Posted on 06/07/2006 4:40:26 AM PDT by Flavius
TEHRAN, June 5 (UPI) -- The Iranian Oil Bourse is in its final stages, Iran's Fars news agency reported Monday.
According to the Fars report, the board of directors of the International Bourse Co., which is charged with establishing the bourse, will review the final draft of the articles of association of the Iranian bourse this week.
The International Bourse Co. was registered last month, with an initial capital of $2,000, and is charged with setting up the Iranian Oil Bourse on Kish Island. The IBC is owned by the National Iranian Oil Co., which has an 80 percent stake, and by with Kish Free Zone Organization and the Mostaz'afan and Janbazan Foundation, each of which hold 10 percent stakes.
Once the IBC finalize the draft, the articles of association will be sent to the body in charge of securities for review.
The bourse will be established in phases; following discussions of the first phase, rules and bylaws involving the establishment, running, equipping and opening of the bourse will be negotiated
I expect they're going to get a taste of capitalism in action.
They aren't going to like it...
You are correct; one of the few, at least on this forum, that get it.
Iran accounts for a very small amount of dollars in the world markets. Very unlikely to succeed at all.
I thought the Iranian Oil Bourse was to eventually, or theoretically, serve as an exchange for all oil bought and sold?
To attract buyers and sellers, the exchange would have to be generally accepted as generating prices that reflect real world conditions. If prices are in terms of euros or dollars, it would not matter much. There are, after all, exchange rate markets. The questions are, how liquid will the oil bourse be, how free of price manipulation?
This could seriously weaken the dollar.
Is the dollar strong or weak now? Why are US authorities complaining about China's currency being too weak against the dollar? Is the Swiss franc strong? Who trades what major commodities in Swiss francs? A currency's strength or weakness is only meaningful in terms of confidence in its future buying power. And that is a reflection of a country's monetary policy, not of the specific units used to quotes prices.
If anything this will be the real reason we go to war with Iran
On the contrary, if Iran is serious about a establishing a real oil exchange, then it will be forced to show a commitment to the international market order, a good thing. That being said, my first reaction is that this bourse project is likely a con game meant to put into effect the rule, a mullah and his money are soon parted.
Its going to be a disaster. The millionaire mullahs won't stand for the fact they can't control an exchange's rules.
Oil trading is not the bulk of dollar transactions in the world, and Iran most certainly is involved in but a very small fraction of dollar transactions, so in effect, your link means basically nothing, and he is correct.
A currency's strength or weakness is only meaningful in terms of confidence in its future buying power. And that is a reflection of a country's monetary policy, not of the specific units used to quotes prices.
Not exactly regarding the dollar. If oil trading turns to Euros that reduces the demand for dollars. Through inflation, the dollar is worth less to foreign countries who have dollar reserves. These countries basically get stuck with a tax with inflation and want to have less dollars. With a drop in demand worldwide for the dollar, there so goes the worth of the dollar.
Why? (Beyond transactions costs associated with using exchange rate markets.)
It is one thing to say, "people don't have confidence in the dollar, and therefore an exchange in euros will atract more users;" and another thing to say, "because a anti-US regime insists on (subsidizes?) an exchange that officially quotes prices in euros, therefore people will lose confidence in the dollar."
Anyway, rather than strong versus weak, I think the better way of classifying currencies is hard versus soft. Iran can subsidize every barrel exchanged on its bourse and we'd see large volumes trade, but it would not mean much at all. (The ease-of-transactions premium on dollars is not zero, but I would have to see some evidence that it is econometrically detectable.)
Why?
Because nations could now buy oil with Euros and this would free them from having to have only dollar cash reserves for purchasing oil. Currently all oil is purchased with dollars which keeps the dollar in high demand around the world.
Theoretically, with oil-for-Euros the dollar demand drops.
That's what is not clear at all. Are there so many dollars held beyond the US because international markets use dollar price quotes, or do markets use dollar quotes because there are so many dollars in so many hands? Few "nations" buy oil; most is bought by private interests. I can take my euros right now and buy oil on international markets (quoted in dollars), and if need be use an exchange rate market. A Chilean buys oil, priced in dollars, from Mexico, and passes a Mexican exporter a check written in pesos drawn on a bank based in Monterrey. And has the use of dollar units for oil hurt the value of the euro, or has the hardness of the euro made it a candidate for serving as a unit of trade? Foreign exchange reserves are most often in dollars due to its hardness, not the price quote unit. How much oil does Brazil import? How much does Ecuador? Saudi Arabia? Why are their reserves significantly in dollars? (By the way, did the shift from price quotes in ounces of gold to quotes in British pounts or US dollars hurt the value of gold? Did the shift of international markets from British pounds to dollars hurt the value of the pound?)
Hey, I got three grand in the bank. Maybe I'll try to setup my own Oil Bourse.
Oops, I made a mistake...
Iran's oil is about 3% of the total imports to the US (15% of the 20% we import from the Persian Gulf countries). We import about half our oil. So Iran's oil is about 1.5% of the total oil we use here in the US.
In countries that import all of their oil Iran is about 3% of that total import.
This is not a true venture that will follow rules, it is the launch of an economic weapon more deadly than a nuke.
For more information read "Mullah Threat Not sinking In" on http://www.antimullah.com
Not this sh*t again!?
A "bourse" set up for $2000 in a country with no laws, no transparency, no independent judiciary, no way.
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