New (sour) crude contract
The Sultanate of Oman’s Ministry of Oil and Gas (MOG) and the Dubai Mercantile Exchange Limited (DME) today announced the successful completion of their joint working group’s efforts to develop a new Middle East sour crude futures contract. Since signing a Memorandum of Understanding (MoU) in February 2006, the two parties have undertaken an intensive analysis of the benefits and implications of developing an Oman-backed physical crude oil futures contract.
Such a contract would eliminate the basis risk between the (sweet) Brent and WTI crudes that are the current world benchmarks and most Middle East (sour) crude. For producers and consumers this would eliminate unwanted risk in hedging programs; for traders it would provide a more efficient way to trade this spread, adding liquidity and improving price discovery and signals for producers and refiners globally.
Meanwhile, WTI and Brent contracts hit record high prices…
