The Iranian Oil Bourse (), International Oil Bourse, Iran Petroleum Exchange Kish Exchange or Oil Bourse in Kish (IOB; the official English language name is unclear) also known as Iran Crude Oil Exchange, is a commodity exchange, which opened its first phase on 17 February 2008. It was created in 2005. The history of Iran Mercantile Exchange and its links with the "international trading floor of crude oil and petrochemical products in the Kish Island" (IOB) have been published. The IOB is intended as an

oil bourse An oil bourse is a commodities exchange where energy commodities such as crude oil and natural gas are traded. Examples include the New York Mercantile Exchange and the Intercontinental Exchange. In 2005, an Iranian oil bourse was announced and pro ...

for

petroleum Petroleum, also known as crude oil or simply oil, is a naturally occurring, yellowish-black liquid chemical mixture found in geological formations, consisting mainly of hydrocarbons. The term ''petroleum'' refers both to naturally occurring un ...

petrochemical Petrochemicals (sometimes abbreviated as petchems) are the chemical products obtained from petroleum by refining. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable s ...

s and

gas Gas is a state of matter that has neither a fixed volume nor a fixed shape and is a compressible fluid. A ''pure gas'' is made up of individual atoms (e.g. a noble gas like neon) or molecules of either a single type of atom ( elements such as ...

in various currencies other than the

United States dollar The United States dollar (Currency symbol, symbol: Dollar sign, $; ISO 4217, currency code: USD) is the official currency of the United States and International use of the U.S. dollar, several other countries. The Coinage Act of 1792 introdu ...

, primarily the

euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, currency code: EUR) is the official currency of 20 of the Member state of the European Union, member states of the European Union. This group of states is officially known as the ...

and

Iranian rial The rial (; symbol: ; abbreviation: Rl (singular) and Rls (plural) or IR in Latin; ISO code: IRR) is the official currency of Iran. It is subdivided into 100 dinars, but due to the rial's low purchasing power the dinar is not practically used. ...

and a basket of other major (non-US) currencies. The geographical location is at the

Persian Gulf The Persian Gulf, sometimes called the Arabian Gulf, is a Mediterranean seas, mediterranean sea in West Asia. The body of water is an extension of the Arabian Sea and the larger Indian Ocean located between Iran and the Arabian Peninsula.Un ...

island of

Kish Kish may refer to: Businesses and organisations * KISH, a radio station in Guam * Kish Air, an Iranian airline * Korean International School in Hanoi, Vietnam People * Kish (surname), including a list of people with the name * Kish, a former ...

which is designated by Iran as a

free trade zone A free-trade zone (FTZ) is a class of special economic zone. It is a geographic area where goods may be imported, stored, handled, manufactured, or reconfigured and re- exported under specific customs regulation and generally not subject t ...

.Economy
iran-daily.com During 2007, Iran asked its petroleum customers to pay in non US dollar currencies. By December 8, 2007, Iran reported to have converted all of its oil export payments to non-dollar currencies. The Kish Bourse was officially opened in a videoconference ceremony on 17 February 2008, despite last minute disruptions to the internet services to the Persian Gulf regions. Currently the Kish Bourse is only trading in oil-derived products, generally those used as feedstock for the plastics and pharmaceutical industries. However, officially published statements by Iranian oil minister Gholam-Hossein Nozari indicate that the second phase, to establish trading in crude oil directly, which has been suggested might one day perhaps create a "Caspian Crude" benchmark price analogous to

Brent Crude Brent Crude may refer to any or all of the components of the Brent Complex, a physically and financially traded oil market based around the North Sea of Northwest Europe; colloquially, Brent Crude usually refers to the price of the ICE (Intercon ...

or WTI will only be started after the Bourse has demonstrated a reasonable period of trouble-free running. Due to technical problems, the oil bourse never proceeded, and the plans were finally abandoned after a vote by the Iranian Parliament on 7 January 2020.

Background

The three current oil markers are all US dollar denominated:

North America North America is a continent in the Northern Hemisphere, Northern and Western Hemisphere, Western hemispheres. North America is bordered to the north by the Arctic Ocean, to the east by the Atlantic Ocean, to the southeast by South Ameri ...

West Texas Intermediate West Texas Intermediate (WTI) is a grade or mix of crude oil; the term is also used to refer to the spot price, the futures price, or assessed price for that oil. In colloquial usage, WTI usually refers to the WTI Crude Oil futures contract t ...

crude (WTI),

North Sea The North Sea lies between Great Britain, Denmark, Norway, Germany, the Netherlands, Belgium, and France. A sea on the European continental shelf, it connects to the Atlantic Ocean through the English Channel in the south and the Norwegian Se ...

