Japan's major oil distributors are considering halting oil imports from Iran in response to US demands, sources familiar with the plan said Thursday.
The US Energy Information Administration (EIA) said on Wednesday US crude production had reached 11 million barrels per day for the first time.
The August contract also moved up by Rs 22, or 0.47 per cent, to Rs 4,721 per barrel with a business volume of 1,700 lots.
There was some support for prices based on comments from Saudi Arabia, the world's biggest oil exporter, that it would cut crude shipments.
Ahead of the talks with United States official, a source privy to the development said that India could convey to the U.S. that it could look at reducing the import of oil from Tehran in return for an exemption from USA sanctions on plans to push ahead with the development of Iran's Chabahar Port, considered to be a gateway to the landlocked Afghanistan and Central Asia. But following the lift in worldwide sanctions on Iran in 2016, the Middle Eastern country's share within Korea's total crude oil imports sharply expanded to 10.38 percent in 2016 and 13.2 percent in 2017.
The United States uses about 20 million barrels of oil a day, but one-fourth of the oil comes from overseas. This new mechanism for pricing oil remains outside the dollar's institutions, and so not so exposed to US pressure. Although, markets edged up on Friday in the wake of Saudi Arabia moving to allay some fears of oversupply. Iranian official urges Trump not to use USA strategic oil reserve.
US crude oil refinery inputs averaged about 17.2 million barrels per day during the week ending July 13, which was 413,000 barrels per day less than the previous week's average.
A Reuters survey of Opec production showed Saudi output at a near record, up 700,000 bpd at 10.70 million bpd. The potential release of oil from the strategic petroleum reserve and the pressure from the Trump administration on Saudi Arabia to increase output has increased uncertainty. Japan has alternatives in Saudi Arabia and UAE among others for its oil needs as it prepares to break its oil alliance with Iran.
Ever since Donald Trump pulled the United States out of the 2015 Iran nuclear deal, otherwise known as the Joint Comprehensive Plan of Action (JCPOA), the U.S. has been warning its allies and even some neutral countries about the importance of ending their reliance on Iranian oil before the November deadline when USA sanctions will snap back into place.
There's still some discord within OPEC and its partners over how much oil should be added to the market. Considering that Iranian exports dropped to about 1-1.5 million bpd during the 2013-2015 period of strong economic sanctions (from around 2.5 million bpd in 2011 to some 1 million bpd at the end of 2013), depending on how many countries follow the White House's call for sanctions today, we might expect Iranian exports to fall by between 200,000 bpd and 1 million bpd. Prices yesterday dropped 32 cents to US$72.58.