Global oil capacity enough to make up for Iran cutbacks: US State Dept

The United States is looking to reduce Tehran’s oil revenue in an effort to force Iran's leadership to change its behavior in the region, Reuters reported, citing Brian Hook, US State Department’s director of policy planning.

The US also believes there is enough spare global oil capacity to make up for lower supply from Iran, Hook added. 

The goal is to get as many countries as possible down to zero Iranian oil imports, and the United States would work with allies on a case-by-case basis, but Washington did not plan to offer exemptions from sanctions, Hook told a news conference.

“Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue on crude oil sales,” Hook said. “We are working to minimize disruptions to the global market but we are confident there is sufficient global spare oil capacity.”

The White House has said that King Salman promised President Donald Trump at the weekend that he would raise oil production if needed and the country has 2 million barrels per day (bpd) of spare capacity to boost output, the White House said.

Trump said in a tweet on Saturday that the extra Saudi oil would help offset a decline in supply from Iran, without specifying if the additional amount was per day. Worldwide daily demand is nearing 100 million bpd.

The Trump administration is pushing countries to cut all imports of Iranian oil from November when the United States re-imposed sanctions against Tehran, after Trump withdrew from the 2015 nuclear deal agreed between Iran and six major powers, against the advice of allies in Europe and elsewhere.

US officials are pressing allies in Europe, Asia and the Middle East to adhere to the sanctions once they are re-imposed, with the aim of pressuring Iran into negotiating a new agreement.

Hook said he planned to meet with European allies Britain, France and Germany at the end of the week to discuss Iran.

Hook and a senior Treasury Department would visit Gulf states “in the coming days,” he said.

Some 50 international companies had announced their intention to leave the Iranian market, particularly in energy and financial sectors, as the United States moved to re-impose the sanctions against Iran, Hook said.

“We have been clear with countries and companies around the world that we are bringing severe economic pressure on Iran until the regime changes its destabilizing policies,” Hook added.

Oil prices fell on Monday, reversing course from last week as supplies from Saudi Arabia and Russia rose while economic growth stumbled in Asia amid escalating trade disputes with the United States.