, and the

UAE The United Arab Emirates (UAE), or simply the Emirates, is a country in West Asia, in the Middle East, at the eastern end of the Arabian Peninsula. It is a federal elective monarchy made up of seven emirates, with Abu Dhabi serving as i ...

Dubai Crude Dubai Crude is a medium sour crude oil extracted from Dubai. Dubai Crude is used as a price benchmark or oil marker because it is one of only a few Persian Gulf crude oils available immediately. There are two other main oil markers: Brent Cr ...

. The two major

s are the

New York Mercantile Exchange The New York Mercantile Exchange (NYMEX) is a commodity futures exchange owned and operated by CME Group of Chicago. NYMEX is located at One North End Avenue in Brookfield Place in the Battery Park City section of Manhattan, New York City. ...

(NYMEX) in

New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...

, and the

IntercontinentalExchange Intercontinental Exchange, Inc. (ICE) is an American multinational financial services company formed in 2000 that operates global financial exchanges and clearing houses and provides mortgage technology, data and listing services. Listed on the ...

(ICE) in

London London is the Capital city, capital and List of urban areas in the United Kingdom, largest city of both England and the United Kingdom, with a population of in . London metropolitan area, Its wider metropolitan area is the largest in Wester ...

and

Atlanta Atlanta ( ) is the List of capitals in the United States, capital and List of municipalities in Georgia (U.S. state), most populous city in the U.S. state of Georgia (U.S. state), Georgia. It is the county seat, seat of Fulton County, Georg ...

. As the Oil Bourse in Kish is developed, the plan is to establish a Petrobourse denominated by the

, the

and other major currencies.

Iran Iran, officially the Islamic Republic of Iran (IRI) and also known as Persia, is a country in West Asia. It borders Iraq to the west, Turkey, Azerbaijan, and Armenia to the northwest, the Caspian Sea to the north, Turkmenistan to the nort ...

sits on some of the largest oil and gas reserves in the world.

Operations

At the time of the Oil Bourse's opening on Kish, the Director of the Kish Stock Exchange, Hossein Allahdadi, said that there "are no limitations imposed on transactions by foreign shareholders at the Oil Bourse in Kish". As of 2009, the Oil Bourse was a

spot market The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market, in which delivery is due at a later date. In a spot market, s ...

for petrochemical products mainly, with plans to introduce

sharia Sharia, Sharī'ah, Shari'a, or Shariah () is a body of religious law that forms a part of the Islamic tradition based on Islamic holy books, scriptures of Islam, particularly the Quran, Qur'an and hadith. In Islamic terminology ''sharīʿah'' ...

-compliant

futures contracts In finance, a futures contract (sometimes called futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The item tr ...

for crude oil and petrochemicals in the future, during the second phase. Global standards for Islamic derivatives were set in 2010. The “Hedging Master Agreement” provides a structure under which institutions can trade derivatives such as profit-rate and

currency swap In finance, a currency swap (more typically termed a cross-currency swap, XCS) is an interest rate derivative (IRD). In particular it is a linear IRD, and one of the most liquid benchmark products spanning multiple currencies simultaneously. It ...

Timeline

2003 Iran's oil ministry decided to establish a domestic oil bourse. The Iranian oil bourse, first reported in 2005, initially had a widely publicised opening date of March 20, 2006. which is the Iranian New Year, Nauroz. According to an April 2005 report, the Tehran Stock Exchange (TSE), the Wimpole Consortium and a private staff fund for retired petroleum workers were to form a consortium developing the exchange. January 2006 The Wimpole Consortium referred to delays in the process due to the election to the presidency of

Mahmoud Ahmadinejad Mahmoud Ahmadinejad (born Mahmoud Sabbaghian on 28 October 1956) is an Iranian Iranian principlists, principlist and Iranian nationalism, nationalist politician who served as the sixth president of Iran from 2005 to 2013. He is currently a mem ...

and subsequent difficulty in appointing a new oil minister acceptable both to the president and parliament. February 2006 Wimpole consortium complained that their invoices which used to receive the trading license has not paid. March 2006 the Petroleum Minister of Iran, Kazem Vaziri Hamaneh, announced that due to "technical glitches", the Bourse launch was postponed, with no new date set. However, as of April 26 Iran had restarted its move to open the oil market, and Kazem announced the bourse was set to open the first week of May. May 2006 Minister of Economic Affairs and Finance Davoud Danesh-Jafari said the Oil Ministry has a two-month deadline for presenting the

