The Argus Dubai crude assessment is used extensively in crude pricing.
Middle East crude oil sold to the eastern markets is traditionally valued against the price of Dubai or an average of the prices of Dubai and Oman. This is because Dubai is one of the few Middle Eastern crudes to be sold without extensive destination clauses and is available to a freely traded open spot market. Dubai’s production, and therefore its market liquidity, has been in decline for many years. Few full cargoes of Dubai crude are now traded on the open spot market which means price discovery of the crude needs to reflect other transparent and liquid market indicators. Argus Dubai prices are identified through a swaps and spreads methodology.
Argus assesses the price of Dubai in the same way that the market assesses the value of Dubai. Companies that trade the Dubai market convert their Dubai price exposure into a Brent price exposure. They do this because Brent price exposure is easier to manage. The underlying traded volumes of Dubai swaps and the associated Ice Brent contract provide a more reliable and transparent basis for assessing the price of Dubai than any other methodological approach. Argus begins its assessment of the Dubai price by reporting the active market in Dubai swaps based in Singapore. Dubai swaps are traded as an exchange of futures for swaps (EFS). Argus identifies and reports the prevailing EFS price, expressed as a differential to the Ice Brent price. This EFS value is subtracted from the prevailing price of Brent on the Ice at 4:30pm Singapore time to establish a fixed price for Dubai swaps.
The Argus Dubai price is published in the Argus Crude daily market report. For full details of specifications and information on how Argus calculates front-month Dubai price, download the Argus Crude market-appropriate methodology.
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