Dubai Exchange to restore oil trading

The DME was established two years ago by Dubai developer Tatweer, the CME Group that runs the commodities exchange in New York and the Oman Investment Fund.

Currently, two million barrels are being traded there daily according to its benchmark Oman crude oil contract: it is this price index that the DME wants to turn into the global reference point for the price of oil.

Today media outlets refer to the New York index when reporting on the price of oil.

The first move by the DME is to convince the regional producers, most importantly the world's number one producer, Saudi Arabia, to start using the Oman benchmark when setting export prices.

A DME official told the paper that the company was in talks with other regional producers such as Abu Dhabi, Kuwait, Iraq, Iran and Qatar, adding that others would follow Riyadh if they decided to switch.

Since the introduction of the oil embargo in 1973 by the oil-producing Arab states, together with Egypt and Syria, as a protest against U.S. support of Israel in the 1973 war, oil producing countries in the Middle East have become accustomed to controlling the price of oil by setting quotas during the regular meetings of the Organization of Petroleum Exporting Countries (OPEC).

While the income generated last year when the price of oil soared to record levels close to $150 a barrel was most welcome in the producing countries, the fact that much of the increase was due to speculation by investors and not by cuts in production was not equally welcome.