Dubai Mercantile Exchange
Company type | Joint Venture |
---|---|
Industry | Commodities Exchange |
Founded | 2007 |
Headquarters | Dubai, United Arab Emirates |
Website | Official website |
The Dubai Mercantile Exchange (DME) is a
The choice of the OQD contract as a benchmark was due to several important attributes of the crude oil itself and its infrastructure as opposed to the volume of export in comparison with other Middle East crudes. Firstly, the Omani crude oil is not subject to OPEC production quotas and/or cuts, nor is it subject to destination restrictions. Secondly, the geographical location of the export port Mina al Fahal (operated by Petroleum Development Oman - PDO),in Muscat into the Gulf of Oman, is past the Strait of Hormuz. Other reasons such as the increasing long-term production levels and investments, as well as the quality of the crude, helped tip the balance in favor of that crude to be used as a benchmark.
The DME is located in the
Company Evolution
The exchange was initially started in 2005, when
Two major events in 2008 that notably changed the DME’s shareholding structure; several trading firms and international financial institutions, namely
.The acquisition of NYMEX by the CME Group greatly impacted the DME. Until the DME migration to the
Another boost for the DME in 2009 was the announcement by the Dubai Department of Petroleum Affairs (DPA) in switching their pricing formula to the forward public OSP based on the DME contract. That meant that the Dubai crude oil selling price would become:
In December 2010, NYMEX announced the launch of six DME Oman-linked contracts to complement the availability of trading instruments so as to help establish the benchmark.
Futures Contract
The DME’s flagship contract is the Oman Crude Oil Futures Contract, launched on 1 June 2007, which became the largest physically delivered crude oil contract in the region. The physical settlement of the contract gives it a unique aspect whereby the front trading month is two months forward (e.g.: the March contract is the front month during January trading).
Total number of barrels traded per year on the Dubai Mercantile Exchange through the Oman Crude Oil Futures Contract:
2007* | 200,892,000 barrels |
2008 | 322,294,000 barrels |
2009 | 551,866,000 barrels |
2010 | 744,727,000 barrels |
* the exchanged opened on 1 June 2007. 1,000 barrels = 1 lot (or contract). Figures are from the DME website
With over 144 million barrels delivered through the exchange in 2010 and more than 50 companies trading the contract regularly, it seems that the DME Oman oil benchmark has been accepted by market participants as a regulated and transparent benchmark for the East of Suez market.
See also
- CME Group
- Chicago Mercantile Exchange
- NYMEX
- DME Oman Crude Oil Futures Contract
- Commodity Futures Trading Commission
- Dubai Financial Services Authority
- Petroleum Development Oman
- List of futures exchanges
- List of traded commodities