7th Oil Offer on IRENEX Today

EghtesadOnline: The seventh crude oil auction on Iran Energy Exchange will kick off on Monday noon in what would be the last attempt by the National Iranian Oil Company to sell crude oil on the stock market in the outgoing fiscal year that ends on Mach 20.

News ID: ۷۴۶۹۵۳

18 March 2019

It remains to be seen if buyers will come forward this time around as the country faces growing US restrictions on its oil exports.

In the sixth oil offer on IRENEX earlier this month, NIOC set the base price at $59.63 per barrel and offered the commodity in cargos of 35,000 barrels each. The trading session, however, ended flat.

NIOC also didn’t find buyers for the oil in the third and fourth rounds despite easing the purchasing conditions, Financial Tribune reported.

Most trading terms for the latest round remains the same with the minimum purchasing amount being 35,000 barrels and the maximum one million barrels.

The base price for competition has been set at $61.73 per barrel. Among changes made to the trading terms for Monday's offer is the possibility for traders to pay the 6% mandatory pre-payment in foreign currency. In the past the advance payment was only in rial.

Another facility is that traders can receive the cargo by land from Tabriz Refinery instead of the huge Kharg Island terminal in the Persian Gulf. Buyers can receive their cargo four months after the completion of the deal. In the last offer payment settlement period was extended from 60 to 90 days.

As in the past, payments can be settled both in rials and foreign currency and the exchange rate is based on open market rates reported by SANA website.

Offering crude oil on the stock market is part of efforts to involve the private sector and international companies in the oil industry, which is almost completely under government control.

Role of the private sector in the oil sector has gained currency, particularly after the new US sanctions which, among other things, hit the oil industry.

As part of the next fiscal (March 2019-20) budget, lawmakers passed a proposal to oblige the Oil Ministry to offer on a monthly basis 2 million barrels of light crude on IRENEX.