US light crude CLc1 was down 5 cents at $74.91. "We will be guided by our national interest", he said.
"The U.S. appears to be abandoning its tough stance on buyers of Iranian oil", analysts at Commerzbank said.
The country previously held oil in storage at Dalian during the last round of sanctions in 2014 that was later sold to buyers in South Korea and India. Washington said on Friday it was considering waivers for nations that were reducing imports of Iranian oil.
Iran's crude exports fell further in the first week of October as buyers sought alternatives ahead of US sanctions that take effect on November 4, according to tanker data and an industry source. Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said there was also "chatter that Saudi Arabia has replaced all of Iran's lost oil".
Singh said options for paying for Iranian oil are under discussions.
This new stance is triggering criticism from some Iran hawks and comes amid disparate statements about the administration's willingness to grant other concessions, such as preserving Iran's access to global financial markets, as the Free Beacon first reported on Monday.
The IMF, however, predicted Iran's economy will sink deep in the red due to renewed United States sanctions.
The U.S.is imposing the sanctions because Iran has reneged on a 2015 nuclear deal-a point on which other major powers disagree-and because it wants Iranian forces to pull out of Syria and Iraq.
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Asked about whether oil prices at $85 have already resulted in demand destruction, Dudley told CNBC, "we don't see that destruction".
President Trump chose to leave the deal and reimpose sanctions.
As the start date of the US sanctions on Iran's oil is less than four weeks away, the market is jittery and prone to emotional reactions regarding the two key uncertainties over the next couple of months-how much Iranian oil will be lost to the USA sanctions, and how much spare capacity Saudi Arabia can bring (or is willing to bring) to offset possible steep losses.
"These officials are planning to announce that it's OK to give banks waivers because re-imposed sanctions on businesses are sufficient", the source explained.
Given their dependence on Iranian oil supplies, the Indian refiners are concerned about the loss of Iranian crude once the sanctions start and are seeking exemptions.
Although countries like Turkey, Russia, and China have indicated they will go ahead with their oil trade with Iran, the European Union will probably accede in a large measure, given the exposure of their companies to the US banking system.
Sources said this time around the entire 100 per cent of Iranian oil import bill can be paid in rupees.
The best value zone for the November WTI crude oil market is $72.35 to $71.27.