U.S. Pushes Allies to Halt Iran Oil Imports

The United States has told countries to cut off all Iranian oil imports. It is unlikely to offer any exemptions, said a State Department official  as the Trump administration ramps up pressure on allies to cease  funding to Iran.

U.S. President Donald Trump said his administration was withdrawing from the "defective" nuclear deal agreement between Iran and six world powers in July 2015. The agreement was aimed to curb Tehran's nuclear capabilities in exchange for lifting some sanctions. Trump ordered the reimposition of U.S. sanctions against Tehran that were suspended under the accord.

"Yes, we are asking them to go to zero," the official said when asked if the United States was pushing allies, including China and India, to cut oil imports to zero by November.

"We're going to isolate streams of Iranian funding and looking to highlight the totality of Iran's malign behavior across the region," the official told reporters.

The official said a U.S. delegation was headed to the Middle East next week to urge Gulf producers to ensure global oil supplies as Iran is cut out of the market starting November  4, 2018 when U.S. sanctions are reimposed.

Officials have yet to hold talks with China and India, which are among the largest importers of Iran's oil, as well as Turkey and Iraq.

Benchmark U.S. oil futures rose more than $2 on Tuesday, topping $70 a barrel for the first time since May 25 as the threat that the United States would push buyers to limit Iranian oil imports added to concerns about tightening supplies.

Iran has met with Chinese oil buyers to ask them to maintain imports of its oil, although it failed to secure guarantees from China, sources told Reuters.

"We will be engaging in the next segment coming up in a week or so with our Middle Eastern partners to ensure the global supply of oil is not adversely affected by these sanctions," the official said.

China, the world’s top crude oil buyer, imported around 655,000 barrels a day on average from Iran in the first quarter of this year, according to official Chinese customs data, equivalent to more than a quarter of Iran’s total exports.

Oil analysts said there are concerns that OPEC producers will not be able to fully supply the market after Iranian oil is cut from the market.

"There is real concern on whether the 'OPEC Plus' will have enough spare capacity to balance potential drops in oil production from Venezuela and Iran," said Abhishek Kumar, Senior Energy Analyst at Interfax Energy's Global Gas Analytics in London.

European powers have vowed to keep the 2015 deal alive without the United States by trying to keep Iran's oil and investment flowing, but have acknowledged that U.S. sanctions would make it difficult to give Tehran guarantees.

"For the vast majority of countries they are willing to adhere and support our approach to this because they also view" Iran's behavior as a threat, the official added.

Iranian President Hassan Rouhani on Tuesday promised Iranians the government would be able to handle the economic pressure of new U.S. sanctions amid reports of a second day of demonstrations in protest at financial hardship and a weakening rial.

Reporting by Lesley Wroughton and Doina Chiacu