A new method of pricing Basra crude from Iraq using the
monthly average of DME Oman futures two months before the oil loads has not
gone down well with Indian refiners. Other Middle East producers like Saudi Arabia, Kuwait and Iran price their oils
one month before loading.
This means Iraqi crude loading in October would be priced off DME’s futures contracts in August.
This poses a risk to Indian buyers, who would only be notified by mid-September whether they had successfully bid for a cargo, making it hard for them to hedge against price changes in advance.
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