Tehran Times – Iran is going to offer up to three-year oil future contracts for certain international buyers in an effort to offset the impacts of U.S. sanctions on its oil exports, Shana reported.
Iranian Vice-President Es’haq Jahangiri said on Tuesday that “powerful economies” interested in buying Iranian oil will be provided with long term contracts at pre-determined prices.
“Any powerful country that wishes to work with Iran can pre-order Iran’s oil for the next two to three years,” Jahangiri said.
The second top government official said the measure was part of Iran’s efforts to minimize the impacts of U.S. sanctions on the Iranian economy and its oil revenues.
Iran has seen a decline in oil income since the U.S. restored a series of economic sanctions on the country that had been lifted as part of a nuclear agreement in 2015.
Since the U.S.’s withdrew from Iran’s nuclear pact in May 2018, vowing to drive Iran’s oil exports down to zero, the Islamic Republic has been taking various measures to counter the U.S. actions and to keep its oil exports levels as high as possible.
One of the main strategies that Iran chose to execute to help its oil exports afloat has been trying new ways to diversify the mechanism of oil sales, one of which is offering oil at the country’s stock market.
Offering future oil contracts is a first of its kind for Iran, a major global supplier which used to earn around $150 billion a year from oil exports before the sanctions started in November.
That would create an opportunity for buyers who believe oil prices would increase as a result of protectionist policies adopted by the U.S. government.
Jahangiri said major buyers could count on Iran’s ability to deliver oil at future dates as the country has maintained its production at three to four million barrels per day (bpd).
A similar mechanism has been proposed to European buyers of Iran’s oil as Tehran believes it could provide a credit line for a special company launched by Britain, France and Germany to keep up trade with Iran at the time of U.S. sanctions.
Iran is also exempt from an agreement between major global oil exporters to maintain cuts of 1.2 million bpd until March 2020.