The new oil bourses springing up show economic/political power is shifting from West to East -basically from previous oil exporters (US and UK) to the last remaining oil exporters (Russia and OPEC).
Russian to open oil bourse: Novosti
Qatar to open oil bourse:
Xinhua
Kish proposed oil bourse (can't tell if this is one and the same as the proposed Iranian oil bourse)
Kish News
Proposed Iranian oil bourse:
Globe&Mall.com
PeakOil is You
New Oil Bourses show power shifting from West to East
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New Oil Bourses show power shifting from West to East
by seahorse2 » Thu 23 Mar 2006, 12:30:18
Last edited by seahorse2 on Thu 23 Mar 2006, 14:54:00, edited 1 time in total.
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Re: New Oil Bourses show power shifting from West to East
by LadyRuby » Thu 23 Mar 2006, 14:54:11
You forgot the Dubai bourse:
Dubai Mercantile Exchange Announces Developments in Creation of New International Energy Exchange
$this->bbcode_second_pass_quote('', 'T')he Dubai Mercantile Exchange (DME) today announced recent developments in the creation of a new commodity exchange that will initially develop and trade a Middle East Sour Crude Oil Futures contract in the heart of the world's largest hydrocarbon province.
The DME aims to meet the growing market need for price discovery of Middle East Sour Crude Oil whilst simultaneously addressing the time zone gap between Europe and Asia by providing a hub for the trading of energy futures, options and other products.
...
He added: "The establishment of an exchange and the securing of a new Middle East Sour Crude Oil Futures contract is a complex process. However, in line with the guidance that we have given our potential customers, we expect to meet our stated goal of a launch in the fourth quarter of 2006.
Dubai Mercantile Exchange Announces Developments in Creation of New International Energy Exchange
$this->bbcode_second_pass_quote('', 'T')he Dubai Mercantile Exchange (DME) today announced recent developments in the creation of a new commodity exchange that will initially develop and trade a Middle East Sour Crude Oil Futures contract in the heart of the world's largest hydrocarbon province.
The DME aims to meet the growing market need for price discovery of Middle East Sour Crude Oil whilst simultaneously addressing the time zone gap between Europe and Asia by providing a hub for the trading of energy futures, options and other products.
...
He added: "The establishment of an exchange and the securing of a new Middle East Sour Crude Oil Futures contract is a complex process. However, in line with the guidance that we have given our potential customers, we expect to meet our stated goal of a launch in the fourth quarter of 2006.
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Re: New Oil Bourses show power shifting from West to East
by seahorse2 » Thu 23 Mar 2006, 15:03:05
Interesting how all these bourses plan to be open in 2006.
So, I have the following questions:
(1) Why all the sudden interest in opening 4 new oil bourses in 2006? This is unprecedented. If the world traded oil on two exchanges since hitler was a corporal, why the sudden emergence of all these new bourses in the same year, 2006?
(2) What are the odds that they will all only trade in dollars?
So, I have the following questions:
(1) Why all the sudden interest in opening 4 new oil bourses in 2006? This is unprecedented. If the world traded oil on two exchanges since hitler was a corporal, why the sudden emergence of all these new bourses in the same year, 2006?
(2) What are the odds that they will all only trade in dollars?
Last edited by seahorse2 on Thu 23 Mar 2006, 15:14:41, edited 1 time in total.
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Re: New Oil Bourses show power shifting from West to East
by LadyRuby » Thu 23 Mar 2006, 15:03:32
I have no answers just questions too.
Are they all scrambling to get their foot in the door first?
Another question, can they change from trading in dollars to euros at will if the situation warranted it?
Are they all scrambling to get their foot in the door first?
Another question, can they change from trading in dollars to euros at will if the situation warranted it?
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Re: New Oil Bourses show power shifting from West to East
by Petrodollar » Thu 23 Mar 2006, 16:11:23
seahorse2,
I'll try to answer your question, but first, I think their are over 180 misc. exchanges around the world, but only a few of them deal with international oil and gas trades. The two "biggies" that drive the price of crude oil are of course NYMEX and IPE.
Interest in these energy bourses are due to the desire to control the money flows of oil - which represented tremendous power in the 20th century. The first person to realize this was a young man in the 1870s by the name of John D. Rockefeller. He went on to become the first American billionaire, and monopolized the oil price with his famous firm - Standard Oil {until it was broken up by Teddy Roosevelt}.
Fast-forwarding to today, with Peak Oil approaching, we can expect more economic and political power to flow to the Middle East and perhaps Russia as the major oil producers. The host of new US military bases in the Middle East and Central Asia region is acknowledgement of this new dynamic.
As for your questions, I am obviously more familiar with Iran's interest in an oil bourse - and I suspect it was Tehran's plans that have spurned interest in other new bourses (Dubai's exchange did not deal with energy, but obviously that is changing). In essence, these stock exchanges are about control. There is some belief, especially in the Middle East, that the New York and London exchanges "manipulate" the price of oil to some degree (increasing volatility), but now that the US and UK are no longer major oil exporters, some of the pricing power should shift to the remaining producers..at least that is how I read the sentiments.
