Investigating the impact of the Mediterranean index on the official celling price for the price of Iranian crude oil

Changes in the oil price formula are of great importance in economic literature for oil producers such as Iran, given their dependence on oil revenue and its large share in their budget. On the other hand, the official oil price formula is a key factor in marketing and determining market share, and national oil companies constantly adjust this system according to changes in market conditions and competitors. The main issue is that in recent years, pricing experts have disagreed on the official oil price formula, so that the first group considers the aforementioned formula to be a function of the Brent crude oil price in the ICE market, but the second group considers the aforementioned formula to be mainly a function of the Mediterranean market index (the difference between Ural crude oil and Brent). Therefore, the purpose of this study is to examine the official Iranian crude oil price formula in the Mediterranean market. In this study, two expert pricing approaches are evaluated: the first is the Brent oil price function in the ICE market, and the second is the Mediterranean market index function. For this purpose, using monthly data from 2007 to 2022, the significance of the aforementioned variables and some other variables such as interest rates and the Dow Jones index on the official price formula has been evaluated using the multivariate GARCH method. The results show that the Mediterranean market index did not have a significant effect on the official Iranian oil price formula, but Brent oil in the ICE market had a significant significant effect on it. Similarly, the effectiveness of the interest rate and Dow Jones index variables in the two scenarios have significant effects on the Iranian oil price formula.