Iran began trading oil on the Kish International Commodity Exchange last week. The move has been seen as an attempt on Tehran’s part to draw trades away from New York.For now, the New York Mercantile Exchange trades Texas Intermediate benchmark futures, and London’s Intercontinental Exchange deals in North Sea Brent and all trades take place in dollars.
The Kish Exchange trades contracts in Iranian rials, euros but noticeably, not dollars, according to a report in OilPrice.
Iran has long been pushing OPEC to stop oil sales in dollars and the island of Kish, situated in the Persian Gulf, was chosen over Tehran because its been declared a free trade zone. And, Iranian MP Fakhroddin Heydari sees it is a way to dodge U.S. sanctions:
“It also strengthens Iran’s position in setting oil prices in regional markets. …The oil bourse helps us break the barriers of sanctions; therefore, enabling world’s outstanding businessmen enter into transactions without any problem.”
For now however it’s got off to a lousy start. 600,000 barrels of Bahregan heavy crude oil at a base price of $112.60 per barrel were offered on its first day of trading, but dealers refused to pay over $109.65. End result? Zero transactions.
Business Insider Emails & Alerts
Site highlights each day to your inbox.