US President Barack Obama said on Friday that he believed there was sufficient global oil supply to fill in the gap by reducing exports from Iran, making it possible for more sanctions on Iran's energy sector and countries buying oil from the Islamic republic.
Obama said in a statement that his conclusion was made after carefully considering the current global economic conditions, increased production by some countries, the level of spare capacity, and the available strategic oil reserves, among other factors.
He determined that there was a sufficient oil supply from other countries to permit a significant reduction in oil purchased from Iran, said the statement.
"I will closely monitor this situation to assure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran," Obama said.
According to the National Defense Authorization Act, Obama is required to determine by Friday, and every six months after that, whether the United States can endure the impact of a significant cut of oil output from Iran.
The law, passed by the US congress and signed by Obama in December last year, is aimed at choking off Iran's crucial oil revenue by targeting its central bank and financial sector, a move that allows penalties on foreign banks that settle oil imports with the Iranian central bank.
However, the law offers waivers to firms from countries that significantly reduce their crude imports from Iran. On March 20, the United States announced that it would initially exempt 11 countries from the new tough sanctions, citing their significant reduction of oil imports from the Islamic republic. The 11 countries include Japan, Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland and Spain. The exemption period, which is renewable, is for 180 days and valid until Sept. 16.
Washington is currently continuing its conversations with countries including India, China, Turkey, South Korea in an effort to persuade them to reduce dependence on Iran's oil.
The Obama administration, according to the law, can slap sanctions after June 28 on foreign banks that engage in oil transactions with Iran's central bank and cut them off from the American financial system.