Trump administration seeks to drop Iran's oil revenue to nothing

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Last month President Donald Trump withdrew the United States from the landmark Iran nuclear deal, re-imposing U.S. sanctions that had been suspended in return for curbs on Tehran's nuclear programme.

The White House later walked back the president's comments, saying the king had said his country could raise oil production if needed.

An oil tanker is loaded at a Saudi Aramco refinery and terminal in Ras Tanura, Saudi Arabia, in May. It comes as Mr. Trump pulled the USA out of Tehran's nuclear deal with world powers in May.

The price for Brent crude oil, the global benchmark for the price of oil, was up 1.32 percent as of 9:15 a.m. EDT to $78.32 per barrel.

Tehran and Riyadh are members of the Organisation of Petroleum Exporting Countries, a cartel that manages supply to the global market via production quotas so as to keep prices in member states' favour.

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In May, the USA retreated from a multilateral deal with Iran regarding its nuclear disarmament program, and imposed sanctions to limit the world's fourth largest oil exporter's access to global markets. West Texas Intermediate, the USA benchmark for the price of oil, was up 1.51 percent to $75.06 per barrel, its highest level since November 2014.

The US "down to zero" plan rests heavily on banning India and China from buying from the Iranians, and while Indian companies have suggested they will dial it back, China remains in the nuclear deal and nearly certainly won't give in to US demands.

The quick drop after WTI reached US$75 might have been due to "a bout of long liquidation in front of the holiday", said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis. "They don't want our farm products".

OPEC pledged to relax compliance with an agreement that helped balance an oversupplied market, but that might not be enough to address a looming deficit of around 2 million barrels per day.

They agreed to bring down overcompliance with the cuts, resulting in an output increase of one million barrels a day, according to the Saudi energy ministry.

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Iran possesses the second-largest gas reserves on the planet, after Russian Federation, and the fourth-largest oil supplies, while Saudi Arabia is the world's biggest oil exporter.

Mr Trump took another swing at his European allies saying they dealt unfairly with the USA over trade.

Trump will visit Europe this month for a meeting with North Atlantic Treaty Organisation allies, whom he has criticized sharply as paying too little for their joint defense.

The president, in an interview with Fox News' "Sunday Morning Futures with Maria Bartiromo", also said he would not complete a new NAFTA trade deal with Canada and Mexico until after the November congressional elections.

"Investors should keep in mind that U.S. shale production remains robust while global trade tensions present a threat for global growth, and this may translate to less demand for commodities".

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