Crude oil trading at Kish Exchange failed because of high price and lack of discounts

Crude oil trading at Kish Exchange failed because of high price and lack of discounts

Azerbaijan, Baku, July 16 /Trend T.Konyayeva/

Trading at the Kish International Oil Exchange in the first day of its operation has failed because of the higher price as compared with the international value and the refusal of Iran's Oil Ministry to offer discounts to potential buyers, U.S. Northeastern University Professor Kamran Dadkhah believes.

"The reason that the deal didn't go through was that the price demanded by the Oil Ministry was higher than the international price. Furthermore, potential buyers pointed out that due to international sanctions and restrictions on transfer of money for Iranian enterprises, they should receive further discount but the Oil Ministry did not agree," Dadkhah wrote to Trend in an email.

The Kish International Oil Exchange was officially inaugurated on July 13, with 600,000 barrels of heavy crude oil being offered for sale at the base price of $112.60 per barrel. However, no dealer was ready to pay above $109.65, so no transactions were carried out.

During the inauguration ceremony of the Kish Exchange, President of Securities and Exchange Organization of Iran Saleh Abadi noted that in the near future the regional price of oil will be set at the Kish exchange.

According to Dadkhah, Abadi's notice is "a pipe dream".

"In order for the exchange to have any serious function, Iran has to be free of international sanctions particularly financial restrictions," he wrote.

Iran's refusal to abandon its nuclear activities has resulted in resolutions adopted by the UN Security Council in 2010, as well as additional unilateral sanctions approved by the U.S. Congress and the foreign ministers of all EU countries, which were primarily directed against the banking, financial and energy sectors of Iran.

Restrictions imposed by the EU include the ban on the sale of equipment, technologies and services to Iran's energy sector which is a major source of revenue for the Iranian regime; the same measure refers to the refining industry.

Further, Dadkhah believes, Iran has to have amicable relationship with other oil producers of the region such as Saudi Arabia, Kuwait, and Iraq.

"Even if all these conditions are met, still price of oil will be determined in established markets of New York and London not in Kish. But for Mr. Ahmadinejad and the Iranian government, appearances and propaganda are everything," he told.

According to Dadkhah, the exchange also will provide the opportunities for cronies of the Iranian power elite and friendly companies to act as middlemen and reap substantial profits.

"As was illustrated in the first day of trading, there is no way that anyone would pay for oil more than the international price," he told. "But as buyers' arguments showed, there are many reasons to ask for substantial discounts from the Oil Ministry. Furthermore, there are many ways to refund the buyers under different pretexts and under the table."

Dadkhah noted that Iranians would have been better off if the government tackled real economic problems including inflation, unemployment, and international sanctions.

"It is likely that in the future the government intervenes and makes the sales possible.

"Nevertheless, the whole enterprise of the Kish Oil Exchange is a sham. The government has two objectives: propaganda, and finding an outlet to reward friends and cronies," he concluded.

The Iranian Oil Exchange establishing euro and dirham (ADE) based pricing of oil opened on February 2008. Iran inaugurated the new phase of oil exchange with vast opportunities for foreign companies in 2010.

The Kish Exchange has traded oil-derived products until Iran included cruel oil and fuel oil on OIB product selling list.

Iran began offering fuel oil contracts on the oil exchange in April.

On June 1, Iran commenced the first oil exchange when by offering 35,000 tons of oil liquids, whilst the trading session failed due to price disagreements. The Bandar Abbas Oil Refining Company (BAORCO) put 35,000 tons of oil liquids at the price of $623.35 per ton. The customer's price offer from $610 to $622.85 was rejected.

Later, on June 8, despite having two demanding customers Iran's second furnace fuel oil cargo at $644.58 per ton failed to trade at Kish Island.

Two customers expressed readiness to buy 70,000 ton fuel oil from Bandar Abbas oil refinery. However it did not sell as one of the applicants offered $640.58 while the other costumer offered $636.

On June 14, Iran's third attempt to sell furnace fuel oil cargo was a success on international oil exchange. The Iranian oil exchange could sell oil batch in the third attempt thanks to agreement of a seller - BAORCO - to reduce prices.

