Donald Trump says Saudis must compensate for drop in Iran oil supply

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Referring to reports that Saudi Arabia may increase its oil exports to replace Iranian oil in world markets, Jahangiri said, "Anyone trying to take away Iran's oil market [share] would be committing great treachery against Iran and will one day pay for it".

The Iranian warning, in a letter to the United Arab Emirates' energy minister, comes as Tehran faces a USA push to get its allies to stop buying its oil as part of Trump's decision to pull America from the nuclear deal with world powers. "Iran. OK. You think of it. Iran is their big enemy, so they are going to have to do it", Trump said.

Benchmark Brent crude oil fell $1.24 a barrel to a low of $77.99 before recovering to around $78.50, down 73 cents, by 0935 GMT.

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"Absolutely", the president responded when asked if the USA would sanction European countries that do business with Iran.

Rising gasoline prices could create a political headache for Trump ahead of the November elections by offsetting Republican claims that his tax cuts and rollbacks of federal regulations have helped boost the economy.

Meanwhile, Iranian Oil Minister Bijan Zanganeh sent a letter to the Organisation of Petroleum Exporting Countries (OPEC) asking its members to adhere to the group's agreement reached last month to collectively raise output and "refrain from any unilateral measures" that could undermine the unity of the producer group. "OPEC is and they better stop it because we're protecting those countries, many of those countries".

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In late 2016, OPEC members and 11 non-OPEC countries struck a deal to reduce oil output by 1.8 million barrels per day compared to October 2016. "We believe that the Russian budget received an extra 4 trillion rubles thanks to this deal with Saudi Arabia", said the head of RDIF Kirill Dmitriev in an interview with Russia's NTV channel.

Trump's suggestion means he wants Riyadh to increase production to 12 million bpd - something the kingdom has never done in the past.

Trump threatened in an interview that aired on Sunday to put sanctions on European companies that do business with Iran. Trump has imposed tariffs on steel and aluminum in response to what he calls unfair trade practices from Europe, Canada, and other allies around the world, who have responded with retaliatory sanctions in kind.

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