Here's how Dr. Asemipur has termed it (the man repsonsible for setting up the Kish International Oil, Gas and Petrochemical Bourse, or IOB):
$this->bbcode_second_pass_quote('', '"')The exchange will play an important role in increasing [Iran's] GDP and foreign exchange revenues, making trading transparent, providing experience in oil trading and risk management, and establishing a regional and international market."
As to the estimated financial turnover, Asemipur said: "The maximum financial turnover in the oil exchange - based on the National [Iranian] Oil Company's total revenue of 60bn dollars last year and the 20bn dollars from the sale of petrochemical products over the next 10 years, and assuming a minimum trading of 10 times - will exceed 800bn dollars per year which will play a fundamental role in the growth of the gross domestic product."
I'll try to answer your question, but first, I think their are over 180 misc. exchanges around the world, but only a few of them deal with international oil and gas trades. The two "biggies" that drive the price of crude oil are of course NYMEX and IPE.
Interest in these energy bourses are due to the desire to control the money flows of oil - which represented tremendous power in the 20th century. The first person to realize this was a young man in the 1870s by the name of John D. Rockefeller. He went on to become the first American billionaire, and monopolized the oil price with his famous firm - Standard Oil {until it was broken up by Teddy Roosevelt}.
Fast-forwarding to today, with Peak Oil approaching, we can expect more economic and political power to flow to the Middle East and perhaps Russia as the major oil producers. The host of new US military bases in the Middle East and Central Asia region is acknowledgement of this new dynamic.
As for your questions, I am obviously more familiar with Iran's interest in an oil bourse - and I suspect it was Tehran's plans that have spurned interest in other new bourses (Dubai's exchange did not deal with energy, but obviously that is changing). In essence, these stock exchanges are about control. There is some belief, especially in the Middle East, that the New York and London exchanges "manipulate" the price of oil to some degree (increasing volatility), but now that the US and UK are no longer major oil exporters, some of the pricing power should shift to the remaining producers..at least that is how I read the sentiments.
Here's how Dr. Asemipur has termed it (the man repsonsible for setting up the Kish International Oil, Gas and Petrochemical Bourse, or IOB):
$this->bbcode_second_pass_quote('', '"')The exchange will play an important role in increasing [Iran's] GDP and foreign exchange revenues, making trading transparent, providing experience in oil trading and risk management, and establishing a regional and international market."
As to the estimated financial turnover, Asemipur said: "The maximum financial turnover in the oil exchange - based on the National [Iranian] Oil Company's total revenue of 60bn dollars last year and the 20bn dollars from the sale of petrochemical products over the next 10 years, and assuming a minimum trading of 10 times - will exceed 800bn dollars per year which will play a fundamental role in the growth of the gross domestic product."
{$800 billion over 10 years is not an insignificant amount for a country such as Iran}
Here's how the director of IS for the INOC views the oil bourse:
$this->bbcode_second_pass_quote('', 'H')oseyn Talebi, director of management information systems of the National Iranian Oil Company and member of specialized and technical committee of the oil exchange. In one interview, Talebi said among other things: "In addition to physical transactions, paper deals will be carried out. Another method is optional transactions which are used to offset the risk from severe change in purchased oil price. In Iran, we are deprived of revenues resulting from future and optional deals and most of them are done in other counties; for example, IPE in England or NYMEX in the United States or even SIMEX in Singapore. This is important both economically and strategically because those markets will attract customers and we, as a major player in the region, will lose benefits. Therefore, establishment of oil bourse is a national necessity."
Lastly, here is how the deputy head of Kish Free Zone Organization(KFZO), Abdolrahman Nadimi, stated the Iran oil bourse will benefit Iran's economy:
$this->bbcode_second_pass_quote('', '[')b]Kish Oil Bourse Essential
Iran Daily
December 26, 2005
....The official stated that stock exchange and the establishment of a number of foreign banks branches in Kish, an international oil-gas and petrochemical bourse would significantly help develop the island's economy and transform Iran into an active country in the field of international oil transactions. Nadimi pointed to the strategic location of Kishin the Persian Gulf, which holds 65 percent of the world's energy reserves, adding the island is an important base for companies involved in oil and gas projects."
I should note that only the Iranian's are suggesting a euro-based oil transaction system, and I doubt Qatar (which is a US military colony) will use euros, and the same goes for Dubai. Speaking of control, their is also a political reason for Iran's desire to use euros.
Tehran’s interest in converting all of their oil transactions to the euro, is in part due to political blowback created after President Bush named Iran as part of an “Axis of Evil" in his State of the Union speech. Just a few months before Iran was providing assistance to the US in the campaign agianst the Taliban, who the Iranians despised. Tehran even made the unusal offer to help rescue any downed US airforce crews during the October 2001 air campaign over Afghanistan. This was a diplomatic gesture, but getting labeled as "evil" a few months later shocked Tehran and the relationship has suffered ever since.
