24 September 2012
Muscat: The partnership of the Oman Investment Fund in the Dubai Mercantile Exchange (DME) has been of crucial importance to the DME's success, chairman of the exchange told Times of Oman in an exclusive interview.
DME Oman is now the largest physically delivered crude oil futures contract in the world and the only credible benchmark for pricing Middle Eastern sour crude oil bound for the East of Suez, Ahmad Sharaf chairman of DME said, adding that "We look forward to continuing our already very successful and mutually beneficial relationship with Oman for many years to come.-
Sharaf, armed with previous experience working at various senior management positions with international and state energy companies in the United States and the Middle East, is currently at the helm of the DME. In a candid interview with Times Business, he outlines the growth, trends in the industry and a peep into the world of oil trading.
How successfully has DME made its presence felt?
DME Oman is a very robust contract that has a lot of demand in the market and our volumes have consistently increased over the years. A number of large producers, consumers and traders have been trading the DME Oman contract over the years.
Despite the global financial crisis, our volumes have been on the rise as the demand for futures trading is huge in the Asian markets. This coupled with the Middle East markets' continued growth. In addition, trading on the DME is done electronically and predominantly by traders from various international markets. The DME is currently authorised to operate in nearly 26 jurisdictions globally.
It is the leading energy focused commodities exchange in the Middle East and home to the benchmark sour crude oil futures contract, DME Oman. DME Oman is the only credible benchmark for Middle Eastern crude oil bound for the East of Suez markets.
What reasons do you attribute for the surge in volumes?
The DME Oman crude oil futures contract is the largest physically delivered oil futures contract in the world and is the only credible benchmark for oil trading for the Asian markets. When you combine this with the fact that oil consumption is rising dramatically in Asia, you have a means of fair pricing for the fastest growing oil supply/demand corridor in the world.
What strategy have you adopted to make DME as the premier energy exchange in the region?
The DME Oman contract provides the only credible benchmark for oil price discovery in the Asian markets. This makes us relevant and important on the global stage, and therefore our focus is on providing a fair and transparent means of pricing a regionally produced product for a global audience.
Going forward, we would like to explore the possibility to cooperate with the excellent regional financial institutions such as the locally owned banks, to help them take advantage of the international trade finance opportunities that might be available to them through the exchange.
What are the major trends being seen in the energy markets?
In general, there is a shift in power in the oil markets from the traditional power base of the Western economies to the increasingly significant markets in the East. Refineries in India and Asia are becoming increasingly larger consumers of crude oil and the Middle East is responsible for meeting much of that increased consumption.
This is what makes the DME so relevant in today's marketplace and why companies are increasing using the DME as a means of mitigating their risk exposure to this very exciting and developing market.
What are the major achievements of the DME?
The DME offers a contract that does not exist anywhere else in the world and which is the largest physically delivered contract globally. The consumption of oil in Asia has been growing rapidly and the demand for a crude oil benchmark, which is truly reflective of the economics of the region, has also been on the rise in the recent past.
These have been major contributors to the rapid rise in trading volumes on the DME, especially in the last two years complimented by the fact that we are helping to create new markets in the East.
Overall, trades on DME passed the three billion barrel-mark in May 2012, with a total of 3.478 million contracts (equivalent to 3.478 billion barrels) and annual average daily volumes growing at a compounded rate of 31 per cent during the period.
India's largest oil refiner, Reliance Industries Ltd (RIL), recently chose DME to be the first exchange they would be members of. This is a very significant step for Reliance and indicates the importance of DME in the Asian crude oil market.
What is the reason for DME Oman contract volumes touching new highs?
The consumption of oil in Asia is growing rapidly and the demand for a crude oil benchmark that is reflective of the economics of the region is also on the rise. There is beginning to be a bifurcation of the markets, where markets are acting more independently of each other. People are more and more working within their geographies and they are using DME Oman as a means of doing that.
