India reducing oil from Iran ahead of United States sanctions

India reducing oil from Iran ahead of United States sanctions

Oil prices were largely steady on Friday after the previous session's steep drop due to demand concerns, but were on track to end the week higher bolstered by earlier gains on supply constraints from Iran following USA sanctions.

Following crippling sanctions on Iran following the collapse of the Washington and Tehran's nuclear deal, the price of a barrel of United States crude oil could result in a price rise of $4 (£3.12) a gallon of unleaded fuel at petrol station pumps.

Iran, which is facing sanctions by the USA, saw its August production falling by 120,000 barrels per day.

U.S. officials are pressing allies in Europe, Asia and the Middle East, including Saudi Arabia, to adhere to the sanctions, which are aimed at pressuring Iran to negotiate a new agreement to halt its nuclear programmes.

Price rises were capped after US Energy Secretary Rick Perry said Saudi Arabia, other members of OPEC and Russian Federation were to be admired for trying to prevent a spike in global oil prices.

The change comes at a time when the oil market is already facing a high degree of uncertainty, partly due to the Trump administration's decision to cut Iranian oil imports to zero.

In August, rising output in Libya, Iraq, Nigeria and Saudi Arabia offset declines in Iran, which is about to face new USA sanctions that are already hurting Iranian exports, and in Venezuela.

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Oil processors in South Korea, Iran's top customer for South Pars condensate, halted Iranian oil liftings in July as banks, insurance and shipping companies wound down business related to Iran before US sanctions the country's petroleum sector kick in on November 4.

Under the deal, Iran undertook to put limits on its nuclear program in exchange for the removal of nuclear-related sanctions.

Under pressure from Trump to lower oil prices, the Organization of the Petroleum Exporting Countries and allies agreed in June to boost production, having participated in a supply-cutting deal in place since 2017.

"It seems President Trump has been taken hostage by Saudi Arabia and a few producers when they claimed they could replace 2.5 million barrels per day of Iranian exports, encouraging him to take action against Iran", Kazempour Ardebili was quoted as saying by media. However, after crude oil prices increased in early 2016, investment and production began increasing later that year.

"Saudi Arabia and UAE are turning the OPEC into a United States tool", he said.

Iran's oil minister had previously warned its Saudi counterpart the OPEC supply pact from previous year does not give member countries the right to raise oil production above their targets.

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