The first trade on the market on the Gulf island of Kish, was for 500,000 barrels of Iran's "heavy export-grade crude" sold at Iran's official selling price (OSP), the reformist Sharq daily reported.

Iran usually sells its oil at announced OSP rate, revised each month, plus a variable figure, so selling at the flat OSP rate is considered a discount on normal terms.

Sharq, which said the oil was destined for northwestern Europe -- the buyer has not been disclosed -- reported that critics accused the National Iranian Oil Co. for being overly generous in order to secure the sale and make sure the bourse is finally active.

Mohsem Qamsari, the head of the NIOC's international affairs, said the consignment could have been sold about $1.35 per barrel over the OSP, but the NIOC decided "to proceed with the sale on a flat basis with the approval of the officials in order to promote trade there."

"The bourse must help bring together the necessary oil trade infrastructure such as banking," said Qamsari. "It presently lacks the necessary means for a foreign buyer to come forward and buy oil there."

Launched in May, the bourse is part of Iran's plan to deregulate the prices of oil products and petrochemicals and create more transparency. Qamsari said the bourse had failed to do achieve that goal.

"The trading at the bourse today (Wednesday) demonstrated that the supply of oil there is not advantageous. There is this outlook that if oil is put out for sale at bourse there would be more transparency. But we don't believe that as our contracts are transparent enough."

The fifth largest oil exporter in the world, Iran is under sanctions that restrict vital western investment and technology to the oil sector. The West believes Iran is seeking nuclear weapons capability, a charge which Tehran denies.

For the past year, Iran has also been under US and European Union banking sanctions that restrict the flow of money in and out of the country.

Copyright Reuters, 2011