US seeks to quickly curb Iran oil after scrapping deal

Mnuchin Boeing's sales licenses to Iran will be revoked

Nearly one-third of Iranian oil shipments this year have gone to China, according to energy research firm Genscape. "I do not expect any significant shift or sudden shutdown in trade with Iran", Teotia said.

Analysts' estimates of the possible reduction in Iranian crude supplies as a result of any new USA sanctions range from 200,000 bpd to 1 million bpd.

The United States imports no crude directly from Iran.

While the sanctions have had an immediate impact on the global crude oil market, the fallout is expected to be wider impacting several non-oil businesses.

The decision overturned years of painstaking diplomacy and left European allies scrambling to save the hard-fought deal.

Saudi Arabia also backed Trump's decision on his country withdrawing from the Iran nuclear deal.

Iran had struck the JCPoA (Joint Comprehensive Plan of Action) deal with the USA, the UK, Russia, China, France and Germany after years of negotiations. The two countries are in talks, but appear to be far apart on major issues.

European governments tried for months to persuade Mr Trump to stick with the deal but failed, and now fear it will raise the risk of conflict in the region. Expressing doubts over Iran's sincerity, Trump has threatened to walk away from the 2015 agreement by not extending sanctions waivers when they expire on May 12, which would likely result in a reduction of Iran's oil exports.

The US Treasury has said that there will be wind-down periods of 90 and 180 days before sanctions are implemented. The future of the commodity rose by more than 8% last month and by over 15% since the beginning of the year. Iran delivered 766,000 barrels per day to China in March and almost 700,000 barrels per day in April, according to ClipperData.

And it came amid growing tension between the Sunni kingdom and the Shiite Islamic republic over Iran's support for the Huthi rebels in Yemen, who have been firing rockets across the border. And the impact on the global oil market may be less dramatic than some feared.

Oil prices rose on May 10, heading for their largest weekly increase in a month, as the market prepared for potential disruption to crude flows from major exporter Iran in the face of United States sanctions.

Jefferies said OPEC "has the capacity to replace the Iranian losses" but warned that "even if physical supply is held constant. the market will still be faced with a precariously low level of spare capacity". It is possible that some other agreement is reached before then. But since they do not really trade much with Iran anyway, they do not add much to the coalition.

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