The global energy landscape has been undergoing a profound transformation − and the Middle East is at the heart of it. Traditionally viewed as a crude oil exporter, the region has rapidly evolved into a major refining and trading hub.
This shift is not just about rapid development of infrastructure − it’s also about global influence, and it is prompting a necessary re-evaluation of how gasoline produced in the broader region is priced.
Since 2017, refining capacity in the Gulf region has expanded by a third to more than 10.5 million barrels per day. This growth reflects a determined strategy by regional producers to move downstream and capture more value from their hydrocarbon resources.
The result is a significant increase in gasoline output from 1.7 million bpd to nearly 2.4 million bpd, enabling the region to not only meet domestic demand but also export surplus volumes.
Gasoline exports from the Middle East have more than doubled over the same period, rising to 654,000 bpd.
These flows are also becoming increasingly global.
Although the primary markets for supply and delivery of gasoline and other products remains the Gulf region itself, the regional demand comes from the east coast of Africa, Pakistan, the Red Sea and sporadically the Mediterranean. And there is supply competition from west coast of India and the Red Sea.
The market beyond these territories is really global: Asia, Singapore, the US and Australia.
To handle the complexity and extended reach, the big state-owned oil majors in the Gulf region have created their own global trading teams. The move has given them the necessary tools to react to market moves and positions during Asian, European and US trading days. These trading teams rival the best in the world on any scale.
However, despite the transformation in production and markets, the pricing of Middle East gasoline has remained anchored to a market that no longer reflects regional realities.
Historically, gasoline produced in the Gulf region has been priced using values derived from the Singapore market, adjusted for the cost of freight. This pricing mechanism made sense when Singapore was the primary destination for lower Middle East exports.
However, today, only a small fraction − just 7 per cent − of the region’s gasoline exports are shipped to Singapore. The rest are distributed across a diverse set of markets, each with its own supply-demand dynamics.
Moreover, the reliance on freight-adjusted “netbacks” introduces volatility and price dislocations.
Tanker rates have become increasingly unpredictable, driven by disruptions along key shipping routes and broader geopolitical tensions. These fluctuations can obscure the true value of the product, making it harder for buyers and sellers to transact with confidence.
In response to these challenges, Argus has developed a new pricing mechanism has emerged to reflect actual trading activity during the UAE business day, which is designed to capture local market fundamentals that reflect the region’s role in the wider markets that it delivers to.
Called “MEBOB”, the pricing mechanism lines up with Europe’s benchmark EBOB and RBOB, the measure for the US gasoline.
These benchmarks, along with Singapore’s gasoline, trade as a global complex, and traders use derivatives to balance price and manage exposure to changing values worldwide.
It follows the principle that the price of refined products in the Gulf should reflect the value of the commodity in the region and play its due role in the global gasoline trading complex.
The new mechanism is more than a technical innovation and is a recognition of a structural shift in global energy markets.
The Middle East is no longer a passive participant in refined product trade; it is a price-setting region. Its refineries are among the most advanced in the world, its export reach is global, and its trading activity is increasingly centred in regional hubs like Fujairah and Jebel Ali.
Of course, the success of any new benchmark depends on adoption. Market participants will need to see consistent liquidity, transparency and alignment with physical trade.
But the rationale is clear: pricing Middle East gasoline based on a market thousands of miles away, with limited relevance to regional fundamentals, is not optimal.
As energy flows become more multipolar and regional hubs rise in prominence, pricing mechanisms must evolve.
The Middle East’s refining expansion demands a benchmark that reflects its new role − not just as a producer, but as a global products supplier and one of the levers in global prices.
Will Harwood is vice president for oil business development at Argus Media
