The Dubai exchange said that the milestone follows a MOG/DME working group's analysis of the benefits and implications of developing an Oman-backed physical crude oil futures contract. DME contends that the current market situation presents an ideal opportunity for the development of a liquid crude oil futures benchmark.
Although the Middle East is the world's largest hydrocarbon region, it has yet to develop a transparent futures contract. The two leading crude oil futures benchmarks, West Texas Intermediate and Brent, reflect the value of sweet crude oil--not the sour crude oils of the Middle East.
The working group, commissioned by a February memorandum of understanding between MOG and DME, has been examining this anomaly in the context of growing market challenges and the need for a robust and liquid price discovery mechanism for Middle East crude. It includes senior professionals from MOG, Oman's Ministry of Finance, Petroleum Development of Oman, the New York Mercantile Exchange (NYMEX), and the DME.
The working group reported its findings to a steering committee that includes senior leaders from MOG and DME. The steering committee unanimously approved the findings. Furthermore, they instructed the working group to engage the energy and financial communities
on the specific terms of the draft futures contract. The planned launch date of the contract is the fourth quarter of this year.
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