Dubai to set crude oil selling price based on DME Oman Contract

Dubai June 24, 2009 (WAM) - The Dubai Mercantile Exchange (DME) confirmed yesterday 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 Oil 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. In moving to futures pricing, the OSP for month "M" will now be set in advance, with the differential set in M-3, and the final OSP calculated at the end of M-2.
Abdulla Abdul Karim, Director of the Department of Petroleum Affairs stated: "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. 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."