NIOC selling oil at IRENEX while US tightens sanctions

TEHRAN, May 03 (MNA) – National Iranian Oil Company sold 70,000 barrels of heavy crude oil at Iran Energy Exchange (IRENEX) for the first time on Tuesday.

Offering heavy crude at IRENEX came after NIOC offered light crude at this stock market in eight rounds.

Like offering light oil, one billion barrels of heavy oil was offered at IRENEX with 35,000 barrels as the least amount of sales.

The base price for heavy crude was planned to be $63.51 but the product was finally offered at $60.68.

Successful sales of heavy crude at Iran’s stock market happened while the US is tightening pressure on the country’s oil industry as the Trump administration announced last month that it would end waivers on crude purchase granted to Iran's primary oil buyers in a bid to push Tehran oil sales to zero.

Since the US’s withdrew from Iran’s nuclear pact in May 2018, vowing to drive Iran's oil exports down to zero, the Islamic Republic has been taking various measures to counter the US actions and to keep its oil exports levels as high as possible.

One of the main strategies that Iran chose to execute to help its oil exports afloat has been trying new ways to diversify the mechanism of oil sales, one of which is offering oil at the country’s stock market.

Iranian Oil Minister Bijan Namdar Zanganeh has said that NIOC will offer crude oil at IRENEX every week.

The minister said that it may take some time for selling crude oil at IRENEX to be common and regular, but the Oil Ministry will offer the product at this market every week.

NIOC offered crude oil at IRENEX first on October 28, 2018, just few days before new US sanctions on Iran’s petroleum sector took effect (November 4). In the first round, NIOC could sell some 280,000 barrels of crude oil at $74.85 per barrel. With the daily supply amount of one million barrels, the market wrapped up by selling eight 35,000-barrel-cargos of oil on the day.

Now, offering heavy crude oil at IRENEX can open a new chapter for the exports of Iranian oil as this type of crude is of high significance both technically and commercially, because it accounts for a huge amount of production in the refineries and many refineries throughout the world specially in the South Asian region are willing to use this type which has of course lower price compared to the light oil.

Another achievement for stock market

While sales of heavy crude at the IRENEX is some good news for the exports of Iranian oil, it also highlights existence of infrastructure at the country’s stock market for trade of different types of commodities.

Offering this product at the stock market in the current Iranian calendar year (started on March 21) is considered another achievement added to some noticeable successful measures of this market in the past year as besides offering light crude oil at IRENEX for the first time it launched some new financial instruments in different markets.

For example, Tehran Stock Exchange (TSE) officially launched “futures” in mid-December 2018 for more risk management and Iran Mercantile Exchange (IME) launched “option” in early March 2019 in an approach to diversify financing methods for agricultural products, while the number and worth of trades at Iran’s over-the-counter (OTC) market, known also as Iran Fara Bourse (IFB), increased 89 percent and 71 percent, respectively, in the past year compared to its preceding year and IFX, the main index of (IFB), touched a new record high, gaining more than 100% to stand at 2,258 points on March 19, 2019.

Meanwhile, the value of trades at IME rose 52 percent in the past calendar year from its previous year.

Strong support by government

Sales of crude oil, both light and heavy types, at the IRENEX is being strongly supported by the Iranian government and NIOC is facilitating the condition for the buyers more in each round of the offering.

In this due, Export Guarantee Fund of Iran (EGFI) is going to issue bank guarantees for the customers who purchase the oil offered at IRENEX, managing director of the fund announced on Sunday.

“We are in talks with the oil ministry in this regard.” Afrouz Bahrami said.

She noted that EGFI has received some requests for issuing bank guarantees from oil customers interested in purchasing the oil offered at IRENEX.

According to the official, EGFI covers the commercial and political risks of exports, including both non-oil and oil exports and since the oil which is offered at the IRENEX is also considered as part of the country’s oil exports, therefore it is possible for EGFI to issue banking guarantees for such cargoes.

Such supports and also offered incentives encourage the applicants of crude oil at the energy exchange and also pave the way for the country’s oil exports under the sanctions.

Reported by: Mahnaz Abdi


News Code 144797


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