If the U.S.is successful at convincing most countries to stop buying oil from Iran, the outages could rise to as high as 2 mb/d, although that remains speculation.
Despite rising USA output, US commercial crude oil inventories C-STK-T-EIA dropped by nearly 10 million barrels in the week to June 22, to 416.64 million barrels, according to the Energy Information Administration on Wednesday.
Moreover, gasoline reserves increased by 1.156 million barrels, and distillate stocks increased by 15,000 barrels. Brent crude LCOc1 rose $1.31, or 1.7 percent, to settle at $77.62 a barrel.
As they have lowered their dependence on Iranian crude, refiners say the impact of the USA embargo could be contained to a certain level, but a price hike in retail products will be inevitable because of worldwide oil price hikes.
Crude stocks at the Cushing, Oklahoma, delivery hub for the NYMEX futures contract fell by 2.7 million barrels, EIA said.
The United States will work with countries importing Iranian oil on a case by case basis to get as many of them as possible "down to zero" by early November, the U.S. State Department said on Thursday, clarifying comments from earlier this week that suggested there wouldn't be any waivers for Iran's oil buyers.
Venezuela said the USA sanctions are affecting consumers worldwide and are an attack on the global oil market.
Russian Energy Minister Alexander Novak sits on a committee monitoring compliance for an effort steered by the Organization of Petroleum Exporting Countries to ensure an even-keeled market through coordinated production arrangements.
Crude closed at a 3 1/2 year high amid shrinking stockpiles in the US, disruptions at Libyan ports and other worldwide supply risks.
India and China, Iran's largest crude oil importers, are expected to continue business as usual, ignoring USA pressure. It was the third largest exporter to Korea following Saudi Arabia at 28.5 percent and Kuwait at 14.3 percent.
He also talked about the economic crisis of Iran at hand.
A power struggle between the official government and rebels has left it unclear who will handle Libya's large oil reserves, although as of late Tuesday sources said the country's oil ports of Hariga and Zueitina in eastern Libya appeared to be working normally.
India refiners prefer Iranian oil as it comes with freight discount and a longer credit period.
So the commitment there is to add another million barrels per day; the market responded to this, they have tried to figure out how much this will actually add in terms of barrels to be added. The move is most likely in anticipation of the US sanction on Iran that will severely tighten global supply, even though it was announced ahead of the State Department Action.