Washington (Platts)--11Jun2012/353 pm EDT/1953 GMT

US President Barack Obama determined Monday that the global oil market had sufficient supplies outside of Iran in May to follow through with tough new sanctions against Tehran, the White House said.

As required by the sanctions law, Obama must report to Congress whether a sufficient supply of crude and petroleum products exists to permit significant cuts in Iranian oil exports.

The Energy Information Administration found tightness in the oil market relaxed somewhat in March and April, compared with January and February.
"That trend continued in May," White House spokesman Jay Carney said in a statement. "Although production disruptions continue to remove some oil from the market and the international response to concerns about Iran's nuclear activities has increased demand for non-Iranian crude oil, production increases in other countries and weaker demand growth overall have mitigated oil market tightness to a degree."

Carney's statement repeated language from a similar report issued March 30 that there appears to be "sufficient supply of non-Iranian oil to permit foreign countries to significantly reduce their imports of Iranian oil, taking into account current estimates of demand, increased production by countries other than Iran, inventories of crude oil and petroleum products, and available strategic petroleum reserves."

"In this context, it is notable that many purchasers of Iranian crude oil have already significantly reduced their purchases or announced they are in productive discussions with alternative suppliers," Carney said.

Congress inserted the alternative supply language into the latest Iran sanctions bill over concerns that forcing countries to cut back on their Iranian crude purchases could hurt the US' allies and cause the price of oil to spike.

--Meghan Gordon, meghan_gordon@platts.com
--Edited by Keiron Greenhalgh, keiron_greenhalgh@platts.com

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