The May 1 launch could change the way nearly 15% of the world's crude is priced.
The Dubai Mercantile Exchange (DME) will launch a long-awaited Oman oil futures contract on May 1 that could change the way nearly 15% of the world's crude is priced.
The contract is the first for crude futures to have the backing of a Middle East producer. Oman has pledged to drop its policy of pricing its crude retroactively and to use the new crude futures contract instead.
Non-OPEC producer Oman is one of the smaller oil producers in the region.
Omani output is just over 700,000 barrels per day, but its crude makes up half the benchmark used to price 12 million bpd of Middle East exports sailing to Asian refiners.
The DME said is a statement on Tuesday that the Oman crude contract will begin trading on May 1 at 0200 local time (2200 GMT on April 30).
The launch of trading on the exchange is still subject to the approval of the Dubai Financial Services Authority (DFSA). Delays in the approval pushed the start date for trading to May from March, industry sources say. The DME did not previously made a start date public.
"We are very confident of meeting the launch date, the approval process is on track," the DME's Chief Executive Gary King told Reuters on Tuesday.
"There is a huge buzz about this contract. We are in a period of unprecedented confidence in the Gulf. Liquidity is the lifeblood of any exchange, and our programme to develop market makers to ensure good liquidity has been very well received."
The exchange has had a high volume of applications from companies that want to become members and market makers, King said.
Some traders and market participants hope that the contract will provide a more liquid, transparent benchmark for Middle East oil exports. If 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.
The DME will also launch contracts on May 1 to trade the spread between Oman and the sweeter London Brent crude and U.S. light crude. Market participants use spread trades for global shipments.
"We hope for some vigorous arbitrage trade based on these contracts," King said.
UAE fuel retailer Emirates National Oil Co (ENOC) and Emirates Airline are working with the DME to develop a jet fuel contract for launch later this year.
The DME is a joint venture between Oman, Dubai and the New York Mercantile Exchange (NYMEX). NYMEX will provide clearing services for the new exchange, also subject to approval from the DFSA.