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U.S., Saudi Arabia Discuss Keeping Oil Market Supplied After Iran Sanctions

Oil rig mountain

U.S. State Department officials have visited Saudi Arabia to coordinate stronger pressure on Iran and discuss ways to ensure that the oil market is well-supplied after U.S. sanctions on Iran’s oil kick in later this year, a Senior State Department Official said on a background briefing en route to Brussels.

“In our meeting with the Saudi energy minister, we discussed maintaining a well-supplied oil market to guard against volatility. We coordinated – we discussed U.S. oil sanctions to deny Iran revenue to finance terrorism. We talked about minimizing market disruptions and helping partners find alternatives to Iranian supply of oil,” the senior U.S. State Department official said.

State Department officials were joined by Treasury Department officials and spent three days in Saudi Arabia to discuss ways to economically isolate Iran, and at the same time, keep oil markets well-supplied, the official noted.

Referring to the current customers of Iranian oil, to which the U.S. is calling upon to cut off crude oil imports from Iran, the state department official said that “we are very serious and determined about re-imposing our sanctions that were lifted under the Iran nuclear deal, and we are working very closely with nations to provide alternatives to the Iranian supply of oil.”

According to the official, the U.S. is confident that it would be able to do that “without market disruptions and working closely with the Saudis and other oil producing nations to make sure that we have a well-supplied oil market.”

Related: A Storm Is Brewing For U.S. Oil Exports

Since the U.S. signaled a harder line against Iran’s oil exports last month, analysts have started to warn that many more Iranian barrels would be removed from the market than initially expected, and the thinning global spare capacity as Saudi Arabia and Russia raise production would boost oil prices.

Last week, Morgan Stanley lifted its forecast for Brent Crude by $7.50 to $85 a barrel for H2 2018, while Bank of America warned that a complete cut-off of Iran’s oil could result in oil prices jumping to more than $120 a barrel.

By Tsvetana Paraskova for Oilprice.com

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