Editor’s Note:

Story highlights

Meeting between Saudi king, decision to implement Iran came on the same day

It's only a coincidence, a senior administration official says

The new sanctions will place much of Iran's oil exports off limits

Saudi Arabia may have to take up much of the slack

Washington CNN  — 

President Barack Obama’s Friday announcement that the U.S. will implement sanctions that could significantly cut sales of Iranian oil was not tied to a meeting the same day between Secretary of State Hillary Clinton and Saudi King Abdullah, a senior administration official told CNN.

Numerous U.S. officials have traveled recently to Saudi Arabia, the world’s biggest oil exporter, to discuss the country’s ability to increase exports enough to make up for the loss of Iranian oil under the sanctions, the official said. Analysts say nearly a million barrels a day could ultimately be lost from Iran.

But that the meeting and announcement came on the same day was “coincidental,” the official said.

Obama’s decision came after he concluded that world oil markets can be adequately supplied even with a significant portion of Iran’s 2.2 million barrels a day declared off limits.

“There is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions,” Obama said Friday in a statement.

The world’s oil producers can increase output by about 1.5 million to 2 million barrels of oil a day, mostly from Saudi Arabia, according to analysts. If Saudi Arabia has to increase its production to cover Iran’s oil, it would leave a razor-thin margin to cover for any other disruptions.

The sanctions, announced late last year, are aimed at getting Iran to give up its nuclear program. Iran maintains the program is peaceful in nature, but international inspectors have expressed concern about possible military uses.

The sanctions make banks, companies and governments that do business with Iran’s central bank subject to U.S. sanctions.

They are slated to take full effect June 28, and a full embargo of Iranian oil from the European Union is set for July 1.

Some countries have already begun reducing imports from Iran, whose exports have dropped by about 300,000 barrels a day over the last few months, according to analysts.

Analysts cite that disruption, along with the potential for a full-blown conflict with Iran, as the main reason behind a 20% spike in oil and gasoline prices this year.

CNNMoney’s Steve Hargreaves contributed to this report.