Iran to start trading oil in Euros

[vimto]

rogue yam seems like a bit of a tit to me

 

[nino_savatte]

Oh he is, but he thinks he's bright.

 

[vimto]

You a member of a political party/movement rogue yam?

 

[KeyboardJockey]

rogue yam seems like a bit of a tit to me

vimto on this one you have shown yourself to be a master of understatement.

 

[Streathamite]

g'waan, Kj, ask him 'THE QUESTION' again.....

 

[chinchilla]

I always thought that Iran couldn't trade oil in Dollars anyway, under the U.S. Office of Foreign Asset Control any money flowing in or out of the united states that had anything to do with Iran, Cuba and a few other states listed by the U.S. but not by the U.N. could be impounded permanently.

Under banking systems most U.S. Dollar transactions, even between 2 none U.S. countries would be done through Correspondent banks in the U.S.

When i worked for an oil trading company, Iranian oil deals were generally darried out in Sterling, Euros or swiss francs.

Also no U.S. Citizen, even if working in another country for a non U.S. company could be involved in any way with business involving those countries for fear of prosecution on return to the U.S.

 

[TAE]

I think the important fact is that many countries buy dollars in order to buy oil, and if that stopped happening then the US would be in trouble.

 

[KeyboardJockey]

g'waan, Kj, ask him 'THE QUESTION' again.....

OK I'll ask Mr White Feather yet again (anyone keeping count here as I believe that I've passed the 20x mark in asking him to back up or shut up) Where is this list of liberated nations.

Cluck cluck

 

[Backatcha Bandit]

Worthy of a sly *bump* as the reported date (20th March) for the Iranian Oil Bourse to start trading approaches.

-

Also worthy of note:

http://www.federalreserve.gov/releases/h6/discm3.htm

On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars.

Time to crank up the hysterical war propaganda machine another notch! Yay!!!

 

[skunkboy69]

This has been in alternative media and conspiracy newsgroups for about 6 months now.Funny how the mainstream medias just picking up on it 3 weeks before it happens.

 

[Backatcha Bandit]

This has been in alternative media and conspiracy newsgroups for about 6 months now.Funny how the mainstream medias just picking up on it 3 weeks before it happens.

Mainstream media? Where?

 

[Azrael23]

The Federal Reserve is a group of private bankers. They`ll tell you differently all day in fourteen different ways...they are betrayed by simple historical fact.

Didn`t Iran say they were going to VALUE THEIR RESERVES in the euro? That would mean any loans made of that capital would no longer be in $$.

Course i`m quite tired and could be making this up!

 

[Barking_Mad]

Look at the hard time the USA is having getting any kind of security council censure against Iran. Three of the permanent members: China, Russia and the EU (UK) are major trading partners of Iran, and are effectively strong political allies.

Yeah seems as though there might be a few complaints from the business lobby if there was any interference

 

[Backatcha Bandit]

Yeah seems as though there might be a few complaints from the business lobby if there was any interference

Good spot, BM.

From your link:

What are the opportunities?

Iran is one of the most exciting countries in the region for business development. After years of economic self-sufficiency, Iran now recognises the need for the transfer of technology and management skills across a wide range of sectors.

Iran is a difficult market for UK companies to penetrate, although if done successfully it can be very rewarding. The main opportunity for UK businesses is in providing capital and equipment to Iran's priority sectors:

Oil, gas and petrochemicals
Mining
Power
Agriculture
Packaging
Automotive

...something about the use of the word 'penetrate' made me shift uncomfortably in my chair.

 

[guinnessdrinker]

It's not just Iran

according to the indy, this morning, the UAE is considering using euros against the dollar. that's because the yanks refused to let Dubai (part of The UAE) to buy 5 of their ports. even the governor of the saudi arabian central bank criticised the americans. syria has confirmed the change from dollars to euros in their transactions. americans. are getting a little bit too greedy for their own good, it seems.

 

[Streathamite]

so can anyone give the lowdown on the implications for the US economy, if a whole load of oil nations switch to euros?

 

[slaar]

Fundamentally, it means Central Banks will hold more foreign reserves (used to pay for imports) in Euros or another currency rather then Dollars. The US is partially funding its trade deficit by these flows.

