Global oil market ready for end to Iran crude exports, say US officials

United States’ attempts to drive Iranian oil exports down to zero come against the backdrop of a global market that is sufficiently well supplied to avoid price disruptions, senior US officials said on Thursday.

“There’s roughly a million barrels per day (bpd) of Iranian crude (exports) left, and there is plenty of supply in the market to ease that transition and maintain stable prices,” said Brian Hook, US Special Representative for Iran and Senior Policy Advisor to the Secretary of State, speaking in a call with reporters.

The comments came three days after the US demanded importers halt oil purchases from Tehran from May or face punitive action.

Despite the suggestion of plentiful supply, the tightening of sanctions pushed global oil price benchmarks Brent and West Texas Intermediate (WTI) to their highest levels this year. The Middle East benchmark Dubai even jumped to its highest in more than five years.

Still, “the price situation is well in hand,” said Assistant Secretary of State for Energy Resources Frank Fannon, speaking during the same call. “Now is the right time to go to zero” Iranian oil exports, Fannon said, adding the market was “well supplied”.

US President Donald Trump has expressed confidence that Saudi Arabia and the United Arab Emirates would compensate for the shortfall in the oil market.

Crude oil production is also soaring in the US, reaching a record 12.2 million bpd this year.

The US re-imposed sanctions against Iran’s oil exports last November, but initially allowed the eight biggest buyers of Iranian oil limited imports for another half-year.

Iran’s biggest oil buyers are China, India, South Korea, Japan and Turkey.

China is the biggest buyer, and Beijing has criticised the move to re-impose sanctions.

Hook said during the call he was confident China would be able to find alternative supplies to Iran. He said there had yet to be an announcement from Washington on whether China could continue to export oil produced from assets it owns in Iran.

Another country relying heavily on Iranian supply is close US ally South Korea, where petrochemical facilities use Iranian condensate, a super-light form of crude oil.

Fannon said the US government was working closely with South Korea to ensure supply for its petrochemical facilities.

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