Iran’s Minister of Petroleum Bijan Zangeneh says US sanction reprieves for some countries importing Iranian oil are not enough and oil consumers are set for “painful months” ahead because of insufficient supplies.

The US on Monday gave exemptions to eight importers of Iranian crude oil as it reimposed sanctions on Iran’s banking, energy and shipping industries, backing down on its threat to zero the country’s oil exports.

“Despite the initial rodomontade of Mr. Trump and a number of regional oil producers, the US government ultimately confessed to the severe shortage of oil and the impossibility of eliminating Iran from the market,” Zangeneh said.

The United States, he said, allowed Iranian imports because of a serious shortage of oil and a lack of balance between supply and demand which was pressuring large consumers.

“But this amount of exemptions does not correspond to demand. Hence, I have to say that unfortunately, painful months are predicted for oil consumers in the months ahead,” Zangeneh said, according to Shana news agency.

The minister also said the Trump administration has “artificially” brought down oil and gasoline prices ahead of midterm elections by coordinating an increased draw in US crude inventory, but the prices will “naturally” move up in the coming months.

Iran's Minister of Petroleum Bijan Zangeneh speaks to reporters in this undated photo.

Oil on Wednesday was trading close to its lowest since August at around $72 a barrel, on reported rise in US inventories and sanction waivers.

Market analysts said the waivers were larger than expected, while the US kept pressure on Saudi Arabia and other producers to maintain ramped-up output.

“The waivers have been larger than expected by the market. At the same time, there is still pressure on Saudi Arabia to maintain high exports,” Reuters quoted Olivier Jakob of Petromatrix as saying Wednesday.

Market overestimating losses

Badr H. Jafar, president of Crescent Petroleum in the United Arab Emirates, said Saudi Arabia was unlikely to sustain its high output.

“With continuing production concerns in Nigeria, Venezuela, Angola and Libya, alongside Iranian curtailment, we could well see prices edging up again toward $80,” he told the New York Times.

So far the US, Russia and Saudi Arabia are claimed to have replaced the lost Iranian barrels.

Matt Badiali, a senior analyst at financial research and publishing firm Banyan Hill, predicts the sanctions to shave off another 900,000 barrels over the next year.

“The market is overestimating the amount of oil that could come on. Can the world produce an extra 500,000 barrels a day? I don’t see it,” he told the Times.

In late 2016, Russia and Saudi Arabia oversaw the establishment of two committees that monitor a deal on coordinating oil production between OPEC and other non-OPEC producers.

Zangeneh on Tuesday wrote to OPEC’s secretary general calling for the two committees to be scrapped.

“Some OPEC members of these two committees have clearly taken sides with the United States in imposing its unilateral and unlawful sanctions against Iran,” he said. The committees “should immediately stop their work,” he added.

Trade in local currencies

China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea are the eight countries that have been exempted from the US sanctions.

Reports on Tuesday said India’s top refiner Indian Oil Corp and Mangalore Refinery and Petrochemicals Ltd had placed an order with Iran to buy a total of 9 million barrels of oil in December.

Government officials in New Delhi were also cited as saying that India and Iran would sign an initial agreement this month to settle all their oil trade in rupees.

South Korea was also resuming won-based trade transactions via the Central Bank of Iran's accounts at Woori Bank and the Industrial Bank of Korea (IBK), Yonhap news agency reported.

It said a team of South Korean officials visited Tehran on the weekend, just before the US announcement of waivers, and offered a detailed briefing on Seoul's related agreement with Washington.