"While there has been minimal impact so far on Iran's crude production ahead of renewed U.S. sanctions, Washington's move to apply the toughest ever measures on Iran could result in an even steeper reduction than ... seen during the previous round of sanctions" when its exports fell by 1.2 million barrels per day (mbd) said the IEA.
The two countries buy a combined 12 per cent of the world's oil, and their growth has helped drive the recovery in oil prices since 2016.
Oil prices fell on Monday after data suggested inventories at the USA crude delivery hub rose in the latest week, compounding worries that troubled emerging markets and trade tensions will dent the outlook for fuel demand.
Gloomy months lie ahead of Nigeria and other crude oil exporters as OPEC on Monday forecast lower demand for crude next year.
Yet their shipped imports in July were about half a million barrels per day (bpd) below their Jaunary-June average of 12.4 million bpd, shipping data shows.
Prices are expected to remain under pressure as United States petrol demand slows going into the autumn and refiners shut for maintenance, pushing more crude into storage, said Tariq Zahir, managing member at Tyche Capital in NY.
Iran's foreign minister said the OPEC nation won't meet with the U.S. at the United Nations General Assembly in NY in September, with sanctions on the Middle Eastern nation's oil industry set to be implemented on November 5. Meanwhile, U.S. output, which had surged to a record last month, has slowed in recent weeks.
Weaker currencies in Asia and tariff-suppressed trade slows economic growth, reduces purchasing power, and eventually hits fuel demand.
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Recently, Indian Oil Corp, which is the biggest refiner in India, purchased as many as 6 barrels of the USA crude oil.
Oil drops as economic turbulence in Turkey and the strengthening greenback heightens concerns about global oil demand.
The U.S. and Iran saga has had a grip over oil markets for the last three months.
Australia, another rich economy in the region, has also seen strong demand, importing some 370,000 bpd in July, up from an average of 333,000 bpd in the first half of the year.
While concerns about scarce oil supplies have receded after Saudi Arabia and other producers pumped more, the International Energy Agency warned that renewed American sanctions on Iran and disruptions elsewhere could be challenging.
Along with this, United States production last week has risen to record levels of 11 million bpd mark, very close to Saudi Arabia and Russia's production levels. Mee is even more bullish, seeing the ultimate loss of supply at more than 2 million bpd.
Despite the gloomy outlook for trade and the potential slowdown in economic growth, oil markets are expected to remain relatively tight, particularly as U.S. sanctions on Iran have started.