Oil prices extended early losses on Monday, dropping about $3 a barrel, after Treasury Secretary Steve Mnuchin said some crude importers may receive waivers to continue buying supplies from Iran, despite U.S. sanctions on the Middle Eastern country.
"We want people to reduce oil purchases to zero, but in certain cases if people can't do that overnight, we'll consider exceptions," Mnuchin told reporters on Friday while traveling to Mexico, Reuters reported. The comments were under embargo until Monday morning.
Mnuchin told the reporters the Trump administration wants to avoid roiling global oil markets as it seeks to pressure Iran to make concessions on its nuclear program, ballistic missile tests and its role in regional conflicts. President Donald Trump withdrew the United States from the 2015 Iran nuclear deal and restored sanctions on Tehran in May.
U.S. West Texas Intermediate crude oil prices ended Monday's session down $2.95, or 4.2 percent, at $68.06. WTI has fallen for two weeks in a row, dropping from a 3½-year high above $75 a barrel.
Brent crude oil fell $3.49 per barrel, or 4.6 percent, to a three-month closing low of $71.84.
The Trump administration sent oil prices soaring three weeks ago after a senior State Department official told reporters the agency had been pushing Europeans to cut their oil purchases from Iran to zero by Nov. 4. The tougher-than-expected deadline raised concerns about shortages of oil at a time when supply and demand are finely balanced.
The State Department later signaled some leeway on the policy, and last week, Secretary of State Mike Pompeo said the administration will consider granting sanctions relief to a "handful of countries."
The Trump administration now appears to be moving towards the approach followed by President Barack Obama. When the Obama administration expanded sanctions on Iran, it allowed importers to continue buying Iranian crude so long as the purchasing country's overall imports fell by 20 percent every 180 days.
"The State Department has the ability to issue waivers around significant reductions in the oil markets, that's something that Treasury and State will be doing," Mnuchin said on Friday.