Today’s Number: 4 Billion Barrels

Image courtesy Dubai Mercantile Exchange

The Dubai Mercantile Exchange announced today that it has now reached the four billion barrel mark, with a total of four million contracts (four billion barrels) traded on the Exchange. This milestone comes just 10 months after the DME passed the three billion mark and continues the trend of strong trading growth on the Exchange.

Why such rapid growth for a Middle East-based oil benchmark? CEO Christopher Fix explained part of the reason in the company’s press release:

“With the increasing influence of countries such as China and India on global crude oil markets, DME is perfectly positioned to bridge these two sub-continents and provide the only appropriate benchmark for, and gateway into, the rapidly expanding East of Suez crude oil corridor.”

As Bob Levin wrote last year, China is looking for a benchmark oil contract on which to base prices. And a contract with four billion barrels traded in a little over five years might provide the liquid market they’re looking for, especially when that contract is based on crude with a much healthier production profile, and much closer to home, than what they must currently rely on.

The milestone was crossed at 12:28 pm Dubai Time February 5, with a trade between Japanese trading house Mitsubishi Corp, and the Anglo–Swiss multinational commodities trader, Glencore, highlighting DME Oman’s position as the most credible benchmark for oil trading for the Asian markets.

Last year, Lynn Strongin Dodds wrote about DME Oman’s quest for benchmark status.

Justin Bozzino is executive director of energy products at CME Group.

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