Articles of Association In corporate governance, a company's articles of association (AoA, called articles of incorporation in some jurisdictions) is a document that, along with the memorandum of association (where applicable), forms the company's constitution. The ...

of the Iranian Oil Bourse. Danesh-Jafari said that the

had not yet been finalized as the legal tender of transactions in the oil bourse, and the final decision about that depends upon the Oil Ministry's proposed IOB Articles of Association. July 2006 a building has been purchased and the projected opening date was originally slated for September 2006. On September 15, Oil Minister Kazem Vaziri-Hamaneh stated that all preparatory requirements had been arranged for launching the oil stock market in the country. However, the launch had still not occurred. December 2006 Bloomberg cited two Iranian newspapers reporting Iran's Minister of Economy Davoud Danesh-Ja'fari Iran as wanting to cut US dollar based transactions to a minimum. March 2007 The

New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...

reported that China's state-run Zhuhai Zhenrong Trading, the biggest buyer of Iranian crude worldwide, began paying for its oil in euros late last year. Iranian officials have said for months that OPEC member's customers switched their payment currency away from the dollar as Tehran seeks to diversify its reserves, but news of the Zhenrong change is the first outside confirmation. Japan has also announced that it would be willing to switch to Yen from US Dollars. Iran's central banker announced in March 2007 that Iran had cut its holding of U.S.-dollar assets to around 20% of its foreign reserves in response to U.S. hostility. September 2007 Japan's Nippon Oil has agreed to buy Iranian oil using yen. December 2007 Iran stops accepting U.S. dollars for oil. January 2008 Iran's Finance Minister Davoud Danesh-Jafari told reporters that the bourse will be opened during the anniversary of the

Islamic Revolution The Iranian Revolution (, ), also known as the 1979 Revolution, or the Islamic Revolution of 1979 (, ) was a series of events that culminated in the overthrow of the Pahlavi dynasty in 1979. The revolution led to the replacement of the Im ...

(February 1–11). February 2008 On February 4, the

Iranian Iranian () may refer to: * Something of, from, or related to Iran ** Iranian diaspora, Iranians living outside Iran ** Iranian architecture, architecture of Iran and parts of the rest of West Asia ** Iranian cuisine, cooking traditions and practic ...

Cabinet approved the creation of the oil bourse in two stages - first a raw oil exchange and secondly an oil byproducts exchange. The Ministry of Finance and Economics, the Oil Ministry, the

Ministry of Foreign Affairs In many countries, the ministry of foreign affairs (abbreviated as MFA or MOFA) is the highest government department exclusively or primarily responsible for the state's foreign policy and relations, diplomacy, bilateral, and multilateral r ...

, and the

Central Bank of Iran The Central Bank of the Islamic Republic of Iran (CBI; ; SWIFT Code: BMJIIRTH), also known as ''Bank Markazi'', was established under the Iranian Banking and Monetary Act in 1960. It serves as the banker to the Iranian government and has the e ...

are required to create a workgroup to coordinate the project, and the Iran Commodities Bourse Company is given the task of carrying out the project. The communique from the Cabinet states that the " Ministry of Finance and Economics Affairs is required to take measures in making the petrochemical byproducts bourse operational by the end of February 2008." 31 December 2009 Orr Litchfield LLP the law firm who developed the contract agreement for the report sued two directors of Wimpole Ltd and recovered the unpaid their invoices from the directors of Wimpole Ltd personal assets.

Opening

February 17, 2008: The Iranian Oil Bourse was inaugurated in a video conference ceremony from the capital

Tehran Tehran (; , ''Tehrân'') is the capital and largest city of Iran. It is the capital of Tehran province, and the administrative center for Tehran County and its Central District (Tehran County), Central District. With a population of around 9. ...

