Iran diplomat visits China for talks on nuclear deal crisis

National security adviser John Bolton arrives for a joint news conference between U.S. President Donald Trump and Germany's Chancellor Angel

"We are more anxious about what such political action will do to the outright price of oil, rather than whether it will create a real supply shortage", said another Chinese refining manager, who also declined to be named. "While we acknowledge that these types of conflicts potentially can have a longer lasting impact on oil markets and Energy performance, we have yet to really see any significant changes to global supply and demand as of late to indicate this".

President Donald Trump said May 8 Washington was withdrawing from Joint Comprehensive Plan of Action (JCPOA), the deal that suspended sanctions on Tehran in exchange for Iran curbing its nuclear ambitions.

During the last round of sanctions, Iran's oil supplies fell by around one million bpd, but the country re-emerged as a major oil exporter after sanctions were lifted by producing 3.81 million bpd in March 2018. This time, analysts expect much less of an impact.

Trade data already shows a reduction of Iranian oil supplies to Japan and South Korea, and refinery sources confirmed they had started shifting purchases to other suppliers in preparation for renewed sanctions, Reuters reported.

Facing that reality, Le Maire said the European Union should strengthen its own legal arsenal against any such future US threats. European leaders have signaled their commitment to the nuclear deal despite the U.S.'s withdrawal - though Bolton speculated Sunday that commitment could waver in the future.

In a statement, British Foreign Secretary Boris Johnson said after talks with his French counterpart, Jean-Yves Le Drian, that both countries were determined "to conserve the essence of the Iran nuclear deal".

This would essentially end the OPEC-led deal to trim production.

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In his television appearance Sunday, Mr. Pompeo also expanded on his comments Friday that the US would help North Korea achieve economic prosperity if it gave up its nuclear arsenal.

Foreign companies that do business in the country have also been banned from accessing American banking and financial systems. It meant most owners weren't able to haul Iranian oil and forced some Asian buyers of the Middle East country's crude to find awkward workarounds such as state-backed cover. If the policy extends to higher tariffs to protect the United States oil industry as it did with the steel industry, it is possible that a buying frenzy might be sparked to secure supplies at lower prices.

After elimination of sanctions in 2016, based on nuclear agreement, Iran resumed its oil exports and increased it to over 2.8 mb/d in April. US law gives the Treasury secretary the power to administer sanctions imposed by the president. The Venezuelan elections are coming up May 20.

That makes Trump's decision most painful for Europe. If Maduro wins again, it could bring continuing chaos and a further decline in oil volumes.

As they grapple with the short-term threat of US sanctions, European officials are debating how to protect the bloc in the long term against the overseas reach of American law. However, the fate of the JCPOA is expected to top the agenda of the meeting.

There is little doubt the pressure on supplies from Iran will have a supportive impact on prices, but USA producers are expected to increase output and Opec has the spare capacity to fill in any gaps in the mid-term, so this factor is likely to have a limited effect.

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