Iran warns of fallout as Trump hints at oil embargo

Iran’s Oil Minister Bijan Zanganeh said a possible boycott of the Islamic Republic’s crude oil, as sought by US President Donald Trump, would affect the market.

Trump issued a statement last Saturday, saying because there was enough supply of oil from other countries, it was possible to limit the purchase of oil and its derivatives from Iran.

“Iran’s oil supply to the market is up to 2.5 million barrels a day, and the removal of this amount would definitely affect the market,” Fars News Agency on Saturday quoted Zanganeh as saying.

Trump’s remarks, the minister said, have had no impact on Iran’s oil trade so far and the exports are going ahead without any problem.

Over 60 percent of Iran’s crude oil is shipped to Asian countries and about 40 percent to Europe.

Zanganeh also said oil exports to India were moving ahead normally despite claims that Indian refiners had cut purchases from Iran amid a standoff over development rights to a giant gas field in the Persian Gulf.

The Indians have been demanding special treatment on the offshore Farzad B gas field, which they discovered in 2008, but Iran has refused to submit to the demands.

“The Indians are buying oil from Iran, and there is nothing special in this regard,” Zanganeh said.

The US has been looming large on the future of Iran’s oil trade with India. Increased output from US shale producers has been a major bug-bear for traditional oil producers, hindering OPEC’S ability to eliminate the supply overhang and limiting the market upside. OPEC and NON-OPEC producers have been working for some time to restore the stability of the oil market. They are about to meet in Vienna next week to discuss a possible extension of production limits.

The unprecedented cooperation among the traditional rivals has helped the market rebound from its worst doldrums. On Thursday, oil hit two-year highs (about $60 per barrel) amid news that US crude stockpiles were declining.

Zanganeh said, “Most OPEC members agree with the extension of the oil freeze, but the final decision has to be taken at the OPEC meeting.”

Under the freeze program, producers have agreed to maintain their output at current levels after deciding in November 2016 to shave 1.2 million barrels per day off their production.