4th Round of Oil Sale on IRENEX Next Week

EghtesadOnline: The Iranian National Oil Company announced in a notice on Monday that the fourth round of crude oil sale will be launched on Iran Energy Exchange on February 4.

News ID: ۷۴۶۵۷۹

29 January 2019

According to the notice, published on the NIOC’s website, the proposed base price is set at $56.24 per barrel and, as in the previous stage, the commodity will be offered in cargos of 35,000 barrels. Each buyer is required to buy a minimum of one cargo and other conditions will be the same as the previous round.

The third round of crude offer in the energy market ended without any trade last week. The trading procedure in this round underwent some procedural change which is put into effect mainly to facilitate the purchasing conditions for buyers.

It involved settling payments entirely in rials as well as foreign currencies. Exchange rates are calculated based on those reported by SANA (a system operating under the supervision of central bank that records average exchange rates from across the exchange bureaux), Financial Tribune reported.

This is while the payments in the first and second rounds had to be settled 20% in rials and the rest in foreign currencies, namely USD, euro and dirham.

The Supreme Council of Economic Coordination – a special body comprising heads of the three branches government – agreed in December to the total settlement in rials for crude oil sales via IRENEX.

Also, the settlement period in the third round was extended up to 90 days from 60 in the previous rounds. Additionally, the pre-payment required for customers to enter the market was reduced from 10% in the previous rounds to 6% in the third, an incentive that was expected to attract buyers.

In the first round of crude sales in October, one million barrels were offered in the market but only 280,000 barrels sold at $74.85 a barrel. In the second round in November sales increased to 700,000 barrels at $64.97 per barrel.

The country had made several attempts in the past to offer crude oil on the stock market in the past to involve the private sector and international buyers in the state-controlled oil sector -- the lifeblood of its economy.

The new measure has been touted by senior officials in Tehran as an effective way to frustrate US ploys to "reduce Iran's oil export to zero."

Oil Minister Bijan Zanganeh said on Wednesday that Iran has discovered oil in the southwestern Abadan region for the first time. The oil was found at a depth of 3,570 meters in an exploratory well and is “very light and sweet”, Zanganeh said.

The United States withdrew from a nuclear deal with Iran last year and imposed sanctions to choke Iran’s oil and banking industries, while temporarily allowing eight customers to keep buying crude from the Islamic Republic.