I guess another effect could be making the oil price less predictable as it would now depend on the euro / dollar exchange rate as well as the euro oil price. But the US doesn't buy any oil from Iran anyway.

I'm far from convinced it's worth getting hysterical over though. It'd probably lead to a gradual fall in the US exchange rate, but more important is the fact that they can still sell government bonds in US$ to foreigners, which will remain true as long as US returns are steady and guaranteed. If that stops, all bets are off, but there's no real sign of it happening.

 

[A Dashing Blade]

Iran is putting together plans for an oil trading centre that will run on Euros . . .

If Iran's plans go ahead, this could mean a serious blow for the dollar, and a major boost for the Euro.

Apart from a few speculatative reports in the press, I don't think you'll find any concrete, definate plans for this atm.

Sorry.


cf the "The UK banking system " thread in theory/phil/hist for a rathar long running argument I had with resident looney-tune zArk. It starts about here if you can be bothered . . . .
http://www.urban75.net/vbulletin/showthread.php?p=4260434#post4260434
and coninues off and on for another 10 or so pages.

 

[Backatcha Bandit]

Apols for the C+P - no longer availabe online:

Iran's plans for an oil exchange

Feb 28, 2006 (BBC Monitoring via COMTEX) -- Iranian media began carrying news and comment about the possible establishment of an oil exchange during former President Mohammad Khatami's second term in office, but the exchange failed to materialize before the end of his presidency (August 2005). More recent reports suggest that the oil exchange may become operational in a limited form in spring 2006. It seems that, at least during this initial phase, crude oil will not be traded on the exchange and that trading will be limited to some oil derivatives.

In December 2003, Mowj news agency, which specializes in economic issues, quoted a consultant (Hasan Fahimi-Rad) involved in Iran's metal exchange as saying that it was likely that "foreign agents" would be used in Iran's oil exchange. Fahimi-Rad also said: "The oil exchange is being devised on the basis of international markets and if international norms and standards are respected in the exchange, it will definitely be well received. The general level of training in our country is low and we hope that we can train agents to a level whereby Iranian agents will be capable of trading oil. With the establishment of the oil exchange, the initiative in the Middle East oil market will fall into Iran's hands and this will bring a great deal of revenue to the country's economy, and the financial turnovers and the trading of oil and its derivatives will bring vast sums to the country." Fahimi-Rad also said that a need was felt in the Middle East for an oil exchange, adding: "The oil exchange will facilitate price-setting conditions in the Middle East and OPEC, and the establishment of an oil exchange with international standards will link us to the world's markets. An international group is studying the question of where to locate the oil exchange and it may be located in one of the free trade areas. This group includes financial engineers [as received] and British and Iranian consultants." On 23 August 2004, Irangreenpen.org (a website dedicated to environmental issues and sustainable development) cited the director of the National Iranian Oil Company, Mehdi Mir-Mo'ezzi, as saying: "The oil exchange is being set up for trading in oil derivatives only. Crude oil is not going to be traded on it, but we intend to pave the way for trading in all oil derivatives. The aim of setting up the exchange is to make prices and the manner of trading transparent... No programme has been devised yet for trading crude oil but there may gradually be studies in this connection too."