Iranian, Spanish FMs exchange views on economic, trade coop.
Iranian, Spanish FMs exchange views on economic, trade coop.
Some 300 applicants register for Presidential elections in İran
Some 300 applicants register for Presidential elections in İran
Iran’s FM meets with Spanish counterpart
Iran’s FM meets with Spanish counterpart
Loading Bars
Azerbaijan's 4M2021 inflation rate disclosed
Britain to treble tree planting by 2024 to fight climate change
Switzerland sees potential in strengthening co-op with Azerbaijan in energy field
Argentina's COVID-19 death toll exceeds 70,000
Israel hits Hamas politburo leader’s house in Gaza
Turkey registers 11,472 new COVID-19 cases
SpaceX launches rocket with 54 satellites
Brazil reports 2,087 more COVID-19 deaths
France hits target of 20 mln first COVID-19 vaccinations: PM
Air raid sirens go off, explosions heard in Tel Aviv
9 missing in Indonesia's boat accident
IS claims responsibility for Kabul mosque attack
More than 677,000 COVID-19 infections detected worldwide over past 24 hours
Chamber of Commerce hopes Iran's trade to improve as COVID-19 spread declines
Iran to hold conference on electrical engineering
Weekly review of Azerbaijani oil market
Uzbekistan to restore air communication with Saudi Arabia
Georgian Parliament Speaker to pay official visit to Brussels
Britain reports 2,027 new COVID-19 cases, seven deaths
Emergency session of OIC to be held on May 16 at Turkey’s initiative, Ankara says
Turkey aims to create electric vehicle market
Uzbekistan imported more than 200 million liters of gasoline in Jan-Apr 2021
Iranian, Spanish FMs exchange views on economic, trade coop.
Kazakh, Polish, Ukrainian and Arabian airlines to resume flights to Batumi
All international airlines halt air service with Israel
IDF confirms its strike on Gaza building after advance warning to civilians
Azerbaijani and Tajik FMs discuss situation on Azerbaijani-Armenian border
Fitch Ratings forecasts inflation rate in Azerbaijan for 2021-22
Nordwind launches direct flights from St. Petersburg to Baku from May 18
US ambassador to Azerbaijan, USAID director meet with Azerbaijani MP
Shooting occurred on border with Iran, two Azerbaijani border guards were killed
Suez Canal starts dredging work to extend double lane
At least 2,300 missiles fired at Israel from Gaza Strip since May 10
Africa's COVID-19 cases pass 4.67 mln: Africa CDC
Turkish Airlines resumes flights to Azerbaijan's Ganja (PHOTO)
Azerbaijan shares data on number of vaccinated citizens for May 15
France's import value of Turkish cement rises
Azerbaijan confirms 377 more COVID-19 cases, 1,318 recoveries
Azerbaijan's government budget deficit to narrow in 2021-2022 - Fitch Ratings
Azerbaijan's olive oil company entering Russian market
Turkey's revenues from exporting electrical goods to France increase
Fitch Ratings anticipates Azerbaijan's GDP growth in 2021
Value of Georgia's import of Turkish clothes grows
China's import value of Turkish electrical goods up in 4M2021
Turkey unveils number of ships docking at Tuzla port in 1Q2021
French import of grains from Turkey rises in value
Fitch predicts growth in foreign direct investments in Azerbaijan
U.S. requires inspections for wire failure on Boeing 737 Classic planes
Azerbaijani oil prices rebound
Iran hoping to overcome 4-th peak of COVID-19
Iran worried about blackouts due to cryptocurrency mining at homes
Georgia increases exports of beer
Kazakhstan's import value of Turkish electrical goods disclosed
Kazakhstan’s postal operator to engage repair services via tender
Kazakh energy company opens tender for buying isolators
Uzbekistan's import value of Turkish electrical goods notably up
Walmart says fully vaccinated employees can go without masks starting Tuesday
Azerbaijani president, first lady visit secondary school No 1 and Saint Elisæus Jotaari Church in Nij settlement, Gabala (PHOTO)
Georgia reports 1,576 new cases of COVID-19
Iran hopes to start exporting gas if Vienna talks are successful
Iran's 4M2021 import of Turkish grains doubles in value
Turkey reveals 1Q2021 volume of cargo shipment via Trabzon port
Value of Turkish cement export to Germany rises
EBRD to back development renewable energy projects in Georgia
Azerbaijani president, first lady attend opening ceremony of Gabala Railway Station and Laki station - Gabala single-track railway (PHOTO)
Azerbaijani president, first lady attend opening ceremony of new bridge over Bum River, road to Bum settlement after renovation (PHOTO)
Azerbaijani president, first lady visit Albanian Church of Blessed Virgin Mary in Nij settlement, Gabala (PHOTO)
Azerbaijani president, first lady arrive in Gabala district (PHOTO)
Iran inaugurating more projects in Chabahar port
Romania’s Romgaz lowers natural gas output q-o-q
No provocative actions against Russian peacekeepers noted in Karabakh - MoD
Casualties due to landmines in Azerbaijani liberated territories addressed at online conference
India: Modi releases 8th instalment of PM-KISAN benefits
Fitch revises outlook on Azerbaijan's IDR
Armed forces spearhead India’s Covid battle
UN Secretary-General counts on cooperation with Russia in supporting peace and stability
Romgaz’s investments turn out to be 39% less than planned
Spain logged hottest year on record in 2020
Romgaz sees over 7% decrease in Q1 2021 revenues
Khari Bulbul festival in Azerbaijan's Shusha became message to the world - MP
TAP AG joins other partners to submit White Dragon for IPCEI status
UAE urges Mideast ceasefire, offers condolences to all victims
Vienna Energy Research Group talks Iran's capacity in oil production, int'l oil sales
Iran to invest in Afghanistan's infrastructure projects
Petrochemical revenues to become less volatile, says McKinsey & Co.
Tickets for UEFA EURO 2020 matches in Baku up on sale (PHOTO)
Georgia’s subsistence minimum up
Azerbaijan to have two routes to Turkey within BTK corridor
Europe has right conditions for "safe reopening" of tourism in summer - EU Commissioner
Georgian-Lithuanian co-op facilitates freight transport between China, Europe - Ministry
Jan.-Apr. 2021: Georgian wine export up 15%
Demand for domestic tourism on the rise in Kazakhstan
Some 300 applicants register for Presidential elections in İran
Turkey’s 87 tech zones exports reach $5.8 billion
China's probe lands on Mars
Kazakhstan keen to cooperate with Spain in water resources management
Number of active U.S. drilling rigs increases this week
Cuba reports record number of daily COVID-19 cases
Japanese lawyer implores Tokyo to cancel Olympics, 350,000 sign petition
Romania to ease COVID-19 restrictions from Saturday
All news