Iran announces plan to circumvent USA oil sanctions

Iran announces plan to circumvent USA oil sanctions

Trump, who is spending the weekend at his golf property in New Jersey, said in a tweet on Saturday that Saudi Arabia's King Salman bin Abdulaziz Al Saud had agreed to produce more oil.

The quick drop after WTI reached US$75 might have been due to "a bout of long liquidation in front of the holiday", said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis.

The Wall Street Journal in turn cited a high-ranking Saudi official as saying that Riyadh made no concrete promises to Trump but assured him of its ability to satisfy the market's demands.

US crude inventories fell by 4.5 million barrels in the week to June 29 to 416.9 million barrels, according to the American Petroleum Institute (API) on Tuesday.

Rouhani's comments were ambiguous, but in the past years Iran has threatened to block the Strait of Hormuz, a major oil shipping route in the Middle East as retaliation against Washington-imposed sanctions.

OPEC pledged to relax compliance with an agreement that helped balance an oversupplied market, but that might not be enough to address a looming deficit of around 2 million barrels per day.

"We are confident that there is sufficient global spare oil production capacity", he added. "And yes, we will certainly be requesting that their oil imports go to zero, without question".

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Saudi Arabia later acknowledged a call had taken place between Trump and Saudi Arabia's King Salman, but did not mention any production targets. "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.

"Also, taking a broad range of estimates from IEA, EIA and others, Saudi held spare capacity in the range of 1.3 - 2.1 mb/d when oil production was ~10 mb/d".

Some major importers of Iranian crude have sent mixed signals on their willingness to abide USA sanctions, particularly as inventories remain low.

Iran will use various methods to prevent a possible reduction in its oil exports after re-imposition of the USA sanctions. He also said he and senior Treasury Department would visit Gulf states "in the coming days".

The spike was the latest fallout from the Trump administration's decision to abandon the landmark Iran nuclear deal and reimpose sanctions on Iran - a move that has strained relations between the United States and other world powers that support the deal.

Production from the Organization of the Petroleum Exporting Countries increased by 320,000 bpd in June, according to a Reuters survey published Monday. Officials say they are determined to keep the oil flowing.

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