The Dubai Mercantile Exchange is preparing to set up shop in Singapore, intensifying its efforts to make the crude futures it trades the benchmark for oil traded out of the Gulf.
The long-standing ambition to expand out of Dubai has received fresh impetus from the Chicago Mercantile Exchange (CME), the world's largest commodity exchange, which in February doubled its stake in the Dubai bourse to 50 per cent. "The CME catalysed it. One of the things the CME always wanted us to do was have an office out there," said Thomas Leaver, the outgoing Dubai Mercantile Exchange (DME) chief executive.
The DME's first office outside Dubai will be integrated into the CME's Singapore hub.
The DME adopted Oman crude futures as the benchmark for its oil pricing in 2009, and has since pushed for the contract to become the price reference for oil exported out of the Gulf. Futures trading on the exchange has increased steadily, and the bourse can now draw on the vast global capacities of the CME. In addition, the cash spent by the CME on increasing its stake will be reinvested in the DME.
Asia is a key export market for Middle East crude. While demand for oil is declining in countries in the Organisation for Economic Cooperation and Development, the appetite for energy in the developing economies of China, South Korea and other Asian states is growing steadily.
The DME wants to capitalise on Asia's growing stature in the oil market by asking Asian buyers to lobby Gulf producers to adopt the Oman contract as a benchmark for selling prices, Bloomberg News reported last month.
The DME will also try and convince Abu Dhabi to adopt its futures as the benchmark for the crude it will ship out of Fujairah once the export hub on the UAE's northern coast has been completed, Mr Leaver told the newswire.
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