Oman crude oil contract delayed by Dubai Mercantile Exchange

The Dubai Mercantile Exchange (DME) has delayed the launch of its long-awaited Oman crude oil futures contract until May at the earliest in order to sort out regulatory issues, industry sources said. Trading on DME had been expected to start in March, but the exchange is still finalising its licence from the Dubai Financial Services Authority.
The exchange has concerns over its physical delivery process - a crucial element if the Oman contract is to succeed where other sour crude futures in Asia, Europe and the US have failed over the past two decades, they added.
There is a lot of pressure on Dubai entities to do initiatives very quickly.
A spokesperson for DME, a joint venture between the New York Mercantile Exchange (Nymex) and the governments of Oman and Dubai, declined to give a start-up date but said the regulatory process is nearing the final stages.
Industry sources say DME is adopting a cautious approach by delaying the launch to ensure it attracts enough liquidity in the first months of trade. The launch initially was set for the end of last year.
Many oil traders are awaiting the Oman futures contract which, if successful, could change the way the Middle East market trades and how Asian refiners price imports.
Oman's support for the contract through its 30 per cent equity investment and a pledge to drop its retroactive price policy has given traders hope that DME may become a more transparent, liquid benchmark for some 12 million barrels a day of Middle East exports sailing to Asia. If the contract is successful, it could eventually prompt Gulf producers such as Saudi Arabia and Kuwait, often sceptical of derivatives, to switch their pricing away from published Oman/Dubai assessments and onto the DME contract.