Hypothesis of Currency Basket Pricing of Crude Oil: An Iranian Perspective

Sadek Melhem, Abdul Salam Abdul Salam and Michel Terraza

Working Papers from LAMETA, Universtiy of Montpellier

Abstract: The decline in the value of US dollar and the emergence of other currencies has opened the debate within OPEC, of whether it is possible to resort to the pricing of crude oil in alternative currencies. The debate was limited because of the inadequate liquidity of most other currencies. In this paper, we focus on the implications of the shift in the pricing of Iran’s crude oil to other currencies than the US dollar. The results demonstrated that the pricing for Iranian oil in US dollar had high reaction potential and responded moderately to the change in the exchange rate, when compared to the pricing in Euro and in Yen. Consequently, it appeared that stability on the financial market led to partial stability in the oil market.

Keywords: Crude Oil Pricing; Currency Basket; OPEC; Exchange Rate of Dollar; Euros; Yen. (search for similar items in EconPapers)
Pages: 14 pages
Date: 2011-06, Revised 2011-06
New Economics Papers: this item is included in nep-ara, nep-cwa and nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:lam:wpaper:11-13

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