Iran launches its first petrochemicals and oil bourse.

Sunday’s launch on Kish Island in the Persian Gulf, southern Iran, of the first Iranian petrochemical and oil products bourse, seemed to fly under the radar of the local mainstream media in Australia and got little coverage. It does however, open up some interesting thoughts.

The Iranian Republic News Agency reported that the newly-inaugurated oil stock exchange is part of a two-phase project approved by Iranian cabinet. Based on the approval, products of Iran’s Oil Ministry should be traded through stock market in two forms which are the crude oil stock market and the oil and petrochemical products stock market.

Iran’s previous failed attempt to launch a bourse in the early 2000’s was surrounded by the controversy about whether Iran would enable oil to be traded in Euros, thereby moving away from US dollars. Coming as it does at a time when the US economy is facing the pressures of a possible recession, the news must be of some concern. The transactions this time however, will be made in Iranian rials and/or foreign exchange after the second stage comes on stream. An interesting article by Còilin Nunan (Jan 2006) discusses the repercussions of moving away from dollar denomination in oil trading and why this is an important issue for the US. It can be read here.

Iran is the fourth largest oil producer in the world producing over 4 million barrels of crude oil per day and it is the second largest producer in OPEC after Saudi Arabia. Oil Minister Gholamhossein Nozari speaking at the inauguration hoped the new bourse will help pave the way for more investment in Iran’s lucrative oil sector, stimulating private investment.

The question that remains is how will the US view this and will it add to the tensions that already exist between the two countries?

~ by abstraktbiblos on Tuesday, 19 February, 2008.

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