Iran to launch oil trading market for Middle East
Iran should not hinge on an oil exchange because it is not a big economic power, a senior deputy in the parliament
"The oil market stability may benefit us under the present circumstances. But if the oil producers lose their power of decision-making we will lose everything," Hussein Nejabat told. "The phenomenon of globalisation will further benefit those who control the oil exchange. At moment, Iran is not a big economic power and it should not welcome an oil trading market," he said.
Iran is to launch an oil trading market for Middle East and OPEC producers that could threaten the supremacy of
London's International Petroleum Exchange. A contract to design and establish a new platform for crude, natural gas
and petrochemical trades is expected to be signed with an international consortium within days.
Top oil producing countries are determined to seize more control of trading after being advised that existing markets such as the IPE and Nymex in New York are not working in their favour. The Tehran oil bourse is scheduled to open in 2005.
Many of the contracts for crude oil being exported from producers such as Iran and Saudi Arabia are linked to prices
for the UK North Sea Brent blend. The Middle East producers would like to establish a rival Persian Gulf blend
contract alongside hedging mechanisms that could operate around the new bourse.
The regional initiative is significant but not entirely new. The Dubai Mercantile Exchange recently tried to develop an oil trading market with the help of Nymex but it collapsed through lack of interest.
The Tehran bourse is considered to be more likely to succeed because Iran exports 2.7 mm bpd and produces 13 mm tons
of petrochemicals every year. The country has the second biggest oil reserves in the world behind Saudi Arabia.
"Oil trading market will benefit the countries with powerful economic sectors," Nejabat said.