The Department of Oil Affairs of the Government of Dubai has announced that it has notified its customers that the official price of Dubai crude oil, to be delivered in January 2015, will be 0.4 cents lower than the average daily settlement price of the Oman Crude Oil Financial Contract in Dubai Mercantile Exchange for contracts being traded over the next month.
Abdullah Abdul Karim, Director-General of the department, told WAM that the department sets the price of Dubai crude oil in the market to parallel Oman's oil prices, which reinforces the transparency of their pricing process commitment and sets a fair value for crude oil in the Middle East.
The official monthly price of Dubai crude oil - with the transition to the pricing of futures contracts - is determined in advance, wherein a differential price is set three months in advance (M-3), while the official final monthly price is determined at the end of the second month (M-2).
DME Oman crude oil is considered a benchmark for pricing crude oil by the countries that produce it, and it gives them a differential price that reflects the quality of the product.
Every day at 12:30 p.m. Dubai time, Dubai Mercantile Exchange determines the daily settlement price of the Oman contract, which is the average price of transactions made within the five minute period from 12:25 p.m. to 12:30 p.m., Dubai time.
On the last circulating day of the month, the settlement window lasts for 30 minutes from 12 p.m. to 12:30 p.m., Dubai time.