USA aims to reduce Iran’s oil revenue to zero

USA aims to reduce Iran’s oil revenue to zero

Iran had been pushing hard for oil producers to hold output steady as US sanctions are expected to hit its exports.

USA officials are pressing allies in Europe, Asia and the Middle East to adhere to the sanctions once they are re-imposed, with the aim of pressuring Iran into negotiating a new agreement.

An Indian official says his country, which imports 400,000 barrels per day of Iranian crude, would only recognise multi-lateral sanctions, rather than unilateral sanctions.

The president also had tough words for other USA allies.

White House officials have worked to backtrack the president's statement, stating that Saudi Arabia now outputs 10 million bpd, and maintains slack in their production equivalent to 2 million bpd that they can tap, "if and when necessary to ensure market balance". Japan's Fuji Oil and refiner JXTG Holdings, and Formosa Petrochemical are also said to be considering what to do in the absence of Iranian crude.

Iran will allow private companies to export crude oil, part of a strategy to counter USA sanctions, and is urging fellow OPEC members, including regional rival Saudi Arabia, not to break output agreements, state media and officials said on Sunday.

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"We want to defeat America's stop Iran's oil exports", said First Vice President Eshagh Jahangiri in a televised statement.

"Our view is clear: The stronger the implementation and enforcement of a zero Iranian export scenario, the higher the oil price will go, with $100 per barrel crude a distinct possibility", it said. "We do not know how the market will react but prices will surely decrease".

An analyst note from JBC Energy on July 2 forecast that the oil price could rise as high as $100. But he says the USA "is prepared to work with countries that are reducing their imports on a case-by-case basis".

After the remarks, US crude jumped more than 8 percent and closed at more than $74 a barrel - a first since November 2014. The White House later seemed to walk back on Trump's tweet.

"We are working to minimize disruptions to the global market but we are confident there is sufficient global spare oil production capacity", Brian Hook told reporters.

The Trump administration is pushing countries to cut all imports of Iranian oil from November when the United States re-imposes sanctions against Tehran, after Trump withdrew from the 2015 nuclear deal agreed between Iran and six major powers, against the advice of allies in Europe and elsewhere.

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