DME and New Shanghai Exchange to Partner on Asian Futures Contract

The Dubai Mercantile Exchange and the fledgling Shanghai International Energy Exchange announced a deal to cooperate on a much-needed new Asian benchmark crude oil futures contract.

But Chinese authorities have not yet approved the Shanghai crude futures contract because of concerns about loosening restrictions on physical crude oil importation.

The Shanghai International Energy Exchange, known as INE, was set up a year ago with the aim of establishing an energy derivatives trading platform that would give China more control over pricing the oil it is buying in increasing volumes, mainly from Middle East producers. Currently, it is at the mercy of London and New York, where the bulk of the world’s oil futures trading takes place.

The DME has been a booster of INE’s plans from the beginning as its Oman crude futures contract – which is a benchmark for Middle East producers – would dovetail nicely with the Shanghai contract, which INE hopes will be a benchmark for Chinese oil consumers.

The tie-up between DME and Shanghai’s crude contract will certainly boost volume on the DME, Mr Fix said. “This will serve the actual Middle East–China trade flow and anything that does that will get the support of the oil producers and consumers.”

(hellenicshippingnews.com Edited by Topco)