The White House will have to weigh costs and benefits carefully before tightening sanctions on Iran and Venezuela further–and decide whether the economic price is worth the diplomatic gains.

If the White House toughens sanctions on Iran and Venezuela significantly (and the next decision on Iran sanctions is scheduled for the first week of May) any decision is likely to be tied to production increases by Saudi Arabia.

The White House is likely to agree to scale back Iran sanctions waivers if, and only if, Saudi Arabia commits to replacing the lost barrels at least one-for-one to leave the global production-consumption balance unchanged.

High-level discussions between the two countries over sanctions and production policy are likely to have begun already.

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