Trading at the DME, a joint venture between the New York Mercantile Exchange (Nymex) and Tatweer, a subsidiary of Dubai Holding, is due to start later this year. An announcement on the exact date is expected imminently.
The decision of the Sultanate of Oman’s Ministry of Oil and Gas (MOG) to adopt forward pricing of its crude oil based on the daily settlement price of the DME’s Oman crude oil futures contract is evidence of the Oman Government’s continuing support for price transparency, the DME said in a statement. Up to now, Oman has priced its crude retroactively.
The pricing decision, which follows extensive consultation by the joint Oman-DME working group who developed the Oman crude oil futures contract earlier this year, will be welcomed widely by the industry, the DME said.
“We believe this is one of the most significant developments in the Middle Eastern oil market for years, addresses industry needs, and is entirely appropriate given Oman’s role in pricing the region’s crude oil,” commented Dr. Mohammed Hamed Al Rumhy, Oman’s Minister of Oil and Gas. “By pricing Oman’s crude oil directly off the Oman crude oil settlement price when it starts trading on the new exchange, we are giving a resounding and unequivocal demonstration of our commitment to the DME’s long-term success,” he added.
The MOG said it will monitor the price discovery process closely to ensure that the contract is trading in a robust manner which reflects fair market value for Oman crude oil.
Ahmad Sharaf, chairman of the DME, commented: “The Sultanate of Oman’s historic decision has a profound significance not just for the DME but the entire region and industry... Some observed that our prospects of success would be greatly enhanced by a change to Oman’s pricing policy. So we are naturally delighted by this development.”