By Satish Kanady
DOHA: With the GCC ramping up its refining capacity and energy consumption keep soaring; there is a strong demand for setting up independent Middle East oil products benchmarks. Establishing independent oil products benchmarks would significantly help leverage the region’s position as a serious global trading hub, according to experts.
Independent benchmarks are underpinned by transparency, robust methodologies and a level playing field that allow price formation to take place in the open, rather than behind closed doors. This gives all market participants robust pricing data and insights on which to base their trading activities.
The demand for commodities, including oil products, is steadily shifting from west to east and the Gulf is well-placed at the heart of the global crossroads, “Gulf Intelligence” (GI) reported.
Disclosing the outcome of its latest industry survey, the GI noted: “As the Gulf ramps up its refining capacity and energy consumption soars, independent Middle East oil products benchmarks are a must have, according to 72 percent of respondents to the GI Industry Survey. Nearly a quarter (22 percent) said independent benchmarks would be nice to have, but not critical, while 6 percent said there are already plenty of global price points.”
Prices made in Singapore are used to value most of the refined products produced, consumed and traded in the Middle East. Even pump prices in the UAE are determined by Platts Singapore. Yet, the netback pricing from Singapore does not reflect trade flows in the Gulf. Gasoline, diesel, jet fuel and naphtha are the main oil products in the Gulf’s trading ecosystem. While Fujairah is continually growing, it is not even close to matching the might of Singapore where approximately 120 companies actively trade refined products.
But establishing independent oil products benchmarks would significantly help leverage the region’s position as a serious global trading hub, the GI report said.
It is a critical time for Fujairah to finetune its potential. China, the world’s largest crude importer, is looking to establish its own crude derivatives contract. Beijing hopes it will evolve into the world’s third global crude benchmark, alongside London’s Brent and the US’ West Texas Intermediate (WTI). If realized, trillions of dollars would flow through the Shanghai International Energy Exchange (INE) and it would be considerably harder for Fujairah’s independent benchmarks to gain traction on the global trading circuit. An awareness campaign that not only highlights Fujairah’s rapid infrastructure expansions, but also the key points surrounding trading would be hugely beneficial on several levels – a champion to communicate the region’s ambitions. Enhancing awareness would add to the current momentum to establish independent oil products benchmarks in the Gulf.
A Whitepaper released by the GI on the ‘Outlook for the establishment of Middle East benchmarks’ noted oil consumption in the Arab region was less than 1 percent of global demand in 1973.
Forty years later, the GCC, with just 0.5 percent of the world’s population, consumed less than 5 percent of its oil.
Primary energy consumption in the past decade has grown more than twice as fast as the world average of 2.5 percent per year. The Gulf’s 2001 consumption of 220 million tonnes of oil equivalent nearly doubled by 2010 and is expected to nearly double again by 2020.The Peninsula
By Satish Kanady
DOHA: With the GCC ramping up its refining capacity and energy consumption keep soaring; there is a strong demand for setting up independent Middle East oil products benchmarks. Establishing independent oil products benchmarks would significantly help leverage the region’s position as a serious global trading hub, according to experts.
Independent benchmarks are underpinned by transparency, robust methodologies and a level playing field that allow price formation to take place in the open, rather than behind closed doors. This gives all market participants robust pricing data and insights on which to base their trading activities.
The demand for commodities, including oil products, is steadily shifting from west to east and the Gulf is well-placed at the heart of the global crossroads, “Gulf Intelligence” (GI) reported.
Disclosing the outcome of its latest industry survey, the GI noted: “As the Gulf ramps up its refining capacity and energy consumption soars, independent Middle East oil products benchmarks are a must have, according to 72 percent of respondents to the GI Industry Survey. Nearly a quarter (22 percent) said independent benchmarks would be nice to have, but not critical, while 6 percent said there are already plenty of global price points.”
Prices made in Singapore are used to value most of the refined products produced, consumed and traded in the Middle East. Even pump prices in the UAE are determined by Platts Singapore. Yet, the netback pricing from Singapore does not reflect trade flows in the Gulf. Gasoline, diesel, jet fuel and naphtha are the main oil products in the Gulf’s trading ecosystem. While Fujairah is continually growing, it is not even close to matching the might of Singapore where approximately 120 companies actively trade refined products.
But establishing independent oil products benchmarks would significantly help leverage the region’s position as a serious global trading hub, the GI report said.
It is a critical time for Fujairah to finetune its potential. China, the world’s largest crude importer, is looking to establish its own crude derivatives contract. Beijing hopes it will evolve into the world’s third global crude benchmark, alongside London’s Brent and the US’ West Texas Intermediate (WTI). If realized, trillions of dollars would flow through the Shanghai International Energy Exchange (INE) and it would be considerably harder for Fujairah’s independent benchmarks to gain traction on the global trading circuit. An awareness campaign that not only highlights Fujairah’s rapid infrastructure expansions, but also the key points surrounding trading would be hugely beneficial on several levels – a champion to communicate the region’s ambitions. Enhancing awareness would add to the current momentum to establish independent oil products benchmarks in the Gulf.
A Whitepaper released by the GI on the ‘Outlook for the establishment of Middle East benchmarks’ noted oil consumption in the Arab region was less than 1 percent of global demand in 1973.
Forty years later, the GCC, with just 0.5 percent of the world’s population, consumed less than 5 percent of its oil.
Primary energy consumption in the past decade has grown more than twice as fast as the world average of 2.5 percent per year. The Gulf’s 2001 consumption of 220 million tonnes of oil equivalent nearly doubled by 2010 and is expected to nearly double again by 2020.The Peninsula