Muscat: The partnership of the Oman Investment Fund in the Dubai Mercantile Exchange (DME) has been of crucial importance to the DME's success, chairman of the exchange told Times of Oman in an exclusive interview.
DME Oman is now the largest physically delivered crude oil futures contract in the world and the only credible benchmark for pricing Middle Eastern sour crude oil bound for the East of Suez, Ahmad Sharaf chairman of DME said, adding that "We look forward to continuing our already very successful and mutually beneficial relationship with Oman for many years to come.-
Sharaf, armed with previous experience working at various senior management positions with international and state energy companies in the United States and the Middle East, is currently at the helm of the DME. In a candid interview with Times Business, he outlines the growth, trends in the industry and a peep into the world of oil trading.
How successfully has DME made its presence felt?
DME Oman is a very robust contract that has a lot of demand in the market and our volumes have consistently increased over the years. A number of large producers, consumers and traders have been trading the DME Oman contract over the years.
Despite the global financial crisis, our volumes have been on the rise as the demand for futures trading is huge in the Asian markets. This coupled with the Middle East markets' continued growth. In addition, trading on the DME is done electronically and predominantly by traders from various international markets. The DME is currently authorised to operate in nearly 26 jurisdictions globally.
It is the leading energy focused commodities exchange in the Middle East and home to the benchmark sour crude oil futures contract, DME Oman. DME Oman is the only credible benchmark for Middle Eastern crude oil bound for the East of Suez markets.
What reasons do you attribute for the surge in volumes?
The DME Oman crude oil futures contract is the largest physically delivered oil futures contract in the world and is the only credible benchmark for oil trading for the Asian markets. When you combine this with the fact that oil consumption is rising dramatically in Asia, you have a means of fair pricing for the fastest growing oil supply/demand corridor in the world.
What strategy have you adopted to make DME as the premier energy exchange in the region?
The DME Oman contract provides the only credible benchmark for oil price discovery in the Asian markets. This makes us relevant and important on the global stage, and therefore our focus is on providing a fair and transparent means of pricing a regionally produced product for a global audience.
Going forward, we would like to explore the possibility to cooperate with the excellent regional financial institutions such as the locally owned banks, to help them take advantage of the international trade finance opportunities that might be available to them through the exchange.
What are the major trends being seen in the energy markets?
In general, there is a shift in power in the oil markets from the traditional power base of the Western economies to the increasingly significant markets in the East. Refineries in India and Asia are becoming increasingly larger consumers of crude oil and the Middle East is responsible for meeting much of that increased consumption.
This is what makes the DME so relevant in today's marketplace and why companies are increasing using the DME as a means of mitigating their risk exposure to this very exciting and developing market.
What are the major achievements of the DME?
The DME offers a contract that does not exist anywhere else in the world and which is the largest physically delivered contract globally. The consumption of oil in Asia has been growing rapidly and the demand for a crude oil benchmark, which is truly reflective of the economics of the region, has also been on the rise in the recent past.
These have been major contributors to the rapid rise in trading volumes on the DME, especially in the last two years complimented by the fact that we are helping to create new markets in the East.
Overall, trades on DME passed the three billion barrel-mark in May 2012, with a total of 3.478 million contracts (equivalent to 3.478 billion barrels) and annual average daily volumes growing at a compounded rate of 31 per cent during the period.
India's largest oil refiner, Reliance Industries Ltd (RIL), recently chose DME to be the first exchange they would be members of. This is a very significant step for Reliance and indicates the importance of DME in the Asian crude oil market.
What is the reason for DME Oman contract volumes touching new highs?
The consumption of oil in Asia is growing rapidly and the demand for a crude oil benchmark that is reflective of the economics of the region is also on the rise. There is beginning to be a bifurcation of the markets, where markets are acting more independently of each other. People are more and more working within their geographies and they are using DME Oman as a means of doing that.
© Times of Oman 2012