Anyhow, revenue from Iran's daily crude sale is transferred through a series of intermediary banks, mostly European. According to international bankers, all transactions involving large amounts of dollars are cleared through "master" accounts held in New York, and the New York Federal Reserve has access to information about such transfers. {I did not realize this phenomenon until I read the below article)
Apparently Iran is concerned that the Bush administration may interfere with Iranian’s oil revenue transfers. In 2002 an Iranian oil industry source stated,
$this->bbcode_second_pass_quote('', 'A')s a precaution, the Central Bank of Iran is looking into a switch away from dollar payments — with the euro a favoured alternative…The US is keen to know who is sending and receiving dollars and they may make it difficult to transfer our money, especially when they know it is for Iran.
A senior banker in this Alexander Oil & Gas article acknowledged “After September 11, US authorities were chasing terrorist funds and they were questioning a lot of things…There were many wild goose chases.”
Source: “Iran may switch to euro for crude sale payments,” Alexander’s Oil & Gas, September 5, 2002. http://www.gasandoil.com/goc/news/ntm23638.htm
Apparently some of these bankers have felt particularly hassled by Washington’s “war of words on Tehran.” That rhetoric only encouraged Tehran to increase the pace of its ongoing plans regarding euro-based oil transactions. Here's what a recent Iranian article stated on this subject:
http://iran-daily.com/1384/2515/html/ec ... tm#s131169
$this->bbcode_second_pass_quote('', '[')b]Ending $ Monopoly
Azam Mohebbi
March 6, 2006
...The Oil, Gas and Petrochemical Bourse, which will be established as envisaged in the Fourth Five-Year Plan (2005-2010), has received support from both the Parliament and the government. It will also enable oil-rich Iran to regulate prices at home without having to follow other countries’ dollar-based trading system.
Iran’s Oil Bourse can help the world oil market get rid of the present dollar monopoly--what many observers think will put the global status of the major currency at risk.
World oil prices are set in London and New York today where OPEC member-states do not have a decisive role.
Experts believe that once the Caspian Sea oil producing countries also join Iran’s Oil Bourse, world oil market is likely to experience a revolution.
Proponents of the Oil Bourse believe that oil producing countries need to take such an important initiative notwithstanding the risks and barriers.
They believe that OPEC member-states have lost 72 percent of their nominal revenues on the fall in the value of the dollar and their declining purchasing power. {note: I assume that percentage reflects the dollar against a basket of several international currencies over a 30 year period? begining back in 1975 when OPEC agreed to dollar only pricing and transactions}
One thing to remember is that OPEC countries receive dollars for their oil exports and will have to spend the same dollars in trade transactions with countries whose currencies are rivaling the greenback all the time.
Kamal Daneshyar, a senior parliamentarian, contended that the Oil Bourse will help promote Iran’s petroleum business as it will attract customers from around the world.
Iranian authorities are optimistic that the Oil Bourse will provide many countries with an opportunity to trade oil with currencies other than the US dollar.
This optimism also applies to the European Union, which is one of the largest energy consumers in the world and whose currency the euro is the proposed alternative to the dollar.
The short Russian new story from a few months ago does not have enough details to make any conclusions, but given that over 2/3's of its oil exports go to the EU, a euro-based system would be logical from an economic and monetary perspective - but you can be sure that any such decision would met with "great opposition" from the US (quoting a member of the CFR). So, it's too early to say what if anything will come of the Russian anoucement, but I will reiterate what the late/former head of the ECB stated in Oct 2003 about petroeuro pricing being "sensible."
$this->bbcode_second_pass_quote('', '[')b]European Central Bank believes pricing oil in euros is sensible
14-10-03 European Central Bank (ECB)President William Duisenberg said that it might make sense for Russia to sell oil in euros to certain EU customers, entering a debate sparked that has big implications for currency markets. Asked to comment on remarks by President Vladimir Putin that he did not rule out switching Russia's oil pricing from dollars to euros, Duisenberg said this could particularly suit the nations currently lining up to join the common currency block.
"It would be in their interest to pay for imports in their future domestic currencies," he told. "We are worried about the situation in countries that depend on imports of oil from Russia," he was quoted as saying. The agency also cited him as saying, however, that if Russia made a move to the euro it would be a unilateral decision.
Russia is the world's second-largest exporter of oil after Saudi Arabia and the world's top gas exporter. A switch would be a powerful symbolic victory for the euro and might accelerate its growing role as an international reserve currency to challenge the dominance of the dollar.
What I find most surprising is this week's annoucement by Qatar. Could this annoucement - on the very day the IOB was originally scheduled to open (March 21) - be some sort of clever attempt by the US client state (Qatar) to "pre-empt" the emergence of the Iranian/Kish International Oil Bourse? That is just speculation, but I had never heard of Qatar's plans until yesterday, and you can be sure that Qatar will utilize a dollar-denominated trading system (fyi: US CENTCOM is headquartered in Qatar...and it was the lauchpad of the 2003 Iraq invasion).
Well, that's my 2ct on this issue for now.
