The Dubai Mercantile Exchange (DME) announced today that Oman’s Ministry of Oil and Gas has become the first customer of its recently launched ‘DME Auctions’ platform, reported the Omani Oil and Gas Review.
The Omani Ministry of Oil and Gas will add DME Auctions to their available options to market additional spot exports of Oman Blend Crude Oil.
This move is seen as a step towards bolstering transparency in the marketing and pricing of Oman’s crude oil exports.
Owain Johnson, Managing Director, DME said, “We are honored by the decision of the Omani Ministry of Oil and Gas to add ‘DME Auctions’ to their current tools to sell spot crude oil. This decision is a great endorsement of our new platform and of DME’s work to enhance transparency in the east of Suez oil markets. At a difficult time for the oil markets, the need for reliable and regulated benchmarks has never been greater. We salute the Oman government’s commitment to transparency and we look forward to working closely with the ministry to launch the crude oil auctions whenever the volumes are available.”
According to The National most national oil companies (NOCs) in the region have been reluctant to take up this system, although many officials – including the Saudi oil minister Ali Al Naimi – have complained about “speculators” on the futures exchanges.
Speculators cause prices to fall too far when there is a supply overhang, which is why the DME is trying to persuade NOCs that adding an auction option, with its wide pool of customers, will ensure a fairer (and transparent) price for regional commodities.
The hope is that a successful application of the system to Oman will persuade the remaining Gulf NOCs to follow suit.
China, the region’s largest oil buyer, is already moving in a similar direction. The Shanghai International Energy Exchange has said it will launch its own crude oil futures contract before the end of the year.
This will give China even more sway over the regional pricing of oil, if an action system is not adopted extensively in GCC countries.