Many of the reports in 2004-05 suggested that that the oil exchange would be up and running before the end of Mohammad Khatami's presidency (August 2005). In March 2005, Hayat-e Now economic daily quoted Oil Ministry Adviser Mohammad Javad Asemipur, who is in charge of the oil exchange project, as saying that the oil exchange was due to be operational in a matter of months. According to the same report, Asemipur also said that the different types of contracts that are used in international exchanges were being examined to assess their correspondence to Islamic legal regulations and added: "For the initial planning of Iran's oil exchange, we have carried out a correspondence with 180 world exchanges and financial services institutions. Iran's oil exchange will have a different structure from other international exchanges and its system has not been defined similarly to other markets... Kish Island has been identified as the location for the main trading hall and plans are being made for commissioning a hall in Tehran... Moreover, subsidiary halls will gradually be established in the oil regions of our country such as Asaluyeh and Ahvaz... The initial dealing in Iran's oil exchange will involve commodities that will pose less of a challenge for the country's economy, but, ultimately, all the commodities and products of the upstream and downstream sectors of the country's oil industry will be presented on the exchange... The structure of companies that export oil derivatives and petrochemical products will also change with the establishment of the exchange." But several months later, the oil exchange had failed to materialize. It seemed almost like a step backwards when it was reported in July 2005 that Iran's Exchange Council - at a session on 25 July chaired by the economy minister - had discussed the establishment of an oil, gas and petrochemicals exchange and expressed its agreement "in principle" with the project. Asemipur told Shana (news agency affiliated to the Iranian Oil Ministry) on the occasion: "The exchange will play an important role in increasing the GDP and foreign exchange revenues, making trading transparent, providing experience in oil trading and risk management, and establishing a regional and international market." Asemipur described the oil exchange as one of the important economic steps taken by the Khatami government, adding: "Now, with the legal authorization of the oil, gas and petrochemical exchange, the operational phases of the exchange, which will be based in Kish, will proceed according to the timetable... It is being foreseen that, during the first stage, petrochemical products and oil derivatives will be traded on the exchange." Shana added in the same report: "Studies on the oil exchange began last year with the participation of an international consortium and the memo of understanding on commissioning the exchange was signed in Ordibehehsht [13]84 [April-May 2005]." On 10 September 2005, Sharq quoted the then head of the Tehran stock exchange (Hoseyn Abdeh-Tabrizi) as saying that the establishment of the oil exchange "requires more time", adding: "There is no problem if the oil exchange is at the level of selling petrochemical products, like the metal exchange. But, in the sense of selling our products in the international arena - this is a different story, for which we need some planning." Abdeh-Tabrizi also said that the Exchange Council was waiting for the exchange's charter, "hence, we can say that the oil exchange has been born, but, because of the absence of regulations, norms and rules, it cannot trade yet." Asked whether the oil exchange would have branches in different Iranian towns and cities, Abdeh-Tabrizi replied that this was not really necessary, because unlike stock exchanges, which attract ordinary people's savings, commodities exchanges have "limited clienteles", their traders are located in big cities and they can trade by telephone or via the Internet. On 14 November 2005, Sharq newspaper carried a brief report entitled: "Reasons for the delay in commissioning the oil exchange", which reads as follows: "The executor of the oil exchange project has said that the delay in commissioning Iran's oil exchange on Kish was because of the ratification of the Capital Market Bill by the Majlis. Mohammad Javad Asemipur added: Since one of the bill's articles underlines that exchanges in the country are private, the oil companies that wish to enter the oil exchange must leave their current conditions and this problem has to be resolved as quickly as possible. He added: We are ready to commission the oil exchange today. But, in order for it to begin work, some requirements have to be met, including the existence of experienced agents. Asemipur said: The Supreme Exchange Council has authorized the establishment of the oil exchange and its software is in line with international standards. The executor of the oil exchange project rejected some of the prejudgements about the currency that will be used in the oil exchange and added: A decision has not been made about the denomination yet and this depends on the situation of the market when the oil exchange opens." The Iranian Students News Agency (ISNA), on 21 November 2005, carried a report on an interview with Asemipur in which he said that the new Capital Market Law was being promulgated in that week and the oil exchange charter, which was being drawn up, had to be made compatible with the new law and sent to the Exchange Council. Asemipur added: "With the new law, [the relevant] companies will become public joint stock companies and their structure will change... The executive and operational work of buying the building and the equipment, as well as the software, for the oil exchange is in progress... Iran's oil exchange is authorized to present all kinds of main and special oil derivatives and petrochemical products, Iranian crude oil, Central Asian swap-based crude oil and any kind of regional crude oil. It also has the possibility of dealing with other exchanges in the world via domestic and foreign joint agencies." As to the estimated financial turnover, Asemipur said: "The maximum financial turnover in the oil exchange - based on the National [Iranian] Oil Company's total revenue of 60bn dollars last year and the 20bn dollars from the sale of petrochemical products over the next 10 years, and assuming a minimum trading of 10 times - will exceed 800bn dollars per year which will play a fundamental role in the growth of the gross domestic product."

cont...

 

[Backatcha Bandit]

...

