The Dubai Mercantile Exchange (DME) yesterday said it has concluded a transaction with Oman Investment Fund (OIF) to sell a 30 per cent equity stake in the exchange.
DME is a joint venture between Tatweer, a member of Dubai Holding, and the New York Mercantile Exchange (Nymex).
The transaction follows the announcement by Oman’s Ministry of Oil and Gas that the sultanate will adopt forward pricing of its crude based on the daily settlement price of the DME’s Oman crude oil futures contract that is due to start trading on the day the exchange launches operations on June 1.
The Oman crude oil futures contract was developed by the DME to offer the industry a new tool for managing risk through greater transparency.
The benchmark contract was finalised after almost two years of analysis of the fundamentals of the Middle East sour crude market, and further consultation with over 75 market participants comprising of national and international oil companies, producers, end users, energy trading companies and brokers.
Tatweer chairman Saeed Al Muntafiq said in a statement, "The acquisition of a 30 per cent stake in the DME further validates our strong and visionary business model.
"Oman’s confidence and support for the DME, as reflected by this announcement and the continuation of Dubai’s role in developing this exchange underscore the true significance and impact the DME is expected to have on the future pricing of Middle East sour crude oil."
Richard Schaeffer, chairman of Nymex, said, "Nymex is gratified to have the Omani government join us as partners in this exciting venture. Their support has been critical in the creation of the new benchmark Omani crude oil futures contract."
Ahmad Bin Abdul Nabi Makki, chairman of Oman Investment Fund, said, "The Sultanate of Oman views this as a significant milestone for the fast growing financial markets of the region."
To date, over 50 members and more than 20 market makers have been approved by the DME membership committee.