Iran Sells Oil on Exchange in Bid to Counter Sanctions

Iran sold oil to private buyers through its energy exchange for the first time on Sunday, as part of its efforts to counter the imminent return of US sanctions. 

Only 280,000 barrels were sold out of one million offered, and went for USD 74.85 per barrel, more than USD 4 below the initial asking price.

The identity of the buyer remained a secret, with the conservative Fars news agency saying only that a conglomerate of private firms had made the purchase through three brokerages.

The US is set to reimpose sanctions on Iran's oil industry on November 5, following President Donald Trump's decision to walk out of the 2015 nuclear deal in May. 

The plan to sell oil to private companies on the energy exchange was floated back in July by first vice-president Eshaq Jahangiri with the aim of "defeating America's efforts ... to stop Iran's oil exports."

The government hopes selling to private buyers, rather than direct to foreign clients, will make it harder for the US to monitor and stop its sales. 

"With the imminent return of a new wave of sanctions, the government is determined to utilise the maneuvering ability of the private sector to sell Iran's oil and find new markets," Hamidreza Salehi, director of Iran's energy exports federation, told semi-official news agency ILNA.

Some estimates show Iran's crude exports have already dropped by a third since May when it was selling around 2.5 million barrels per day.

The government currently intends to offer oil on the energy exchange once a week, according to Fars. 

Its initial base price on Sunday was USD 79.16, but it received limited bids as much as USD 16 lower as trading began, the exchange's website showed.

The final buyer only emerged after the base price was dropped to USD 74.85 in the closing hours.

The head of Iran's securities and exchange organization, Shapour Mohammadi, promised on Friday that the identity of the buyer would not be revealed.

Photo Credit:IRNA

Iran's Rial Hits Record-Low 100,000 to the Dollar

Iran's currency hit a record low on Sunday of 100,000 rials to the dollar amid a deepening economic crisis and the imminent return of full US sanctions. 

The unofficial rate stood at 102,000 rials by midday, according to Bonbast, one of the most reliable sites for tracking the Iranian currency. 

The rate was confirmed by a trader who spoke on condition of anonymity to AFP. 

The rial has lost half its value against the dollar in just four months, having broken through the 50,000-mark for the first time in March. 

The government attempted to fix the rate at 42,000 in April, and threatened to crackdown on black market traders. 

But the trade continued with Iranians worried about a prolonged economic downturn turning to dollars as a safe way to store their savings, or as an investment in the hope the rial will continue to drop. 

With banks often refusing to sell their dollars at the artificially low rate, the government was forced to soften its line in June, allowing more flexibility for certain groups of importers. 

The handling of the crisis was one of the reasons behind last week's decision by President Hassan Rouhani to replace central bank chief, Valiollah Seif. 

The currency collapse was encouraged by the US announcement in May that it was pulling out of the 2015 nuclear deal, that lifted certain sanctions in exchange for curbs to Iran's atomic program.

The US is set to reimpose its full range of sanctions in two stages on August 6 and November 4, forcing many foreign firms to cut off business with Iran. 

Photo Credit: Mehr

Iran's Rial Hits New Record-Low on Trump Fears

Iran's currency fell more than six percent against the dollar on Sunday, hitting another record-low, as fears of a US withdrawal from the nuclear deal continued to drive speculation.

The rial reached 55,200 to the dollar at the close on the open market—a drop of nearly a third in the past six months—according to the Financial Informing Network, considered the most reliable for fluctuations in the free rate.

"There is a clearly an increase of people buying dollars because they think the United States will pull out of the nuclear deal," said the head of an exchange office in Tehran, on condition of anonymity.

The gap with the government's official rate, which stood at 37,814 on Sunday, has continued to widen, threatening a return of high inflation which the government has battled to bring under control.

"The government can't do anything when there is this much panic. If the US exits the agreement, the Iranian currency could collapse even further and reach 70,000 to the dollar," said the exchange dealer.

The head of the central bank, Valiollah Seif, and Economy Minister Masoud Karbasian were summoned to parliament to discuss the issue last Monday.

Long queues have been seen outside exchange offices for weeks as uncertainty mounts over the nuclear deal which Iran reached with world powers in 2015.

President Donald Trump has threatened to walk away from the deal and reimpose sanctions by May 12—the next deadline for confirming US involvement—unless new restrictions are placed on Iran's nuclear and missile programs.

The rial stood at around 40,000 to the dollar in October, when Trump said he would no longer certify Iran's compliance with the nuclear deal, and has been falling steadily since.

Iran's government took drastic measures in February to stem the decline, arresting unlicenced exchange dealers and freezing speculators' accounts, but they have had little impact.

President Hassan Rouhani, who has staked his legacy on trying to revive the economy by rebuilding ties with the West, sought to play down the decline earlier this year, saying Iran was bringing in plenty of dollars through oil sales.

Photo Credit: AFP