On May 17, the Iranian authorities said that they had recently proposed some "solutions" to the relevant parties regarding the lifting of economic sanctions imposed by the United States on Iran, and now the United States should make a decision and respond. Immediately after, Iranian oil ministry officials said that the energy price spike caused by the bottleneck in the global crude oil supply chain, Iran is considering the possibility of exporting natural gas to Europe, but did not disclose specific details, only said, "there is no conclusion yet", earlier, the CEO of the Iranian national oil company told iran's state news agency IRNA on May 10 that the current surge in energy prices has opened a window of opportunity for Iran to increase revenue.
Panoramic view of Damawand Peak in northeastern Tehran, Iran
Iran has the world's largest gas reserves, but iran's oil and gas industry has been affected since the dollar resumed its energy sector restriction settlement in 2018, so Iran has been looking to develop new energy customers and expand the market.
We note that a new message released by the official website of the Iranian Oil Ministry a week ago said that it is technically ready to return to the global oil market, without the consent of the OPEC+ meeting, and if the dollar lifts the restriction settlement, it may bring 3.8 million barrels of Iranian oil back to the market per day, which is the latest development of the matter.
Iran has been attracting international buyers at extremely low prices since February, and currently exports about 1.5 million barrels a day, but declined to give more details, according to a report released by research firm Midleeasteye on May 16. According to Kpler, a Singapore data and analytics firm, Iranian oil exports grew faster than other Middle Eastern countries in the first quarter of this year, and according to a public speech by the CEO of The National Iranian Oil Company, the Iranian oil industry has managed to increase oil exports by 40% in the 12 months to April, exceeding the annual export target.
According to Iranian state television reported on May 12, Iran is also seeking to expand economic and trade relations with Indonesia, including oil, agricultural products, etc., and considering the use of local currency cooperation settlement in bilateral trade to bypass the US financial system, and in recent weeks, Iran has also signed similar cooperation agreements with Sri Lanka, Venezuela, and Pakistan, and even included a "barter" agreement, allowing Sri Lanka, which is in trouble with foreign reserves, to use agricultural products to repay Iran's oil debt to strengthen cooperation in the energy field.
Iran mainly exports saffron, an agricultural product
The above news is undoubtedly a positive direction for the troubled Iranian oil industry and the suppression of currently high gas and oil prices, which have reduced Iranian crude exports by nearly 80% since the United States put pressure on SWIFT four years ago to limit its oil settlement, but record petrochemical sales are expected to offset the loss of crude oil exports. Because Iran has launched large-scale projects to expand its capacity for non-crude commodities and reduce the economy's reliance on oil revenues.
Despite the dual constraints of sanctions and the coronavirus, exports of non-crude oil commodities, including agricultural products, petrochemicals, mining and others, hit a record high in the 12 months to April, an increase of 81%, and iran is expected to achieve its non-oil export revenue target of $55 billion in the fiscal year ending In March 2023, Iran is expected to achieve its non-oil export revenue target of $55 billion, according to a report released by Iran on May 15. For example, in just three months this year, export earnings from oil, condensate, petrochemicals, petroleum products and natural gas have increased by a factor of 2.5.
The headquarters of the State TaxAtion Service of Iran (INTA) in Tehran
Behind this is the fact that Iran's oil exports have changed tactics and led to profound and innovative changes in the way they finance Iran or sell goods, while many Iranian companies are actively seeking joint ventures or partners to fill their gaps in technology, infrastructure and business management.
At the same time, although the US-Iran negotiations have come to an end, but the Iranian central bank is still being written off by the SWIFT system, it is at this critical moment, as a countermeasure, the Iranian authorities in addition to having officially replaced the original foreign exchange position of the US dollar with the renminbi, together with the euro listed as one of the country's major foreign exchange currencies, on May 2, the Iranian cabinet once again launched a transitional version of the country's new currency, officially announced the change of the country's new currency, and passed legislation to convert the country's national currency, the rial, into Turman. This also means that Iran will officially transition to the new currency, as the photo below shows that the four zeros on Iran's newly issued 100,000 rial banknotes are pale.
According to the Russian media RT on May 14, Iran once again urgently planned to airlift 500 million euros of cash from Germany and transport it back home by plane, and the representative of the German bank confirmed that there was a plan to return the euro by air, and it is reported that the cash will be provided to Iranians who cannot use credit cards. Due to the ban on the U.S. banking system, foreigners face difficulties in transferring funds and settling payments. More than that, the following new news has surprised the market even more.
A woman walks past a fishmonger's shop in southern Tehran
Iran's official news agency also said on May 12 that Iran's relevant departments suggested that members of the Asian Clearing Union adopt Iran's financial settlement system Sepam to avoid SWIFT, and at present, Iran's four banks are negotiating with Germany, France, Britain, Russia, Switzerland, Austria, South Africa and other countries on the use of digital currencies in economic, financial settlement and transactions, and have made new progress.
According to a report published by the Iran-Swiss Chamber of Commerce, as of April, the SHTA trading mechanism cooperated by Iran and Switzerland has carried out a number of transactions. Not only that, Iran officially announced a week ago that it will launch a digital currency program and has already set up a blockchain currency research room to develop a national cryptocurrency.
According to a report released by Iran's Export Guarantee Agency, funds managed by the agency have now replaced the banking system and have managed to clear the obstacles faced by Iran's engineering and technical services sector by issuing guarantees, which can facilitate trade, including oil, using cryptocurrencies to import goods. At this juncture, another unexpected thing happened.
According to Reuters quoting several sources on May 12, the Japanese authorities are also studying the establishment of a digital currency system, which is currently in the second phase (the concept phase was certified in March) to support cross-border transactions and settlements, and advocates de-dollarization in the field of commodity trading with Iran, including with Iran, the data shows that Iran is Japan's main oil supplier, and the core logic behind these things is actually very simple.
In a report published by the advisory board of the world-renowned think tank OMFIF, we explain that these new actions in Iran show that by introducing blockchain-backed anchored national currencies or digital currencies supported by strategic economic resources such as gold and oil, and strengthening foreign exchange and innovative market positioning, it has the ability to weaken the US dollar or bypass SWIFT, and create a digital fiat currency that can be accepted and supported by central banks around the world, which is of course a solution, which may be the next Pearl Harbor-style event. It will also play a role in the transformation of the international financial trading system, and can also provide oil-producing countries with new oil currency options.
Considering that RMB crude oil futures have been enhanced in the Asian market and the expansion of commercial activities between China and Iran, this may become the east wind for the RMB, and can also provide another oil currency option for traders in oil-producing countries, including Iran, according to Reuters analysis, the digital yuan has become one of the world's leading central bank digital currencies.
According to Reuters citing S&P global data and the latest data from global marine industry expert Vortexa Analytics on May 10, Chinese energy buyers have bought at least 4 million barrels of Iranian crude in the past few weeks alone.
Iranian tankers in the Strait of Hormuz
According to the comprehensive data monitored by the foreign media, in the past 24 months, Iranian oil companies have sold more than 22 million tons of oil to Chinese buyers, and the analysis shows that some of the transaction volume is settled in renminbi. It is reported that Iran's new national currency "Turman" may anchor the RMB exchange rate, which means that Iran can also use the RMB to buy more Chinese goods, increase economic and trade exchanges, and inject new vitality into the Iranian economy. (End)