US Aims to Slash Iran's Oil Revenues to Zero

Dwayne Harmon
July 6, 2018

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 a 2015 nuclear deal agreed between Iran and six major powers.

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.

In response, Iranian oil official Hossein Kazempour Ardebili said that Trump should stop tweeting because his statements have pushed oil prices up by about US$10 a barrel, according to Oil Ministry news service, Shana.

Saudi Arabia, which pumped 10.03 million barrels daily in May, could tap some of its two million barrels a day of unused production capacity to stabilize markets.

Russian Federation and Saudi Arabia will face "dire consequences" if they increase their oil production, the head of the state energy firm said. "If anything, they are driving prices higher as the United States defends many of their members for very little $'s".

The collective implied production ceiling for OPEC for this year is 32.78 million bpd, so even with the higher June production, the cartel's compliance rate is still above 100 percent-at 110 percent to be precise, down from 167 percent in May, the Reuters survey showed.

OPEC should reject the US call for a production increase which is "politically motivated against Iran", he said.

US President Donald Trump lashed out at OPEC with a warning to stop manipulating oil markets in an interview that aired on Sunday.

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"Saudi Arabia obviously can deliver as much as the market would need, but we're going to be respectful of the 1-million-barrel cap - and at the same time be respectful of allocating some of that to countries that deliver it", al-Falih said then.

The drop is in contrast to the strong growth in oil prices seen last week as prices started to nudge close to $80 per barrel.

South Korea accounted for 14 percent of Iran's oil exports a year ago, according to the US Energy Department.

"Recurring salvos in the trade war and falling asset prices raise the question of how much tariffs could damage the global economy, USA bank JP Morgan said in a note".

He added that it is "incorrect and unwise" to think that "one day all oil producing countries would export their surplus oil and Iran would be the only country that can not export its oil".

China is the largest importer of Iranian oil with 24 percent, followed by India with 18 percent.

USA officials from the Treasury Department and State Department have been taking what Hook referred to as travelling "road shows" to explain the policy to their counterparts around the world over the past few weeks, ahead of August 4, when the first sanctions will be reimposed on automotive, gold, and key metals.

WITH Saudi Arabia expressing its ability to raise oil production by two million barrels in obedience to pressures from US President Donald Trump, there are fears that Federal Government's 2018 budget just recently signed by President Muhammadu Buhari may be in trouble.

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