Oil prices edge up as US supply tightens, Iran sanctions loom

Fredrick Soto
July 4, 2018

But those moves may be tempered by an equal desire by the United States and other country for stable oil prices.

"We will surely do something to thwart the U.S. rallying cry that Iranian oil (exports) must be stemmed", First Vice President Eshagh Jahangiri said in statements broadcast on state television.

He hopes that will keep prices low - and motorists happy with cheaper fuel - as he tries to force the Iranians out of the market.

Trump threatened in an interview that aired on Sunday to put sanctions on European companies that do business with Iran.

Iran and Saudi Arabia broke off diplomatic relations in 2016 and are locked in several proxy wars in the Middle East, including in Yemen.

So, how much support can Trump garner for his economic assault against Iran?

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.

US President Donald Trump tweeted on Saturday that Saudi Arabia's King Salman bin Abdulaziz Al Saud had agreed to pump more oil, "maybe up to 2,000,000 barrels".

Oil's early gains came after the website president.ir quoted Iranian President Hassan Rouhani as dismissing Washington's attempt to stop Iran's oil exports.

The U.S. government has demanded that all countries stop buying Iran's oil from November.

Hook declined to say if the kingdom can offer that additional supply, but the United States is "working to minimize disruptions to the global market", Hook said.

Last week, some White House officials privately expressed displeasure with the State Department remarks because they were at odds with another Trump administration priority - stopping oil prices from rising too high ahead of the midterm elections.

Iranian Supreme Leader Ayatollah Ali Khamenei says he believes the U.S. sanctions are meant to turn the public against the government, and won't succeed.

In May, the USA retreated from a multilateral deal with Iran regarding its nuclear disarmament program, and imposed sanctions to limit the world's fourth largest oil exporter's access to global markets. On Monday, Hook expressed confidence that the USA sanctions policy would not prompt mass shortages, but analysts have expressed doubt that Saudi Arabia can increase production by as much as Trump described.

Trump announced earlier this year that he would pull the US out of the pact, which offered Tehran sanctions relief in exchange for curbing its nuclear program.

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