Business | Oil & Gas
Dubai crude prices linked to Oman futures
The Dubai Mercantile Exchange (DME) confirmed on Tuesday that the Dubai Department of Petroleum Affairs (DPA) will set the official monthly selling price (OSP) for the emirate's crude oil based on a differential to the settlement price of the DME's Oman crude futures contract.
- By Himendra Mohan Kumar, Staff Reporter
- Published: 22:56 June 23, 2009
Abu Dhabi: The Dubai Mercantile Exchange (DME) confirmed on Tuesday that the Dubai Department of Petroleum Affairs (DPA) will set the official monthly selling price (OSP) for the emirate's crude oil based on a differential to the settlement price of the DME's Oman crude futures contract.
Dubai has traditionally acted as the benchmark crude oil for Middle East producers, who price cargoes at a differential to published estimates of Dubai/Oman prices, typically set retroactively for the previous month.
"Dubai has priced its oil in relation to the DME from the launch of the exchange in June 2007. Now, by announcing a forward price based on the DME Oman contract, we will signal to the markets the price of Dubai crude in relation to Oman, further strengthening the commitment to price transparency and fair value for Middle East crude oil," a statement quoted Abdullah Abdul Karim, director of the Department of Petroleum Affairs, as saying.
"The DME Oman contract continues to gain global acceptance as a fair and robust price discovery mechanism for crude oil destined for East of Suez markets," he added.
Dalton Garis, associate professor of Economics and Petroleum Market Behaviour at Abu Dhabi's Petroleum Institute told Gulf News: "DME is moving towards transparency and market-determined prices for crude oil. It is the beginning for more regional crudes being priced against DME Oman selling price because it's attractive."
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