Hoping For US Waiver, India Tries To Keep Iran Oil Flowing

Gladys Abbott
September 17, 2018

The U.S. will find it hard to cut Iran's oil exports completely as the oil market is already tight and rival producers can not make up the shortfall, a top Iranian official said on Friday.

Aredbili told Reuters that the U.S. will find it challenging to cut off Iran's exports and that Russian Federation and Saudi Arabia would in any case not be able to fill the shortfall.

Iran, a founding member of the cartel, had been against the move which came as the country faces renewed USA sanctions after Washington's decision to leave the 2015 nuclear deal between Tehran and world powers.

It's uncertain whether Saudi Arabia and other producers will fill any shortfall, or how far they're able to do so, the agency said.

Washington has said it wants to cut Iran's oil exports to zero following the reimposition of a second set of sanctions on 4 November.

Though weekly output slipped, the United States likely surpassed Russian Federation and Saudi Arabia earlier this year to become the world's largest crude oil producer, based on preliminary estimates from the Energy Information Administration.

Iran is now OPEC's third-largest producer, but the USA wants to cut its production down to zero by November as part of sanctions imposed on the country.

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The US National Security Adviser John Bolton said last month that the United States is exerting "maximum pressure" on the government of Iran to change its behavior, adding that Washington is prepared to use sanctions to drive Iranian oil exports down to zero.

The Trump administration exited the landmark nuclear agreement with Iran earlier this year, citing Iran's violations of the spirit of the deal.

In May, US President Donald Trump pulled out of an global nuclear deal with Iran, OPEC's third-biggest producer, and announced the imposition of sanctions.

Last week the United States administration had cleared its stance that Washington may consider waivers for Iranian oil buyers such as India but they must eventually halt crude imports from Tehran.

OPEC also said that total global oil supply increased by 490,000 bpd in August, to average 98.88 million bpd, a result of OPEC production growth and rising output in industrialized, oil-consuming nations like the U.S. However, U.S. oil production growth in 2019 is projected to grow at a slower rate than previously forecasted, according to EIA estimates. Saudi Arabia's oil production could rise to the level of 11 million barrels per day if the demand sustains.

The White House has announced that Saudi Arabia's King Salman had promised Trump to raise oil production and that the kingdom had two million barrels per day of spare capacity to boost output to offset a decline in supply from Iran.

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