The US on Monday said it is prepared to work with nations that are reducing their oil imports from Iran on a case-by-case basis, but ruled out granting waivers to countries like India or Turkey as it could substantially reduce pressure on Tehran.
First Vice President Es'haq Jahangiri said on Monday that Iran is able to counter the looming USA sanctions, noting that those at the White House who think they can halt Iran's oil export are living in "illusion".
Oil prices fell on Monday as supplies from Saudi Arabia and Russian Federation rose while economic growth stumbled in Asia amid an escalating trade dispute with the United States. The Saudi leader said he was ready to raise output if needed, the White House said in a statement.
"Recurring salvos in the trade war and falling asset prices raise the question of how much tariffs could damage the global economy", USA bank JPMorgan said. "We are working to minimize disruptions to the global market but we are confident there is sufficient global spare oil capacity".
Mr Trump took another swing at his European allies saying they dealt unfairly with the USA over trade.
"The (Iranian) government has a plan. and God willing we are certain that we will be able to sell as much oil as we want", he said.
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But the USA official, Brian Hook, also said that keeping prices stable in the absence of Iranian crude is also important.
"Such measures are taken as a psychological war against the country", Jahangiri made the remarks at a conference held to mark National Day of Industry and Mine in the capital Tehran. It comes as Mr. Trump pulled the US out of Tehran's nuclear deal with world powers in May.
"Our attempt is to defeat USA policies in the sale of oil and we are pretty sure we will sell our oil as much as we need", he added.
The United States exited from the nuclear deal between Iran and world powers in May and said it would reimpose economic sanctions on the Islamic republic and its business partners by 4 November. The International Energy Agency estimates OPEC's spare capacity could fall in to around 2.5 mbpd (excluding Iran) - by the first half of 2019, its lowest level since the end of 2016 when record production from the Middle East reduced spare capacity to around 1.9 million bpd.
Oil prices edged up on Wednesday following a report of tightening USA fuel inventories amid an outage at Syncrude Canada oil sands facility in Alberta, which usually supplies the United States.