Open AccessA New Pricing Model for Crude Oil Pre-Sale Units via SPFO (Standard Parallel Forward with Options) in Iran
Author(s) -
Ghasem Nikjou,
Najafi Hamed,
Kamran Salmani
Publication year - 2018
Publication title -
journal of business administration research
Language(s) - English
Resource type - Journals
eISSN - 1927-9515
pISSN - 1927-9507
DOI - 10.5430/jbar.v7n1p32
Subject(s) - christian ministry , work (physics) , investment (military) , order (exchange) , petroleum , black–scholes model , finance , business , petroleum industry , energy sector , crude oil , economics , environmental economics , petroleum engineering , environmental science , engineering , mechanical engineering , volatility (finance) , paleontology , philosophy , theology , environmental engineering , politics , political science , law , biology
Nowadays energy has an important role as a driving sector of economy. Forecasting 150 billion dollars investment in energy sector during the fifth development program in Iran, the banking and financial system require a dynamic and modern economy and financial instruments. Obviously, this approach needs to remove legal barriers and modification of contracts. Financing in the oil industry has faced with serious challenges in recent years. In addition, investing in common offshore oil and gas resources is indispensable. Accordingly we are going to design a new contract which is called Oil SPFO (Standard Parallel Forward security with two Options under betting condition), in order to raise funds needed. In this article we would investigate the SPFO for Iran Ministry of Petroleum (MOP)’s finance and present a model for pricing the oil SPFO based on Black and Scholes option pricing model. Finally, we have some recommendations to develop the oil SPFO and suggest that other researchers work on pricing the oil parallel forward securities according to this model.