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The Trump administration has on June 26 asked global community to cut all imports of Iranian oil before November 4, when the United States re-imposes sanctions against that country. Asked if someone was manipulating oil markets, Trump said: "OPEC is and they better stop it because we're protecting those countries, many of those countries". He questioned whether Trump's words would do anything to reverse the effects on the market of declining Iranian oil production.

The restart of those sanctions has global energy buyers nervous as to who will replace those barrels.

Despite the apparent supply relief from Saudi Arabia, oil markets remain tense over escalating trade disputes between the United States and other major economies including China, the European Union, India and Canada, as well as the looming new U.S. sanctions against Iran.

He was not specific on whether the additional two million barrels was a per-day figure - but worldwide daily demand is nearing 100 million bpd.

The U.S. government plans to shut Iran's oil exports out of the market from November, demanding that all countries stop buying its oil.

France's Total has already pledged to sell its stake in an Iranian gas development.

The slump in oil prices also hit Saudi stocks on Monday, with the Tadawul index falling 0.8 percent, and the Dubai index dropping 1.2 percent.

"As soon as market participants realize that there is no more scope for further production increases, prices will continue to rise - and will do so noticeably", he said. "We are also working with oil market participants, including producers and consumers, to ensure market stability".

"U.S. petroleum demand growth slowed significantly to 385,000 bpd year-on-year in April, compared with a growth of more than 730,000 bpd year-on-year in Q1", Barclays bank said, adding that this was mostly due to higher fuel prices. An increase in global production would typically be expected to ease prices. An increase in any nation's output beyond limits that OPEC set in 2016 would breach the agreement, he said.

The 9.1 trillion 2018 budget was predicated on a benchmark price of $51 per barrel and production of 2.3 million barrels per day.

China is the largest importer of Iranian oil with 24 percent, followed by India with 18 percent.

'There is no way one country could go 2 million barrels a day above their production allocation unless they are walking out of OPEC, ' he said.

Oil held near three-year highs on US Independence Day as tight supplies at home and overseas overshadow a Saudi pledge to boost output.

State Deparment's Hook says any sort of waiver or similar moves would reduce pressure on Iran.

"Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue on crude oil sales", said Director of Policy Planning Brian Hook.