President Donald Trump is preparing to impose new sanctions on Iran, the White House said on Wednesday, following the US withdrawal from the multinational 2015 agreement that stalled Iran's nuclear programme.
"It is not yet clear which concrete sanctions the US will impose".
After sanctions were eased as part of the nuclear agreement, Iran ramped up production to about 3.8 million barrels a day. But its oil minister said on Thursday that Trump's decision to quit the pact would not affect Tehran's exports.
Iran ramped up its oil production by 1 million barrels per day after sanctions were lifted in early 2016. Richard Nephew, senior research scholar at Columbia University's Center on Global Energy Policy, added that China and India may continue to buy Iranian oil even in the face of USA sanctions, negating some of their impact. It is a particularly sensitive time for South Korea, which is deeply concerned with avoiding any friction with Washington in the midst of ongoing negotiations with North Korea.
Crude oil prices are showing a climb in the aftermath of President Trump's announcement on the Iran nuclear deal. At one point maybe we will see a little fallback, and then a new consolidation in oil prices, but that might be closer to $80 rather than $70.
The U.S. President Donald Trump on Tuesday afternoon announced the U.S. would violate the Iran nuclear agreement, almost three years after the Joint Comprehensive Plan of Action (JCPOA) was struck.
This would make the United States the world's largest producer, ahead of both Russian Federation and Saudi Arabia.
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The return of sanctions is likely to have "significant ramifications" for maritime trade with Iran, International Group of P&I Clubs, an umbrella organization whose members cover 90 percent of the global tanker fleet against risks including oil spills, said on Wednesday.
"Europe and China will not fight against the United States sanctions". Already playing catch-up after being caught off-guard by the speed and unconventional nature of recent USA and South Korean diplomacy with North Korea, Japan is simultaneously pursuing a permanent exemption to President Trump's planned aluminum and steel tariffs.
China and India, which together make up the majority of purchases of Iranian oil, are unlikely to curtail their Iranian oil imports - and may actually look to expand them.
Meanwhile, SA has become dependent on Iranian oil and the two countries are determined to cement ties.
Italy's Eni also continues to buy Iranian oil and it is buying 2 million barrels of oil per month from Iran under a deal that expires at the end of the year.
The sanctions would aim to limit global trade of the oil producer's crude.
Other major producers could fill the hole left by Iran.
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Under the previous round of sanctions, India received waivers to purchase oil from Iran in rupees, rather than USA dollars, and now pays for Iranian oil using euros via European bank payment channels. USA oil output reached another record high last week, hitting 10.7 million bpd.
Rainer Seele, chief executive of Austrian oil and gas company OMV, told German daily Handelsblatt that he expects prices to rise as the United States moves to reimpose sanctions. "The key question going forward will be what happens to oil production in Saudi Arabia". Riyadh lost no time in assuring the market on Tuesday that it would compensate for any fall in Iranian supply. At least some of that oil will now be pulled from the market - at a time when oil prices are already rising because of production cuts by OPEC and Russian Federation as well as instability in Venezuela.
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OPEC kingpin Saudi Arabia indicated it was ready to act.
Unlike 2012, the United States is entering these sanctions alone, and this means that it has less control over their efficacy.
And it remains to be seen just how much impact the US sanctions will have in keeping Iranian crude oil off the global market.
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