Arab League chief urges quick review on Iran nuclear deal

Desiree Steele
May 10, 2018

"Even before the nuclear deal when the Iran regime was crippled with multilateral and unilateral economic sanctions, Tehran still continued to support militias, proxies and terrorist groups", Rafizadeh told Arab News.

US shale producers could also increase their output but it would take time and their light crude is not a good substitute for heavier Iranian oil.

Despite Riyadh's assurances to find a replacement for Iranian oil production, the oil price did not remain stagnant, rising 3.2 percent up to $71.25 (futures for June) per barrel on May 9.

Analysts had little hope that opposition to the USA action would prevent sanctions from going ahead.

USA politicians will want to avoid being blamed for a further escalation in the run up to congressional elections in November. They will grumble and accept it.

Before that, technical officials meets on May 22-23 when the issue of whether extra barrels are needed to offset any Iranian loss will likely come up, the second source said.

Since the Iran nuclear deal went into effect, its exports have risen to about 2.5 million bpd, from less than 1 million bpd. "As before, it may take several rounds of reductions to reach target levels", FGE's founder and chairman Fereidun Fesharaki wrote in a note.

Saudi Arabia and its close allies Abu Dhabi and Kuwait hold nearly all the spare capacity that could respond quickly to a reduction in Iranian exports.

Saudi Arabia has said it will take all necessary measures to prevent oil supply shortages following the U.S. withdrawal from the Iran nuclear deal. Global agencies responsible for inspecting compliance have said that Iran was in full cooperation with the agreement's terms.

Saudi Arabian Crown Prince Mohammed bin Salman told CBS News in March, "Saudi Arabia does not want to acquire any nuclear bomb, but without a doubt, if Iran developed a nuclear bomb, we will follow suit as soon as possible".

One factor that could partially mitigate any shortfall from Iran is soaring US oil output.

Saudi Arabia now pumps around 10 million bpd, but has capacity of around 12 million bpd - a surplus of two million bpd. The agency has raised its forecasts every month since last August. Although a reactor deal would produce the highest revenue, there are many other important areas through which the United States can assist the Saudi nuclear program-from developing its power grid, building related infrastructure to training personnel, and developing independent legislative body.

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