Dubai: The first trade in Middle East fuel oil derivatives has taken place on the Dubai Mercantile Exchange (DME).
DME recently listed Middle East 180cst and 380cst high-sulfur fuel oil (HSFO) for trading. The fuel oil contracts settle against the MOPAG 180cst and MOPAG 380cst assessments provided by price reporting agency Platts.
The listing allows traders to directly hedge fuel oil delivered in the Gulf region and to trade the important spread between the Middle East and Singapore fuel oil markets. This is a significant step towards helping the Gulf realise its full potential as a refined product trading hub.
“In these volatile times, there is clearly a healthy appetite among regional market participants for a way of managing price risk at Fujairah and the DME is happy to serve this market need,” Owain Johnson, Managing Director, DME said in a statement.
The trade was for 7,000 metric tonnes (appx 45,000/barrels) of July 180 CST fuel oil (product code DHE) and was concluded between Vitol, the world’s largest independent energy trader, and Aegean Marine, an international marine fuel specialist and one of the largest operators in the Middle East. The transaction was brokered by the Dubai office of Freight Investor Services (FIS).
“Vitol is pleased to be part of the first trade in these new DME contracts. Vitol is strongly committed to the development of the Fujairah oil hub and this new derivatives contract represents a big step forward in Fujairah’s evolution from a pure logistics hub into a major trading centre,” Chris Bake, Member of the Executive Committee, Vitol said in a statement.
