not prompt mass shortages, but analysts have expressed doubt that Saudi Arabia can increase production by as much as Trump described.

The official warned countries including China and India, who are key buyers of Iranian oil, that they should stop purchasing crude from the country before the November deadline or face United States sanctions.

The move lower is attributable to Saudi Arabia's willingness to increase demand at the request of US President Donald Trump.

"We are prepared to work with countries that are reducing their imports on a case-by-case basis, but as with our other sanctions, we are not looking to grant waivers or licenses", Hook said, in comments that were seen as a softening of the United States' prior demands.

The move coincides with USA plans to reimpose economic sanctions on OPEC member Iran, including halting oil exports.

British Ministers Rehearse For Queen's Death in Secret
A public record of the Queen's engagements called the Court Circular shows no major break in her work in May. Queen Elizabeth has been head of the monarchy for 65 years, making her the longest serving British monarch.


The agreement from Saudi Arabia is surprising as in recent months they have agreed with Russian Federation and other OPEC+ members to keep production relatively low. "If production increases as we now forecast, a large share of this would be eroded, leaving the global oil market with a limited "margin of safety", said Morgan Stanley's Rat.

After reducing production by more than 1.8 million barrels daily since January a year ago to drain a global glut, the producers decided in Vienna on June 23 to reverse course.

"Our focus is on getting as many countries importing Iranian crude down to zero as soon as possible", Hook said.

The vice president also noted that the "vulnerable" social layers should be helped after re-imposition of sanctions. The global benchmark traded at a $5.64 premium to WTI for September.

"Although geopolitical risk factors ranging from suspended oil exports from Libya, falling production in Venezuela and USA sanctions on Iran have supported oil, the oversupply concerns could make a return".

Notable countries that import Iranian crude include Turkey, India, China and South Korea.

Like this: