DME launches Mideast crude trading platform

The DIFC-based Dubai Mercantile Exchange announced on Monday the launch of a new platform to trade multiple Middle East crude grades priced against DME’s Oman crude futures.

The Alternative Crude Ecosystem (ACE) is a bilateral trading platform that enables participants to trade multiple crude grades through the exchange.

For the first time, Dubai, Upper Zakum, Murban, Oman, Basrah Light, Basrah Heavy and Al Shaheen will be available on one platform as differentials against DME Oman Sour Crude Futures Benchmark, DME said in a statement.

This new functionality allows Middle East crude participants a way to execute multiple Over the Counter (OTC) crude grades as differentials against DME Oman futures.

Last week, Intercontinental Exchange Inc, Abu Dhabi National Oil Co Adnoc and partners including international oil majors launched the Murban crude contract.

The new service offered by DME will shed the light on the growing importance and the status of DME Oman as a strong and reliable Benchmark for the Middle East, representing consistent fair value for Sour Crude barrels to the East of Suez.

Raid Al-Salami, managing director, DME, said ACE is a platform that combines futures and OTC in one transparent window for the very first time, offering all participants opportunities to optimize their trading activities and manage their exposure across multiple crude grades.

Arif Amiri, CEO of DIFC Authority, said ACE innovatively provides an opportunity to trade a range of crude grades as differentials to DME Oman. “We are pleased to see DME continue to develop their position as the premier international energy futures and commodities exchange in the Middle East from DIFC, the leading global financial centre in the Middle East, Africa and South Asia region. Our enabling platform continues to provide opportunities for clients to innovate and together we are shaping the future of finance.”

Salim Al Aufi, undersecretary of the Ministry of Energy and Minerals, Oman, said the ministry supports all continuous improvement initiatives in the oil markets, as it enhances the price discovery and offers a fair price for the key commodity of the region.

“DME Oman has been the benchmark for us since 2007. We believe DME has successfully passed a major stress test in 2020 and presented itself as the natural benchmark for crudes produced in our region. With the launch of ACE, national oil companies across the region will have the opportunity to discover the fair price for grades based on the DME Oman benchmark,” said Al Aufi.

The new initiative aligns with the objectives of DIFC which has helped contribute to the Dubai Plan 2021 by making the emirate a pivotal hub for finance in the global economy. The DIFC platform provides clients with most enabling laws and regulations which are stimulating financial related innovation in the region.

In 2019, DME registered an average daily volume of 5.97 million barrels of crude oil from January to October, up from 4.95 million barrels for the same period in 2018. Forward curve activities reached a total of 600.7 million barrels from January-October 2019, compared with 223.2 million barrels in the corresponding period in 2018.

— issacjohn@khaleejtimes.com