. The first transaction of the IOB took place at 9:30 the following morning, when 2200

tonne The tonne ( or ; symbol: t) is a unit of mass equal to 1,000 kilograms. It is a non-SI unit accepted for use with SI. It is also referred to as a metric ton in the United States to distinguish it from the non-metric units of the s ...

s of low-density polyethylene (LD-PE), held in 100 tonne cases, were traded. November 2008: According to Chairman of Board of Directors for Iranian Oil Bourse Mehdi Karbasian ever since the launch of the first phase of the bourse, transactions worth over $1.5 billion have been made on different oil and petrochemical products. October 2009: IRNA reported that " National Petrochemical Company's Managing Director Adel Nejad-Salim said in the opening ceremony that all petrochemical products will be gradually offered on the market." In the first phase, only petrochemical products such as

polyethylene Polyethylene or polythene (abbreviated PE; IUPAC name polyethene or poly(methylene)) is the most commonly produced plastic. It is a polymer, primarily used for packaging (plastic bags, plastic films, geomembranes and containers including bott ...

and

methanol Methanol (also called methyl alcohol and wood spirit, amongst other names) is an organic chemical compound and the simplest aliphatic Alcohol (chemistry), alcohol, with the chemical formula (a methyl group linked to a hydroxyl group, often ab ...

were traded on a spot basasis and in

Iranian Rial The rial (; symbol: ; abbreviation: Rl (singular) and Rls (plural) or IR in Latin; ISO code: IRR) is the official currency of Iran. It is subdivided into 100 dinars, but due to the rial's low purchasing power the dinar is not practically used. ...

. November 2009: IME reported that "the international trading floor of crude oil and petrochemical products in the Kish Island was put into operation." early June 2011: Iran started fuel oil transaction in Kish Oil Bourse : 35,000 tons at 621.35 dollar per ton and payment was made through Euro or Dirham accounts overseas. July 2011: Third phase of Iran Crude Oil Exchange has been launched. A shipment of 600,000 barrels of heavy crude oil were offered at the Kish International Trading Floor on July 23, 2011, and were traded at US$112.65 per barrel. August 2011: A shipment of 500,000 barrels of heavy crude oil were offered at the Kish Commodity Exchange on 18 August 2011 and were traded at US$105.49 per barrel and received payments in euro and dirham. The crude consignment was traded without any discount or additional premium. March 20, 2012: The Iranian oil bourse will no longer trade oil in the

US dollar The United States dollar (symbol: $; currency code: USD) is the official currency of the United States and several other countries. The Coinage Act of 1792 introduced the U.S. dollar at par with the Spanish silver dollar, divided it int ...

but start trading oil in other currencies such as the

yen The is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar and the euro. It is also widely used as a third reserve currency after the US dollar and the euro. T ...

, yuan,

rupee Rupee (, ) is the common name for the currency, currencies of Indian rupee, India, Mauritian rupee, Mauritius, Nepalese rupee, Nepal, Pakistani rupee, Pakistan, Seychellois rupee, Seychelles, and Sri Lankan rupee, Sri Lanka, and of former cu ...

or a basket of currencies. January 7, 2020 The planned Iranian oil bourse was cancelled.

Petrochemical Exporting Countries Forum (PECF)

Iran proposed the creation of a Petrochemical Exporting Countries Forum.

2008 submarine cable disruption

It has been suggested that the

2008 submarine cable disruption The 2008 submarine cable disruption refers to three separate incidents of major damage to submarine optical communication cables around the world. The first incident caused damage involving up to five high-speed Internet submarine communications c ...

was connected with the launch of Iranian oil bourse and that the internet connection of Iran was being targeted to stop the launch of Iranian oil bourse.

Notes

References

External links

PetroTalk
Portal for petro related Articles, Discussion, Links and more
Iran oil bourse next week
Persian Journal, April 26, 2006

''

The Guardian ''The Guardian'' is a British daily newspaper. It was founded in Manchester in 1821 as ''The Manchester Guardian'' and changed its name in 1959, followed by a move to London. Along with its sister paper, ''The Guardian Weekly'', ''The Guardi ...

''
The Real Reasons Why Iran is the Next Target: The Emerging Euro-denominated International Oil Marker

* ttps://web.archive.org/web/20070906135513/http://www.energybulletin.net/12125.html The Proposed Iranian Oil Bourse
Trading oil in euros – does it matter?

Will the Iranian Oil Bourse Threaten the Dollar?

Iranian Oil Bourse opening
IOB will open amid hurdles {{Energy in Iran Commodity exchanges in Iran Petroleum in Iran Monetary hegemony Financial services companies established in 2008 Non-renewable resource companies established in 2008 2008 establishments in Iran

Background

Operations

Timeline

Opening

Petrochemical Exporting Countries Forum (PECF)

2008 submarine cable disruption

See also

Notes

References

External links