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Published: Sun, July 01, 2018
Economy | By Melissa Porter

Threats from USA put new pressure on Iranian oil importers

Threats from USA put new pressure on Iranian oil importers

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $72.42 a barrel at 0639 GMT, down 34 cents, or 0.5 percent, from their last settlement. Domestic crude inventories declined by 9.89 million barrels last week, as refiners boosted oil processing rates and exports soared to a record, the Energy Information Administration said.

"Our focus is to work with those countries importing Iranian crude oil to get as many of them as possible down to zero by November 4", a State Department official told Reuters, adding: "We are prepared to work with countries that are reducing their imports on a case by case basis".

If Iranian oil is shut out of the market due to US sanctions, the price of crude oil will increase, which could deal a serious blow to corporate activities and household budgets.

Iran said Wednesday that despite the US pressure asking buyers to halt purchase of Iranian oil to zero, it will be impossible to remove its crude from the market, Kallanish Energy learns.

"The country's demonstrated ability to regulate its crude production makes it a key partner to Saudi Arabia in responding to global over-supply conditions", she said in a statement emailed to UPI.

Futures rose 1 percent in NY on Thursday.

While a final view on United States asking India and China to cut Iranian oil imports has not yet been taken, the petroleum ministry has asked refiners to tread cautiously and start looking at alternatives, they said. In the latest May tally, Iranian oil imports dropped to 6 million barrels, down 27 percent from a year earlier.

Members of the Organization of the Petroleum Exporting Countries (OPEC) agreed on Friday to raise the level of oil production, which will add almost a million barrels per day to the market.

This comes right after Saudi Arabia pledged to ramp up output in July to a record 10.8 million barrels a day, though some reported that they could produce close to 11 million barrels a day.

Risk consultancy Eurasia Group said it was "very unlikely" the United States would succeed in ending Iranian oil sales as fast as it hoped. Rapidly draining American surpluses are compounding real and envisioned supply interruptions in Canada, Iran, Venezuela and North Africa. It is the world's seventh largest oil exporter. That along with less bearish OPEC+ meeting last week has helped to push up prices. It said Japan and Turkey also import significant amounts of Iranian oil.

However, as the Trump administration continues to demand an Iranian crude embargo, Korea quickly lowered its imports of Iranian oil.

Crude closed at a 3 1/2 year high amid shrinking stockpiles in the US, disruptions at Libyan ports and other worldwide supply risks. The move is most likely in anticipation of the USA sanction on Iran that will severely tighten global supply, even though it was announced ahead of the State Department Action.

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