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[Saudi Arabia Aramco] plans to modify the pricing formula of its long-term crude oil sales in Asia, Saudi Aramco said Wednesday. As of October, marking the first change in standard materials on which Aramco has been fixing the official selling price of its oil since the mid-1980s.
The new formula will be based on the average monthly oil price Omani crude on the Dubai Mercantile Exchange and Dubai's average crude oil spot price on the Standard & Poor's Global Plats price platform. Saudi Aramco's official selling prices for October will be based on the average settlement prices of the Oman crude oil contract at the Dubai Mercantile Exchange and the December crude oil price in Dubai, according to Platts, who will both be set in October.
Saudi Aramco is expected to officially inform customers in Asia on Wednesday, sources said.
Saudi Aramco, the Dubai Energy Exchange and Plata did not respond to requests for comments when they were contacted by Reuters.
While Saudi Aramco's decision was a shock to the market, a proposal for a change of standard materials was discussed internally for years, according to sources.
The Dubai Mercantile Exchange (DME) launched Oman Oil Futures in 2007, the highest liquid futures contract in the Middle East. By contrast, deliveries of Oman crude oil are rarely offered during price adjustments when closing the market on the Platts platform. "It's obvious, look at DME volumes against Oman on Dishes," said Ady Imserovic, a lecturer at the Center for Energy Economics at the University of Surrey who wrote an article on the Middle East's Standard Petroleum Resources published in 2014.
Last year, the Iraqi Oil Marketing Company (SOMO) proposed to price the sale of crude from Basrah to Asia on the basis of contracts
Dubai Energy started shipping shipments from January, but the plan was postponed.
"Sumo was the first to think about it, but they did not consider the most likely options.Soo returned to zero box.Aramco did not leave the opportunity to Missing. "
Improving DME Trading
According to a Singapore trader, Aramco's decision could improve the liquidity of Omani crude oil futures traded on the Dubai Mercantile Exchange In the instruments derivatives that are not based on Omani crude oil contracts for hedging or price conversion purposes.
"It's a good change because the Oman crude oil contracts can not be covered on the Platts platform."
Aramco generally sets official monthly selling prices on the fifth day of each month, which in turn determine the price of Iranian, Kuwaiti and Iraqi oil, affecting more than 12 million barrels per day of crude destined for Asia.
It was not immediately clear if the rest of the Middle East producers would change the standard commodities on which their oil price is set.
A source in the Kuwaiti oil sector said, "We usually follow the big producers … We will probably need several months to see the market reaction, and we will decide."
