Possible U.S. Request to Russia for Oil Supply Increase Following Iran Sanctions

CNBC reported on the possibility of the U.S. requesting Russia to inject more oil into global markets due to the U.S.'s stringent stance on Iranian crude oil exports. According to OPEC's report, Iran exported nearly 2.125 million barrels of oil per day last year, with two-thirds going to Asian markets and the rest primarily to Europe, and a similar export level was anticipated for this year. Before the sanctions, Iran's daily crude oil exports were 2.2 million barrels, but due to the sanctions, exports fell to one million barrels. The International Energy Agency has predicted that Iran's production and consequently its oil exports will decrease by 900,000 barrels per day by late next year. CNBC reported that on Tuesday, July 5, Rick Perry and Alexander Novak, the U.S. and Russian oil and energy ministers, are set to meet, which could pave the way for a meeting between Donald Trump and Vladimir Putin, the presidents of the two countries. Analysts believe Perry may ask Novak to work with his oil allies to bring more oil to global markets. Other analysts suggest that Russia might do this in exchange for the lifting of some U.S. sanctions against it. This news comes as Bloomberg reported that the United States has requested Japan to completely halt oil imports from Iran, going 'beyond' the framework of sanctions against the Islamic Republic. Bloomberg cited sources familiar with the matter, whose identities were not disclosed. According to these sources, Japan has not yet made a decision in response to this U.S. request, which was raised during negotiations between the two countries this week. The Japanese oil policy director at the Ministry of Economy, Trade and Industry has indicated that Japan is reviewing this matter. Last month, when Donald Trump announced the U.S. withdrawal from the JCPOA, he informed allies they had 180 days to reduce oil purchases from Iran, a member of OPEC. Bloomberg noted that the request for a complete halt to oil purchases from Iran by the U.S. indicates a tougher stance from Washington towards Iran compared to 2012 when the U.S. allowed its allies to make limited oil purchases from Tehran. This is the first time the U.S. has requested a major Iranian customer to completely stop oil purchases. Japan is the fourth-largest buyer of Iranian oil in Asia, sourcing 5.3% of its oil needs, which amounted to 172,000 barrels per day in 2017, from Iran. According to this report, Japan is likely to decide on the level of crude oil purchases from Iran in August. These reports come as Iran's oil minister claims that the Islamic Republic has found 'many ways' to overcome U.S. oil sanctions. Bijan Zanganeh, in an exclusive interview with Bloomberg on the sidelines of the OPEC meeting held in Vienna on Friday, July 1, stated that he would not disclose details of these ways as he does not want 'the U.S. to uncover Iran's plans and neutralize them.' His remarks come at a time when Mohammad Javad Zarif, Iran's foreign minister, has explicitly stated that the U.S. has 'identified our lifelines' by arresting Reza Zarrab and Sadr Hashemi. These two are accused of helping illegally transfer billions of dollars in currency and gold to the Islamic Republic by circumventing international sanctions.