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Iran sees lukewarm initial interest in domestic bourse crude oil offering

Tehran — Iran has sold 280,000 barrels of crude oil out of 1 million barrels on offer through the country's domestic bourse, according to oil ministry news service Shana, as the sanctions-hit OPEC producer seeks to keep its sales flowing.

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National Iranian Oil Co. had eased some of its buyer restrictions to increase interest in the crude sale, which began Sunday, but with almost three-fourths of the barrels on offer still unsold, the bourse may not prove as successful as Iran had been hoping.

Iran reactivated the bourse after four years to allow its private sector to buy the country's crude to resell into the international market, with the aim of bypassing US sanctions that go into force November 5.

NIOC typically sells oil directly to refiners, but the sanctions penalize entities that engage in business with Iranian entities and many of the company's usual customers have already begun rapidly shrinking their purchases.

Saeed Khoshroo, NIOC's director for international affairs, had said Sunday that the eased restrictions would cause the crude offered on the bourse to get snapped up immediately.

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"Considering the [easy] conditions that National Iranian Oil Company has provided for customers, my forecast for today [Sunday] was that they buy the 1 million barrels offered in the international bourse in the first minutes of offer," he said, according to Shana. "Of course, the private sector should be given time and NIOC has proved its goodwill by making conditions easy."

NIOC said the 280,000 barrels were sold at $74.85/b in eight 35,000 barrel consignments. It declined to identify the buyers, citing confidentiality agreements.

Four initial buyers were interested, but eventually three paid the required 10% advance in rials to purchase the barrels, according to the energy bourse's managing director, Ali Hosseini, state-owned students news agency ISNA reported.

As for the remaining 720,000 barrels, NIOC said they are still on offer at the pre-set price of $74.85/b under the same terms and specifications. If necessary, the terms could be altered in a new formal offering, but one has not yet been scheduled yet, Shana reported.

The initial requirements for participating in the bourse offer included having a valid contract with a refiner, as well as a specified destination. Those conditions were waived for Sunday's sale.

EXPORTS IN THE BALANCE

Iran's last use of the bourse was in early April 2014, when US and EU sanctions on Iran were in force. Just 2,920 barrels were sold on the first day that the crude was offered, and a second offer a day later failed to find any buyers.

Many analysts doubt the reactivated bourse will attract significant buyers, since they would still likely be subject to US sanctions.

Iran exported 1.95 million b/d of crude and condensate in September, according to a revised S&P Global Platts analysis of shipping data from Platts trade flow software cFlow. That is down from 2.52 million b/d in September 2017 and 2.41 million b/d during the first six months of 2018.

Iranian officials have maintained their confidence that the US intent of bringing Iran's crude exports down to zero will fail.

"Oil exports might have decreased by a few thousand barrels [per day], but we have always stressed that even with the sanctions, Iran's oil exports should not fall by 1 million b/d," Vice President Eshagh Jahangiri was quoted as saying Sunday by Shana.

--Aresu Eqbali, newsdesk@spglobal.com

--Edited by James Leech, james.leech@spglobal.com