Lenin would not have dabbled in a capitalist activity such as oil pricing. Nevertheless he captured its essence. “Who whom?” – who can do what to whom – describes who sets prices and who just has to accept them. And Saudi oil giant Aramco has just decided that it will not be the one dictated to.
Aramco, the world’s largest oil company, is changing the basis on which it sets prices for its Asian customers. Since the mid-1980s, it has used the average of the Oman and Dubai crude prices assessed by Platts, a specialist energy information provider. It then applies a set of discounts or premia for each of its crude grades, to give a set of Official Selling Prices (OSPs). It adjusts these factors monthly depending on its view of the market, ensuring that it receives the best possible price while still being competitive for its customers. Kuwait, Iraq and Iran usually watch Aramco closely before setting their own OSPs.
But there have been no trades of Oman in the Platts pricing window in 2017 or this year, while the Dubai Mercantile Exchange (DME) has traded about 3,200 contracts daily this year. So Aramco will now shift from the Platts Oman assessment to using the Oman price quoted on the DME. Based in the Dubai International Financial Centre, DME is a joint venture of CME Group, the world's largest futures exchange, Dubai Holding, Oman Investment Fund and a number of big banks and oil companies.
For now, Aramco has gone half-and-half, using the DME Oman price and the Platts assessment of Dubai prices. This may satisfy traditionalists within Aramco, but it will eventually be simpler for the company to shift over to using DME solely.
This move should track the market better, avoiding either leaving money on the table, or overpricing and struggling for market share. It may also lead to a slight gain in pricing because of the improved risk management for customers available from hedging. DME offers contracts on the spreads (difference) between Oman crude oil, Brent (the European and main international marker), and various oil products, allowing refiners to hedge their exposure between input and outputs. As the exchange gains liquidity, it enters a virtuous circle of becoming more attractive to traders.
Oman has priced its sales on DME from its launch in 2007, and Dubai adopted DME pricing in 2009. Now, where Aramco goes, others will follow. Iraq’s State Oil Marketing Organisation looked at switching to DME last year, but although it has sold some surplus cargoes through the exchange’s auction system, it has not yet changed its pricing model. Adnoc set up a new trading unit in April, and in general is testing new approaches across its businesses. A move to adopt DME looks likely here too.
The Bahrain Petroleum Company, only a small player, will probably also concur. In the Gulf, that will just leave Kuwait, Qatar and Iran to decide.
Still, it is not just the lack of trading on the Platts mechanism which has forced Aramco's hand. In March, the Shanghai International Energy Exchange (INE) launched China's first crude oil futures contract. As I wrote then, this move was inevitable, given Beijing's desire for some control over its key imported commodity, but it was a concern for Middle East oil exporters.
The INE contract has several problems for traders – particularly, denomination in yuan, restrictions on crude imports into China, and the contract’s subordination to Beijing’s imperatives, which are in the direction of cheaper oil. An international, impartially regulated, dollar-denominated exchange such as DME will be preferable for most non-Chinese traders.
The contracts of INE and DME, which reflect similar underlying crudes, should trade closely in line. In practice, INE has traded often at a discount to DME, when it should be at least $2.50 per barrel above, allowing for transport costs from the Middle East to China.
In May and June, Asia’s largest refiner, China’s Sinopec, announced it would cut its long-term contract purchases from Aramco by 40 per cent. With usual variation only allowed within a range of plus or minus 10 per cent, Sinopec was playing hardball, arguing that Aramco’s prices were too high.
The Chinese state firm may also have been looking ahead to the possibility of acquired discounted cargoes from Iran as sanctions tighten.
Sinopec’s stance could be just a foretaste of what could happen as China’s oil thirst swells. In 2015, Sinopec and PetroChina, the largest Chinese oil firms, were accused of squeezing the market by acquiring nearly all the available Oman cargoes. Asia imports some 22 million barrels of crude daily, of which China hit a record high of 9.6m bpd in April. The Arabian Gulf countries collectively export about 19m bpd, and from this 5m bpd is Saudi crude to Asia, now under the new pricing methodology.
With the growing self-sufficiency of North America, and long-term expected decline in European demand, Asia is the key crude market today and tomorrow for the Middle East.
The key question is, who leads and who follows. Aramco’s decision puts DME in the driving seat, and it will be in an even stronger position if other Middle East producers follow. Aramco may not be able to fix the price of oil, but they can at least ensure it is not set six thousand kilometres away.
Robin Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Four-day collections of TOH
Day Indian Rs (Dh)
Thursday 500.75 million (25.23m)
Friday 280.25m (14.12m)
Saturday 220.75m (11.21m)
Sunday 170.25m (8.58m)
Total 1.19bn (59.15m)
(Figures in millions, approximate)
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
If you go...
Etihad flies daily from Abu Dhabi to Zurich, with fares starting from Dh2,807 return. Frequent high speed trains between Zurich and Vienna make stops at St. Anton.
%3Cp%3EThe%20Punishment%20of%20Luxury%3Cbr%3EOMD%3Cbr%3E100%25%20Records%3C%2Fp%3E%0A
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
More on Quran memorisation:
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
MATCH INFO
Fixture: Thailand v UAE, Tuesday, 4pm (UAE)
TV: Abu Dhabi Sports
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
North Pole stats
Distance covered: 160km
Temperature: -40°C
Weight of equipment: 45kg
Altitude (metres above sea level): 0
Terrain: Ice rock
South Pole stats
Distance covered: 130km
Temperature: -50°C
Weight of equipment: 50kg
Altitude (metres above sea level): 3,300
Terrain: Flat ice
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
