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Iran Energy Exchange (IRENEX) is Iran's old and alternative plan for monetizing its oil. IRENEX was established in 2013 as a regulated stock exchange for the trading of energy related products and securities. In the past four years, it has served as an exchange market for petroleum and petrochemical products, with the exception of crude oil. The Iranian authorities are now feeling the need to use IRENEX to meet their export potential.
Even before US secondary sanctions hit Iran's exports of oil and petroleum products, there were already threats to crude oil and natural gas liquids exports, which fell by 2.7 million barrels a day in May at 2.2 million barrels a day in October. The US sanctions came into effect on November 5th. Although the United States has granted some waivers to Iran, it is clear that Iran will not be able to regain its level of exports as long as US sanctions are not enforced. .
The Iran Energy Exchange resumed on October 28 with the sale of 280,000 barrels of light crude oil and 700,000 barrels on Nov. 11. The crucial reason behind the sale via IRENEX is that small lots of 35,000 barrels could be sold without the US being able to follow it. . Following the withdrawal of the United States from the 2015 Iran nuclear deal and the imposition of sanctions, Washington is closely monitoring Iran's oil exports.
Whether or not the oil is sold by IRENEX, terms of payment have been reduced, but there is no possibility of offering discounts, said Saeid Khoshrou, director of international affairs at the National Iranian Oil Company.
"I do not think it's [US President Donald Trump] wanted $ 100 [a barrel] oil, "said Robert Dudley, CEO of BP.
According to OPEC figures, Iranian oil sales account for 12% of Iran's GDP. The drop in oil prices since the introduction of US sanctions shows that Washington was fairly indulgent while granting six-month waivers to eight countries that buy Iranian oil.
Trump has expressed concern over rising gas prices if there is a sudden reduction in Iranian exports. His call to Saudi Arabia to boost production has highlighted the inconclusive results of the Abu Dhabi oil producers' meeting in early November.
The European Union and Russia are willing to continue their trade. For several months, the EU has been discussing the creation of a special-purpose vehicle that analysts say would save 20% of business.
"The SPV will have little effect on the entire Iranian economy, although it will help improve some sectors, including food and medicine. It should have a political effect on the protection of the JCPOA (Joint and Global Action Plan – the Iranian Nuclear Agreement) and could prove important for a long-term reduction in air pollution. use of the dollar in international trade, "said Sir Richard Dalton., British Ambassador to Tehran 2003-07.
Russia's plan to buy Iranian oil for domestic purposes and to export more of its oil to foreign markets will have greater effects on the economy. According to the US Energy Information Administration, oil production in Russia could reach 12 million barrels a day in the second quarter of 2019, up from the 11.2 million barrels per day already available.
However, the contraction of the Iranian economy can not be stopped. The Economic Intelligence Unit in London predicted a contraction of 4.6% for the year ended March 2019 and a further 3.9% reduction in 2019-20 (with global growth of 3% and 2.7%). EIU estimates that Iran's oil exports are expected to fall by just over 1 Mbps from 2.6 Mbps in April.
EIU also warned that the easing of tax management would limit unemployment to the current rate of about 13%. If fiscal reins are relaxed, this would lead to an increase in inflation, which should rise from 17.8% in 2018-2019 to 38% in 2019-2020. Imports would become even more expensive, with the Iranian rial rising from US $ 48,000 to US $ 62,000 in 2018-19 and 66,000 in 2019-20.
