The Dubai Mercantile Exchange Limited (DME), a joint venture between Tatweer, a member of Dubai Holding, the New York Mercantile Exchange Inc. (NYMEX), and the Oman Investment Fund, announced today that under a directive issued by Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, the Government of Dubai will cease pricing its export crude oil sales off its current mechanism and instead utilise DME futures prices upon launch of the Exchange.
With this announcement, Dubai becomes an additional Middle East oil producing nation, along side the Sultanate of Oman, to utilise DME settlement prices for its crude oil pricing. Together, Dubai and Oman crude represent the current foundation for pricing the majority of the Middle East’s crude oil sales to the Far East. The historic shift by the Government of Dubai to use DME pricing as a reference point for its crude oil exports further underscores the vital need for a physically backed benchmark that is representative of Middle East sour crude oil.
Over the past three years, the DME, the Middle East’s first energy and commodities futures exchange, consulted with the international energy and financial trading community on the components necessary for creating a new benchmark crude oil contract. Among the key components highlighted for the development of a successful contract was producer support. This latest milestone in the development of the DME and its groundbreaking Middle East sour crude oil benchmark further ensures that customers of the DME have access to an improved risk management tool and that producing nations can recognise fair market value for their crude oil.
The DME will launch its Oman Crude Oil Futures Contract and two financially settled spread contracts on Friday, June 1 at 6:00 Singapore, 02:00 Dubai, 23:00 London time (previous day) and 18:00 New York time (previous day).
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