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CSDI INTRODUCES NEW CURRENCY SETTLEMENT MECHANISM IN CRUDE OIL TRADE

Central Securities Depository of Iran has provided a new mechanism into currency settlement of crude oil transactions in the capital market.

President and CEO of Central Securities Depository of Iran, Dr. MohammadReza Mohseni, says the mechanism is believed to be the first of its kind specifically designed for currency settlement of crude oil transactions in the Iranian capital market to mark a major step forward in shaping the future of international trade of this strategic commodity.

CSDI Chief added extended efforts have been made in recent months to prepare the infrastructure required for international crude oil trade in Iran Energy Exchange (IEE) which hopefully bore into fruition.

Dr. Mohseni went on to say that Tose'e Saderat Bank of Iran i.e. Export Development Bank of Iran (EDBI) is going to be the first bank participating in currency settlement of crude oil transaction in Iran Energy Exchange; nevertheless negotiations are underway to involve more banks into business.

He underlined that the CSDI has, in a letter, informed the National Iranian Oil Company (NIOC) of the Depository’s preparedness to kick start the transactions in the Capital Market and expressed hopes that the relative executive procedures will soon start up.

It is worth mentioning that all currency settlement of crude oil transactions in Iran will be made in Euro at IEE. 

AN OLD DREAM COMING TRUE

The idea of selling crude oil through a mercantile exchange first came into being in early 90s in the framework of Iran’s 3rd Development Plan policies.

In 2007, the then minister of economy who also served as the chairman of the Securities and Exchange Supreme Council, urged Iran Mercantile Exchange (IME) to offer oil and petrochemicals in the stock market.

Despite all challenges, in June 2011, crude oil got listed in the IME spot market; however, the deal not so much impressed the market on various reasons. The experience made the officials in charge at Securities and Exchange Organization (SEO) to demonstrate a brand new way to list crude oil at the market; this time at Iran Energy Exchange (IEE).

Iran Energy Exchange was established in July 17, 2012 as the second official mercantile exchange in Iran to facilitate energy and energy-based securities transactions.

The first crude oil supply got listed in IEE domestic market on March 21, 2014, but the move got lukewarm response from buyers, on various grounds.

This time around Securities and Exchange Organization of Iran (SEO,) Iran Energy Exchange (IEE,) Central Securities Depository of Iran (CSDI,) Tose'e Saderat Bank of Iran together with National Iranian Oil Company (NIOC) have thrown their weight behind the move and IEE - second official mercantile exchange – is to resume selling crude oil to international buyers through the commodity market.

Release Date: 8/29/2017


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