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Amid record low crude oil imports, Iran sanctions worries, Trump officials meet Saudis

Washington — With crude oil exports to the US potentially at the lowest point in a generation and concerns over the reimposition of sanctions on Iranian crude simmering, key Trump administration officials met in Saudi Arabia with the king and crown prince this week, the White House announced Wednesday.

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On Tuesday, Jared Kushner, a senior advisor to President Trump, Jason Greenblatt, Trump's special representative for international negotiations, and Brian Hook, the US special representative for Iran, met with Saudi King Salman bin Abdulaziz al-Saud and Crown Prince Mohammed bin Salman.

"Building on previous conversations, they discussed increasing cooperation between the United States and Saudi Arabia, and the Trump Administration's efforts to facilitate peace between the Israelis and Palestinians," the White House said in a statement. "Additionally, they discussed ways to improve the condition of the entire region through economic investment."

White House officials declined to comment on the meeting further.

Analysts said Wednesday that it was unclear if oil issues, such as the US path forward on Iran sanctions and a US push for the Saudis to increase production to prevent a price spike, were even discussed.

The meeting in Saudi Arabia took place a day after Trump tweeted that oil prices were "too high" and asked OPEC to "please relax and take it easy."

US imports of Saudi crude averaged 346,000 b/d for the week that ended February 22, according to preliminary weekly data released by the US Energy Information Administration Wednesday. Through the first three weeks of February, US imports of Saudi crude have averaged about 452,000 b/d, which, if that preliminary number holds, would be the lowest monthly import average of Saudi crude to the US since May 1987.

But Trump's message to boost oil output was not likely discussed in Tuesday's meeting, according to Ellen Wald, an energy industry and policy consultant at Transversal Consulting. Wald said that, for one, Kushner and Greenblatt do not deal with oil issues and said such discussions would more likely involve US Energy Secretary Rick Perry, Saudi oil minister Khalid al Falih, or Trump and King Salman directly. In addition, a discussion of oil issues could hinder Kushner's efforts to get Saudi assistance in his peace plan, the details of which have yet to be disclosed.

"Kushner is going to Saudi Arabia asking for assistance on Israel/Palestinian issues," Wald said. "He would only be complicating it by asking for assistance on oil issues."

Hook's presence, however, sparked speculation that Iran sanctions were discussed. Hook met with Falih in December, shortly before OPEC and its allies announced a 1.2 million b/d production cut.

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The US "very much wants to ensure that the Saudis are telling every country that is presently buying Iranian oil that they can serve as a replacement," said Richard Nephew, the principal deputy coordinator for sanctions policy at the US State Department during the Obama administration. "I think that's probably what [Hook's] message was on sanctions."

Nephew, who is now a senior research scholar at the Center on Global Energy Policy at Columbia University, said that he had "no doubts" that the Saudis pressed Hook to deny future sanctions waivers as a way to get Iran to zero oil exports.

In November, when the US reimposed Iranian crude oil sanctions, Iran's top oil buyers, including China, India, Japan, South Korea and Turkey, received six-month "significant reduction exemptions", allowing them to continue to import Iranian crude with a pledge to reduce future purchases.

It remains unclear if the US will extend or modify these waivers when they expire on May 4.

The Trump administration needs additional Saudi production in order to allow those sanctions waivers to expire, particularly as sanctions on Venezuelan crude will likely continue to tighten the heavy oil market, said Sara Vakshouri, founder and president of SVB Energy International.

"On the Saudi side, they need an assurance that the Trump administration is serious in cutting Iran oil production and/or pushing it to zero export," Vakshouri said. "This is important for the Saudis in order to have an exact estimate of market requirements."

-- Brian Scheid, brian.scheid@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com