- The Washington Times - Monday, August 13, 2018

The battle of wills between Iran and the Trump administration intensified Monday, with Iranian officials privately admitting they will soon sell discounted oil and gas to Asian customers as Tehran braces for the return of U.S. sanctions.

Iran’s state news agency IRNA reported that an “informed source” inside the country’s oil ministry did not provide extensive details and sought to downplay the move as common industry practice. “Discount is part of the nature of the global markets being offered by all oil exporters,” the news agency quoted the source as saying on Monday.

The comments came after Bloomberg reported on Friday that the Islamic Republic’s state-run National Iranian Oil Company was planning to reduce official prices for September sales to Asia to their lowest level in 14 years.

Iran ranks second globally in natural gas reserves, fourth in proven crude oil reserves and is the third-largest producer within the Organization of the Petroleum Exporting Countries (OPEC), exporting about 2 million barrels of crude per day.

The U.S. is seeking to block Iran’s international oil sales in the coming months as part of Washington’s withdrawal from the Obama-era Iranian nuclear deal that had curbed Tehran’s nuclear programs in exchange for a lifting international economic sanctions.

The Trump administration has said a wave of oil-related sanctions that had been in place before the 2015 deal was reached will be reimposed on Iran beginning November 5.

Energy analysts say the situation has stoked global fears that a coming reduction in Iranian exports will continue to push up world oil prices, which have hit a three-year high in recent months. Some predict Iranian output could drop to as low as 700,000 barrels per day (bpd), from 2 million bpd.

In their move to squeeze Tehran, U.S. officials have argued that global oil supplies are robust enough to replace lost Iranian output. Earlier this summer, President Trump ratcheted up pressure on OPEC and Saudi Arabia — the world’s largest oil exporter — to boost production.

On Monday in its monthly oil market report, OPEC announced crude production was up in July. Despite sliding output in Libya and Venezuela, the price of oil stayed essentially the same in July as it was in June.

As Washington’s Nov. 5 deadline to block Iran’s international oil sales approaches, analysts are also watching reaction from China and India.

Those two countries purchase roughly half of Iran’s overall output and have said they have no plans to cut their Iranian energy purchases. Making Iranian crude cheaper could entice Iran’s Asian customers even more.

• Dan Boylan can be reached at dboylan@washingtontimes.com.

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