Despite Price Spike, US Will Aim To Bring Iran's Oil Revenue To Zero

The Trump administration is standing by its plan to reduce Iran's oil revenue to zero in a bid to isolate the country and force its leaders to change their behavior, a senior State Department official said Monday.

At the same time, the official said, the United States would work "case-by-case" with countries that import Iranian crude, signaling that the Trump administration might not immediately sanction those that continue importing from Iran beyond a Nov. 4 deadline.

"Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue on crude oil sales," Brian Hook, the State Department's director of policy planning, said at a briefing. "We are prepared to work with countries that are reducing their imports on a case-by-case basis, but as with our other sanctions, we are not looking to grant waivers or licenses."

Hook's comments follow a turbulent week in the oil market that started last Tuesday when a State Department official called on buyers to stop importing Iranian crude by Nov. 4.

In a briefing with reporters, the official said Washington would not likely grant waivers from secondary sanctions against foreign companies that continue to do business with Iran. The official spoke on the condition of anonymity under State Department ground rules.

After the remarks, U.S. crude jumped more than 8 percent and closed at more than $74 a barrel -- a first since November 2014.

The spike was the latest fallout from the Trump administration's decision to abandon the landmark Iran nuclear deal and reimpose sanctions on Iran -- a move that has strained relations between the United States and other world powers who support the deal.

Some key countries are reliant on Iranian oil imports, including India and Turkey. Last week, Turkey's economy minister said his country does not plan to abide by the U.S. demand for countries to stop importing Iranian oil, calling the request "nonbinding" on Turkey -- a stinging rebuke from a NATO ally.

Last week, some White House officials privately expressed displeasure with the State Department remarks because they were at odds with another Trump administration priority: stopping oil prices from rising too high ahead of the midterm elections.

The Trump administration's ban on Iranian oil threatens to start a crude shortage, analysts say, which could hit American taxpayers at the gas pump just as they expect some relief in gas prices after the summer.

On Saturday, President Donald Trump touted an agreement with Saudi King Salman bin Abdul Aziz to vastly increase oil production in an effort to lower prices.

"Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference," Trump tweeted. "Prices to [sic] high! He has agreed!"

The White House has since walked back the claim that Salman agreed to Trump's request. On Monday, Hook expressed confidence that the U.S. sanctions policy would not cause mass shortages, but analysts have expressed doubt that Saudi Arabia can increase production by as much as Trump described.

"We are working to minimize disruptions to the global market, but we are confident there is sufficient global spare oil capacity," Hook said.