The Energy Information Administration has revealed the US crude stock fell by 12.6 million barrels last week – far above already-pessimistic expectations of 4.5 million barrels.
Meanwhile gasoline stocks also dropped, albeit by 694,000 barrels – less than the prediction of 750,000 barrels.
Oil prices have now dropped again, down 2.3 percent to $76.98 per barrel – just the latest fluctuation after weeks of chaos.
It comes as Donald Trump’s top diplomat hinted the US could grant waivers to some countries allowing them to continue importing Iranian crude oil even after sanctions are reimposed in November.
This could help stabilises prices and reassure the markets as Mr Trump’s trade war also threatens to impact the world economy.
Secretary of State Mike Pompeo said today: “There will be a handful of countries that come to the United States and ask for relief. We’ll consider it.”
In a separate briefing for reporters travelling with the secretary, a senior State Department official elaborated on recent discussions between U.S. diplomats and their Saudi counterparts.
“In our meeting with the Saudi energy minister, we discussed maintaining a well-supplied oil market to guard against volatility,” the unnamed official told reporters in a background briefing.
“We coordinated – we discussed U.S. oil sanctions to deny Iran revenue to finance terrorism. We talked about minimizing market disruptions and helping partners find alternatives to Iranian supply of oil,” the official added.
Press briefings given earlier this month suggested that the administration’s goal was to reduce Iran’s oil exports to zero, possibly with effect from November.
“Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales,” a senior State Department official told reporters at a press briefing earlier this month.
“We are working to minimize disruptions to the global market, but we are confident that there is sufficient global spare oil production capacity,” Brian Hook, the director of policy planning, said on July 2.
“We are not looking to grant licences or waivers broadly on the re-imposition of sanctions, because we believe pressure is critical to achieve our national security objectives.”