Iran says re-imposition of US sanctions is a "war situation"

Iran says re-imposition of US sanctions is a

Iran says re-imposition of US sanctions is a "war situation"

"While the Iranian sanctions should still be viewed as a latent bullish consideration capable of limiting much additional price slippage, it would appear that the Iranian factor alone will not be capable of spurring higher prices without major assistance from a renewed strengthening in the equities, sustainable weakening in the USA dollar or a significant cut back in OPEC production", Jim Ritterbusch, president of Ritterbusch & Associates, said in a note.

South Korea's presidential spokesman says the USA has demonstrated the strength of the two countries' alliance by allowing South Korea to continue importing Iranian crude oil products under reinstated sanctions against Iran.

The measures are part of a wider effort by US President Donald Trump to curb Tehran's missile and nuclear programs and diminish the Islamic Republic's influence in the Middle East, notably its support for proxies in Syria, Yemen and Lebanon.

Analysts said expectations of an economic slowdown in coming months was outweighing supply-side risks to crude markets from the reintroduced USA sanctions against Iran, which started on Monday.

When asked about his decision to give temporary exemptions to eight economies from the ban on Iranian oil imports, Trump said, "I'm not looking to be a great hero and bring it down to zero immediately".

These are also Iran's biggest buyers, meaning Iran will be allowed to still export some oil for now.

The eight countries are India, China, South Korea, Japan, Greece, Chinese Taipei, Turkey and Italy, Bloomberg quoted Pompeo as saying.

Yesterday Pompeo said over 20 importing nations have zeroed out their imports of crude oil already, taking more than 1 million barrels of crude per day off the market.

He also said the reimposed USA sanctions were part of a psychological war launched by Washington against Tehran, adding that "America's economic pressure on Iran is futile".

One of the sources said the United States had attached some strings to the import allowance, including counterparty disclosures and laying open settlement methods, which were being evaluated before placing new orders with Iran.

Trump pulled America out of the 2015 nuclear deal Iran struck with world powers in May.

House Democratic Whip Steny H Hoyer said, "Rather than achieving its stated goal of eliminating Iran's oil exports altogether, the administration has issued "exemptions" for major Iranian oil importers, allowing Iran to earn billions of dollars from oil sale".

International Brent crude oil futures were down 21 cents, or 0.3 per cent, at $72.96 a barrel.

Ambassador Seyed M. Kazem Sajjadpour said in London on Tuesday that the United States has the "very simple naive" view that Iran will wilt under the pressure.

Now it will be key to watch "what happens after the exemptions expire in 180 days", the merchant trader said.

On the supply-side, oil is in ample availability despite the sanctions against Iran.

Iran's exports peaked at 2.8 million barrels per day (bpd) in April, including 300,000 bpd of condensate, a lighter form of oil that when underground tends to exist as gas.

"This is only the beginning of the Iranian production curtailment story, not the end", said Michael Tran, commodity strategist at RBC Capital Markets.

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