After a long halt due to lack of buyers, oil officials in Tehran resumed trading crude oil at the Iran Energy Exchange on Wednesday.
State-owned National Iranian Oil Company put 1 million barrels of heavy crude and a million barrels of light crude on offer for the day.
As expected, there were no buyers due to the sharp decline in the international price of oil as demand nearly dried up and the world almost ran out of space to store crude. Iran’s bid to sell oil is further constrained due to the new US economic sanctions.
There was also 1 million barrels of gas condensate on offer plus over 150,000 tons of gasoline and diesel and thousands of tons of other petroleum products.
Unlike crude oil, it appears that trade in the latter commodities was running smoothly at IRENEX. According to Amirhossein Tebianian, the NIOC representative in charge of offering petroleum products on IRENEX, the company sold its first cargo of 200,000 barrels of gas condensate at the bourse in the present calendar month (started April 20), IRNA reported.
The government has been able to sell surplus volume of gasoline and diesel on the energy market since the initiative started last summer.
As per a report by Tehran Chamber of Commerce, Industries, Mines and Agriculture, the government generated $85 million by selling gasoline and oil gas during the last calendar month (March 20-April 19).
Fuel trade staged at IRENEX after an oil official announced gasoline and oil gas production had surpassed domestic demand and the country reached self-sufficiency in producing key fuels that apparently have more buyers overseas, particularly in neighboring countries.
As for crude, the Oil Ministry made several attempts in the past two months to remove snags and ease conditions for potential domestic and foreign buyers, but to no avail.
According to Tebianian, the new offers will be as per revised instructions by the Oil Ministry, according to which oil and gas condensates will be offered at discounts. The spot price would be quoted in dollar premiums and be set as per key oil price indices.
The NIOC considers discounts based on major oil indices. Accordingly, each barrel of light crude oil will be offered $7 lower than Brent crude oil price for FOB delivery.
Heavy crude will be priced $8.5 lower than Brent prices and $6 discount is offered to buyers of gas condensate, considering prices in Dubai’s energy market.
Crude oil sale on IRENEX started after the government decided to involve private companies in and outside the country in the key oil industry.
However, except for one initial transaction in the early offerings, most subsequent oil offers fell flat. According to IRENEX, barely 1.1 million barrels of crude oil has been sold since the program started in October 2018.