Early in 2006, the Majlis began showing an interest in the oil exchange project. Majlis Deputy Hoseyn Afarideh told ISNA on 17 January that the oil exchange had been discussed at a meeting of the Majlis Energy Committee, adding: "At the meeting, Dr Asemipur, the executor of the oil exchange project, and Salehabadi, secretary-general of the country's stock exchange, spoke about the different stages and the progress of the oil exchange; then, the Energy Committee underlined that the oil exchange has to be different from the commodities, stocks and agricultural exchanges, because, unlike these other three exchanges, where the stock holders are mainly nationals, in an oil exchange, the investors are mainly foreign investors. Hence, the structure has to be defined in a way in which it is not limited to Iran's 2.5m barrels of oil but should bring the oil of the regional countries into the exchange and to present up to a ceiling of 25m barrels." Also on 17 January, Jam-e Jam newspaper quoted Kamal Daneshyar, the chairman of the Majlis Energy Committee, as saying: "At meetings held with Oil Ministry officials, it was decided that the first phase of the oil exchange will become operational within three months. In the first phase, the oil exchange will operate on a short-term basis, but, in the second phase, the exchange will become international and its activities will become very extensive... Oil products will be traded in the exchange and gradually the range of products will increase... The aim is for the exchange's activities to begin with Iran and neighbouring countries and to become more extensive gradually." In the same report, Jam-e Jam quoted Asemipur as saying: "Bringing in Iraq's oil, as well as Central Asian oil, is one of the main aims of commissioning the oil exchange."

Some of the domestic and foreign reports about the Iranian oil exchange have assumed that the exchange will be euro-based and have suggested that this poses a threat to "the hegemony of the dollar" and is causing the US Administration much consternation. But none of the official Iranian reports have mentioned anything in this connection apart from the 14 November 2005 Sharq report noted above in which Asemipur says that no decision had been made about the denomination yet. A blog especially dedicated to the subject of the oil exchange (oil bourse) (http://oilbourse.blogfa.com/) was active in summer 2005 and posted several English-language interviews with Asemipur and Hoseyn Talebi, director of management information systems of the National Iranian Oil Company and member of specialized and technical committee of the oil exchange. In one interview, Talebi said among other things: "In addition to physical transactions, paper deals will be carried out. Another method is optional transactions which are used to offset the risk from severe change in purchased oil price. In Iran, we are deprived of revenues resulting from future and optional deals and most of them are done in other counties; for example, IPE in England or NYMEX in the United States or even SIMEX in Singapore. This is important both economically and strategically because those markets will attract customers and we, as a major player in the region, will lose benefits. Therefore, establishment of oil bourse is a national necessity... [The] founders of Iran's oil bourse have been determined which include the National Iranian Oil Company (20 per cent), the National Petrochemical Company (25 per cent), National Iranian Oil Refining and Distribution Company (20 per cent), Iran Oil Industry Pension and Deposit Fund (5 per cent), Tehran Stock Exchange (10 per cent), Kish Free Zone Organization (10 per cent) as well as Mostazafan and Janbazan Foundation (10 per cent). The founders have established a company in Kish Island and that company will take care of inaugurating the bourse including installation of needed software and hardware, creating legal banners, and other needed measures. Dr Asemipur is still in charge of the plan while agents will be chosen by the company through signing contract with companies or consortiums that would be qualified... It is a national must to launch the bourse as soon as possible. On the other hand, needed legal and technological infrastructures, in addition to agents, regulations and adapting to religious norms should be done. This will take time. Oil products are much diversified and so will be transactions at oil bourse. We can begin with physical transactions on some products including pitch and sulphur to gain needed experience. Then we can introduce other products. As agency, banking, insurance and legal issues are harmonized, we can, by and by, diversify transactions. "

Source: Iranian briefing material from BBC Monitoring in English 28 Feb 06

BBC Mon ME1 MEPol Mobasser/lr

Again, sorry about C+P, but it's relevant and unavailable o/l.

 

[Backatcha Bandit]

Interesting quote from Mohammad Asemipur in that blog link:

Q: Why Ministry of Petroleum seems to be in no hurry?

