As a result, Japanese oil companies are preparing to halt imports of Iranian crude and researching ways to increase imports from elsewhere to make up the shortfall, the reports said.
Crude oil futures were lower during mid-morning trade in Asia Monday amid a slight uptick in the USA oil rig count and continued focus on global supply increases.
LONDON-Oil prices started September higher Monday as investors refocused on looming risks to Iranian supply, despite signs of rising output from the U.S.
It's unclear, however, how much the U.S.'s allies will cut back on Iranian oil imports. The move would mean that around 50 percent of Chinese exports to the USA would be subject to extra duties.
French oil-and-natural-gas company Total has "officially left" Iran in the face of the USA threats, Iran's oil minister announced in August. He also stated that the Iranian production is already giving indications of declining.
But global oil markets are still fairly well supplied.
Data released by Baker Hughes Friday showed the U.S. oil rig count rose by 2 to 862 in the week ended August 31.
Under a CIF arrangement, Iran would provide shipping and insurance, enabling Indian refiners to continue purchases of the country's oil despite the non-availability of cover from Western insurers due to the restrictions imposed by Washington.
Iran suffered the biggest drop across the group with a decline of 240,000 barrels a day, pushing its production down to 3.5 million barrels a day.
Meanwhile, trade disputes between the United States and other major economies, including China and the European Union, are expected to hurt oil demand if they are not settled soon.
Meanwhile, Russia kept pumping oil near post-Soviet records last month, and Saudis boosted output to more than 10.42 million barrels a day.
China surpassed the U.S.to become the world's largest crude oil importer in 2017, importing 8.4 million barrels per day (b/d), compared with 7.9 million b/d for the U.S., according to the U.S. Energy Information Administration.
In terms of recent demand, China's crude oil imports recovered slightly in July after falling for the previous two months, according to Reuters.
Innes, however, feels that it is too early to predict whether the economic slowdown due to these trade wars was going to impact the demand for oil.
"While the analysts continue fretting that $200 billion in tariffs could drag down oil demand, it isn't at all clear that such type of economic headwinds will topple oil prices given the constant barrage of supply outages", he said.