Published: Wed, July 04, 2018
Economy | By Melissa Porter

Iran announces plan to circumvent USA oil sanctions

Iran announces plan to circumvent USA oil sanctions

"The Cabinet. affirmed the Kingdom's readiness to use its spare capacity when needed to deal with any future changes in oil supply and demand rates in coordination with other producing countries", read a statement released by the Saudi Press Agency.

To make up for potential shortfalls in supply from Iran sanctions as well as other disruptions including Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russian Federation and other oil-producing non-OPEC members to raise output from July.

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.

Oil has been leaning to the bullish side this week after dipping from the weekend's headlines that Trump has encouraged Saudi Arabia to increase their production to make up for market shortfalls from Iran and Venezuela. The move partly reversed the original OPEC+1 deal which came into force in January previous year and was created to reduce the global glut in oil.

On Monday, Brent oil prices were around 1 percent lower but not far from $79 per barrel as analysts have warned of thin global spare capacity to offset potential supply disruptions.

Still, Iran vowed on Sunday to defeat United States efforts to block its oil exports and warned rival producer Saudi Arabia it would never take Tehran's "place" on the worldwide oil market.

Last week, US State Department officials announced that they are pushing nations to bring down purchases of Iranian oil to zero.

President Donald Trump's administration has threatened close allies such as South Korea with sanctions if they don't cut off Iranian imports by early November.

"Iran will offer its oil in the stock market, and the private sector can transparently buy and sell the crude through this market", Jahangiri added. "The immediate reaction following the announcement has been negative, with WTI trading around $73.67 (on Tuesday afternoon)".

The United Arab Emirates is ready to help alleviate possible oil shortages and OPEC will aim to adhere to the group's "overall conformity levels", said UAE Energy Minister Suhail al-Mazrouei, who holds the OPEC presidency for 2018.

"It depends on the conduct of other governments", Bolton said.

The Cabinet was briefed on Crown Prince Mohammed bin Salman's visit to Russian Federation. A quicker restart could boost supplies at the Cushing, Oklahoma, delivery hub for USA crude.

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