Iran's Oil Bourse Fades American Capitalist Glow.
Many of these concepts originate in countries not enamored with Washington's influence, perhaps none so more than the Islamic Republic of Iran, which has been foiling more than three decades of US-led sanctions.
Now Iran is working on a program, that could help undermine the dollar's preeminence as the world's reserve currency more effectively.
Iran's major blow to the United States' currency is an Oil Bourse on Kish Island in the Persian Gulf, which has now begun selling high-grade Iranian crude oil.
Mohsen Ghamsari, Deputy Managing Director for International Affairs of the Iranian National Oil Company explained about the exchange's initial capabilities and said: "the commodity stock exchange has been pursuing a mechanism for offering crude oil on the stock exchange for a long time, and it has taken the preliminary steps, to the extent possible. "
Ghamsari went on to say that considering the existing banking problems, foreign customers are not expected to be taking part in the first phase of offering crude oil on the stock exchange, and this will be done on a trial basis.
He said Bahregan Heavy; a high quality, low sulfur crude oil with less sourness will be offered on the stock exchange for the first time. In the first phase, a 600,000 barrel shipment will be offered, he added.
Given that the world currently consumes roughly 83 million barrels of crude oil each day, the initial oil offerings at the Iranian stock exchange is going to represent an attempt by a significant oil producer to divert revenue streams from New York Mercantile Exchange, the world's largest physical commodity futures exchange, which handles West Texas Intermediate benchmark futures, and London's Intercontinental Exchange, which deals in North Sea Brent. All trades are in dollars, effectively giving the US currency a monopoly.
The Kish Exchange dates back to February 2008, when instead of Tehran, Kish was chosen because it had designated as a free trade zone. The Exchange was set up to trade contracts in euros, Iranian rials and a basket of other currencies other than dollars. The previous year, Iran had requested that its petroleum customers pay in non-dollar currencies.
So while the US Congress remains tone-deaf to the recession's effect on American jobs and the economy, others have taken careful note. Therefor a combination of the world's valid currencies should become a basis for oil transactions, or others (OPEC member countries in particular) could determine a new currency for oil transactions.
China, the world's largest buyer of Iranian crude oil, has renewed its annual import pacts for 2011. In 2010 Iran supplied about 12 percent of China's total crude imports. According to the latest report of the China Customs Organization, Iran's total oil exports to China stood at 8.549 million tons between January and April 2011, up 32 percent compared with the same period last year. Iran is currently China's third largest supplier of crude oil, providing China with nearly one million barrels per day.
China simply ignores Washington's squeals about sanctions and such heavy-duty customers are what it would take for Iran's new exchange to survive and flourish.
China's Ambassador to Tehran Yu Hung Yang, addressing the Iran-China trade conference in Tehran said the value of the two countries' trade exchanges surged 55 percent during the first four months of 2011 over the same period a year ago to $13.28 billion and further predicted that the figure would surpass $40 billion by the end of the year.
Iran is preparing to take away a little of the capitalist glow from New York and London. If the Chinese decide to start paying for their Iranian purchases strictly in yuan, expect the trickle away from the dollar in energy pricing to become a stampede.
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|Publication:||Moj News Agency (Tehran, Iran)|
|Date:||Jul 26, 2011|
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