0854 GMT May 22, 2018
Oil prices have hit new four-year highs above $80/b due to concerns over lost Iranian barrels after Trump announced his decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) with Tehran. Some experts fear US sanctions could prevent European energy companies dealing with Iran and potentially reduce its output by as much as 1 mbd.
However, European governments, including the UK, are evaluating measures to potentially bypass US embargoes and keep Iran in the nuclear agreement. French oil giant Total said on Wednesday it requires a waiver to proceed with the planned development of Iran's South Pars — part of the world's largest offshore natural gas deposit.
"Our decision, therefore, is to continue to work with Iran on the basis that there are other parties to this agreement besides the United States," Alistair Burt, minister for the Middle East and North Africa, said on Thursday.
"We need to evaluate exactly what the United States is going to do in terms of its sanctions and how they will impact."
Shell, the UK's largest oil major, signed an agreement in 2016 to potentially invest in three of Iran's biggest oil and gas fields.
London-based Vitol, the world's largest independent oil trading house, and Glencore have both bought Iranian cargoes since sanctions were lifted three years ago.
However, the US government has set a 180-day period for companies to unwind transactions involving Iranian petroleum, petrochemicals, upstream oil investment, ports, shipping, shipbuilding and the Central Bank of Iran.
"Foreign Secretary [Boris Johnson] said right at the outset of this when the Americans made the decision that we want to work with the States, and that European partners deliver on their side of the bargain," Burt said.
"We're all well aware there are relationships between European financial institutions and American banks perhaps greater in the UK than in Germany, France or Italy but we still need some greater clarity from the United States at what the space is that we can all work in to enable those trading relationships to continue and at the moment that certainty is not there."
Iran has boosted oil production by nearly 1 mbd since the nuclear deal lifted sanctions in January 2016. It produced 3.83 mbd in April, according to the latest S&P Global Platts OPEC survey.
Burt's comments came ahead of an EU announcement Friday of measures seeking to protect the interests of EU companies in Iran against US sanctions and help facilitate oil transactions with the OPEC producer.
Trump's decision has angered Iran and fueled rising tensions in the region, pushing up oil prices. Crude has gained 75 percent in value over the last year amid growing concerns over security of supplies from the Persian Gulf and OPEC's pact with Russia and other producers to reduce global supply by 1.8 mbd.