A USA government official confirmed late Monday the administration is engaged in a process to selectively grant waivers to certain countries still importing Iranian oil.
Another factor easing those fears was a Friday Reuters report that cited an unnamed us government official as saying the Trump administration is considering waivers on its sanctions for countries that agree to reduce their imports of Iranian oil.
The government was discussing its options to buy Iranian oil with all authorities, Pradhan said.
The only really large spare capacity is in Saudi Arabia, but the issue with this is that it has never been tested, because Saudi Arabia has never pumped more than 10.72 million bpd, its all-time high record from November 2016.
USA crude was down $1.14 at $73.20.
Prince Mohammed told Bloomberg on Friday that the kingdom had met its promise to Washington to make up for Iranian oil supplies lost through USA sanctions, reimposed when the United States exited a 2015 nuclear deal between Tehran and six powers.
With the European Union considering the creation of a "special goal vehicle" before November to facilitate trade with Iran, India hopes to find a way to settle payments to Tehran.
He said Iran's sales had fallen by 700,000 barrels per day since the United States announced in May that it was pulling out of the 2015 nuclear deal with Iran and reimposing sanctions on its oil industry.
"This is one of the single biggest supportive factors for crude", said analysts at JBC Energy of the U.S.re-imposition of Iran sanctions. "Two of our oil companies have made nominations to purchase Iranian oil in November", he reportedly said at "The Energy Forum" on Monday.
Companies had turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, according to offshore regulator the Bureau of Safety and Environmental Enforcement.
"This time round, because there is so much less of a consensus on the sanctions from other countries, there will be even more of a push to obtain exceptions or find ways to walk around the sanctions".
UCO Bank had in the previous round of sanctions handled rupee payments. Additionally, a report that Saudi Arabia stands ready to replace any potential shortfall from Iran also weighed on prices.
India, Iran's top client after China, has close diplomatic ties with Iran, where it is building a strategic port called Chabahar that is expected to be operational by 2019.
According to CNBC, Pradhan said India may use rupees rather than dollars to buy the oil, in an attempt to skirt the sanctions.
Besides blocking of banking channels from November, the absence of payment mechanism may pose a challenge to the transportation of the oil as Iranian crude is bought on a CIF basis and shipped on Iranian tankers.