A: We have been obliged by law to launch the oil bourse. We have done studies, purchased a building, signed relevant agreements, and bought needed software. The feasibility report has also been prepared. Therefore, as soon as Bourse Council gives the go-ahead, the oil bourse will start to work. That permit should be issues either under the current government or the next one; either now, or two months later. Launching an oil bourse is our sealed destiny

http://oilbourse.blogfa.com/

 

[A Dashing Blade]

The Federal Reserve is a group of private bankers. They`ll tell you differently all day in fourteen different ways...they are betrayed by simple historical fact.

Go on then, I'll bite, and that simple historical fact is . . . ?

. . . .
Didn`t Iran say they were going to VALUE THEIR RESERVES in the euro? That would mean any loans made of that capital would no longer be in $$.
. . . .

Ahh, Iran, that well known provider of liquidity to the fiancial system

 

[A Dashing Blade]

so can anyone give the lowdown on the implications for the US economy, if a whole load of oil nations switch to euros?

Bias down USD vs EUR
Bias up US interest rates particularly at the long end of the curve (top of my head)

 

[newharper]

But the US doesn't buy any oil from Iran anyway.

This is irrelevant. Iranian Oil production, and the level of it, is integral to the world price of oil.

 

[slaar]

Incidentally, when an exchange rate depreciates, as the US$ would, exports become more competitive and imports more expensive, a good thing in moderation for any economy over the long run. It's not exactly devastating for the US.

 

[atitlan]

Incidentally, when an exchange rate depreciates, as the US$ would, exports become more competitive and imports more expensive, a good thing in moderation for any economy over the long run. It's not exactly devastating for the US.

But don't they already have a massive trade deficit, what with everything now being manufactured in foreign countries?

It's no good having competitive exports when so much of what your society 'needs' is imported...

 

[slaar]

But don't they already have a massive trade deficit, what with everything now being manufactured in foreign countries?

It's no good having competitive exports when so much of what your society 'needs' is imported...

"Everything" is a bit strong. If you want an example of a country where everything that is needed is imported you should come to Africa. It isn't pretty. The US has thriving industries in many areas. It's true that a lot of manufacturing has gone abroad but that in itself doesn't cause the trade deficit, it's the country wanting to consume more than it produces. The foreign debt they take on is effectively promising future US output for current US consumtpion.

More competitive exports and more expensive imports pushes that relationship back in a more healthy direction. But there's nothing inherently unsustainable about taking on foreign debt. It depends on so many factors. The Argentinians spent far, far more than they produced for decades before their currency crashed, and the Peso was a lot weaker than the dollar.

 

[slaar]

Just as an example, India is often cited as a rising economy that is taking US jobs and output, but take a look at these export figures (from the Indian Embassy in Washington):

US exports to India
Engineering goods and machinery including electrical machinery contribute to a third of the total US exports to India. US exports of these items grew from US$ 1641 million in 2003 and to US$ 2131 million in 2004.

Export of precious stones and metals from US to India grew from US $ 411 million in 2003 to US $ 583 million in 2004.

Organic chemicals exported from US to India grew from US $ 299 million in 2003 to US $ 471 million in 2004.

Optical and medical instruments grew from US $ 341.25 million in 2003 to US $ 467.90 million in 2004

Export of aircraft, aviation machinery and parts grew from US $ 317.48 million in 2003 to US $ 376.92 million in 2004.

So not exactly on the verge of collapse...

 

[zoltan]

um

 

[zoltan]

Update - I know this erm...."area" but donrt want to out myself - this Iranian Oil whatever has been bandied about for years - theres been some agreement signed somewhere or other to work on it , but I dont think its a live one to be honest - its takes SO long to get something like this up & running - both liquidity + transparency are unlikley to be associated with such a bours for several years - if ever.Amomgt the hype & Internet based runours, its hard to actually find any concrete info on this & one or two commentators have made a living out of this for a the past year - there is no doubt that the Tehran Govt are talking about it, but nothing has been done yet, exceot some research & a memorandum of understanding between tehran & some ex- IPE ( London Pet. Exchange ) staff.

I would not underestimate that anti yankee sentiment / Propaganda value of this project for the Iranian Government - as a ploy to psycologically undermine the Great Satan, it is certainly getting press amongst the more barking mad Oil commentators.

This is something for the conspiracy theorists to work on & exaggerate, but its got no grounding in the real world for the forseeable future, along with an Islamic Gold based currency.

Can we dump this thread into the dustbin please ?