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.

Need to restore transport route to Azerbaijan’s Nakhchivan Autonomous Republic - obvious - Russian expert
Need to restore transport route to Azerbaijan’s Nakhchivan Autonomous Republic - obvious - Russian expert
Azerbaijan’s export of plastics doubles
Azerbaijan’s export of plastics doubles
Dostlug field to allow Turkmenistan to export natural gas to Western countries
Dostlug field to allow Turkmenistan to export natural gas to Western countries
Loading Bars
Azerbaijani first VP shares footages of fireworks in Shusha on her official Instagram page (VIDEO)
President Ilham Aliyev lays foundation stone for school No1 in Shusha
President Ilham Aliyev views work done at Shusha Art Gallery
Azerbaijani president, first lady view administrative building for Special representation in Shusha
Azerbaijani president, first lady view building for Shusha Creative Center
President Ilham Aliyev inspects Khan gizi Natavan’s palace
President Aliyev views conditions created at block and cottages under “Khari Bulbul” hotel
Azerbaijani president, first lady inaugurate “Khari Bulbul” hotel after renovation (PHOTO)
Holiday prayers will be held in Yukhari Govharagha mosque tomorrow - President of Azerbaijan
I never seen city like Shusha elsewhere in world. There probably isn’t one - President of Azerbaijan
For all these years, we lived with one goal – to liberate our lands, says Azerbaijani president
Azerbaijani culture, prominent representatives of Azerbaijani culture returned to Shusha today - President Aliyev
Next year we will celebrate 270th anniversary of Shusha - President Aliyev
44-day war is our glorious history - Azerbaijani president
“Kharibulbul” festival will now be held in Shusha every year - President Aliyev
After long break, “Kharibulbul” festival being held in Jidir Duzu, we have been looking forward to this day for 30 years - President Aliyev
Montenegro eases COVID-19 restrictive measures
Senior Hamas commander killed as Israel strikes Gaza, Palestinians fire rockets
Anti-Trump Cheney removed from House Republican leadership
Transport Ministry shares data on ships received in southern Turkish port in 1Q2021
Ministry discloses volume of cargo from Israel handled by Turkish ports
Volume of cargo from Greece handled by Turkish ports revealed
Wix reports higher Q1 revenue, lower profit
BMW plans limited series hydrogen fuel cell SUV in 2022
Georgian economy expected to grow
Iran’s Bahar Azadi gold coin price continues to increase
More data needed before COVID-19 vaccine booster decisions - EU regulators
Azerbaijan shares data on number of vaccinated citizens for May 12
European Court of Human Rights to examine Convention violations by Armenia against Azerbaijan
Oil production volumes down in Kazakhstan
Bayati Shiraz mugham performed on Jidir Plain in Azerbaijan’s Shusha (VIDEO)
Deputy Governor of Iran’s Ilam Province talks about energy sector
Construction of Georgian Namakhvani HPP to be suspended
WB supports Georgian MSMEs and promotes digitalization of country’s economy
Azerbaijan confirms 558 more COVID-19 cases, 1,454 recoveries
Collection of notes of works by Azerbaijani composers prepared by Heydar Aliyev Foundation presented at Shusha Music Festival (PHOTO/VIDEO)
Iran discloses volume of bony fish caught in Caspian Sea
Kazakhstan's oil output below plan for 4M2021
Need to restore transport route to Azerbaijan’s Nakhchivan Autonomous Republic - obvious - Russian expert
Activities in Iran’s Bushehr Province increase
Turkey’s export of clothes to Azerbaijan up from January through April 2021
Turkmenistan, China to consider opportunities for developing co-o in number of areas
Iran to manufacture local equipment in drilling sector
Fuel costs in Georgia increase
I was thinking about architecture of new mosque in Shusha for almost few months - President Aliyev
There used to be 17 mosques in Shusha, hated enemy destroyed all of them - President Aliyev
Georgia reports 1,409 new cases of coronavirus for May 12
We returned to Shusha and we returned forever - President Aliyev
Business activity index slows down in Kazakhstan
Geostat reveals TOP-5 suppliers of oil in Georgia
Iran’s PMO declares data of cargo transportation in Bandar Lengeh Port
Turkey’s export of steel to Kazakhstan decreases
Iran reveals COVID-19 data for May 12
Azerbaijani president, first lady attend opening of “Kharibulbul” festival in Shusha (PHOTO)
Trade ministry discloses volume of electrical goods exported by Turkey to Iran
Turkey’s export of cement to Turkmenistan down
President Ilham Aliyev visits restored “Khan gizi” spring in Shusha (PHOTO)
President Ilham Aliyev lays foundation stone for new mosque in Shusha (PHOTO)
President Ilham Aliyev and First Lady Mehriban Aliyeva attend inauguration of 110/35/10 kV Shusha substation (PHOTO)
French Development Agency to support economic dev't of Kazakhstan
Azerbaijan holds Kharibulbul music festival (VIDEO)
UAE to help Sudan secure all petroleum needs through flexible agreement
Similarweb completes NYSE IPO, at $1.6b valuation
Kazakhstan observes slowing down of food inflation
Azerbaijan’s export of plastics doubles
Turkey sees increase in export of cement to Iran
Russia reports over 8,200 daily COVID-19 cases
Norway will not use AstraZeneca COVID-19 vaccine
Turnaround timeframe at Kazakhstan's Kashagan field unveiled
Turkish airline companies to launch direct flights to Kazakhstan
Dostlug field to allow Turkmenistan to export natural gas to Western countries
Kazakhstan-Latvia trade plummets y-o-y
Refining volume remains practically unchanged in Kazakhstan
Gazelli Group standing beside Azerbaijani nation both in hard and good times (PHOTO)
Kazakhstan’s largest logistics terminal operator to buy fuel via tender
Iran plans to increase exports of non-oil products – Deputy Minister
Turkmenistan, Azerbaijan's SOCAR have huge potential for developing co-op
Kazakhstan boosts goods import from Afghanistan
Azerbaijani PM expresses condolences to Russian counterpart
Volume of loaded, unloaded cargo in Iran’s Shahid Bahonar port up
EIA increases forecast for oil extraction in Kazakhstan
Iran's trade turnover with EAEU member states announced
Baku to host Aerobic Gymnastics World Age Group Competitions for first time (VIDEO)
Kazakh KazMunayGas decreases oil transportation volumes y-o-y
Ex-president of Iran announces his candidacy for president
Oil climbs on solid demand outlook as market awaits fresh cues
Minister discloses Kazakhstan's GDP growth rate from January through April 2021
Trade turnover increased in Turkmenistan
Iranian Foreign Minister's begins visit to Middle East, Europe
Number of countries purchase products from Turkmenistan on exchange
Latest prices for Azerbaijani oil disclosed
EIB to invest in solar plant construction in Uzbekistan
Israeli energy pipeline hit in Gaza rocket attack
Turkmenistan exceeds plan for energy production
Wind market to be 30% weaker in 2021 y-o-y
California governor announces $12 billion homeless plan
First Vice-President Mehriban Aliyeva shared footages from her next visit to Karabakh with President Ilham Aliyev on her Instagram page (VIDEO)
Kazakh-Turkish JV launches tender to buy petrol
Iranian currency rates for May 12
Azerbaijan issues data on compulsory non-life insurance for March 2021
All news