Oman crude oil benchmark up 100% following Opec+ supply cuts

Supply cuts have boosted West Texas Intermediate, raising the benchmark above $30 per barrel for the first time in two months. Reuters

The Dubai-Oman crude benchmark, used by many Gulf producers to price their oil is up 100 per cent following production cuts implemented by the Opec+ alliance.

The commodity benchmark, which trades on the Dubai Mercantile Exchange more than doubled as the Saudi Arabian and Russian-led coalition of producers began to cut 9.7 million barrels per day for May and June.

Front-month July DME marker settled at $34.95 per barrel on Friday, up $18.13 per barrel rebounding from a record low of $16.82 per barrel on April 28.

The front-month contract recovered by nearly 108 per cent.

In the Middle East, Saudi Arabia – the world’s largest oil exporter – uses the Oman crude price quoted on the Dubai Mercantile Exchange.

DME is a joint venture between the world’s largest futures exchange, Chicago Mercantile Exchange Group, Dubai Holding, Oman Investment Fund and a number of banks and oil majors. It is based at the Dubai International Financial Centre.

Saudi Arabia, the UAE, and Kuwait also increased their voluntary commitments last week. Riyadh pledged to cut a further 1m bpd, bringing its output to the lowest in 18 years. Meanwhile, the UAE and Kuwait also said they would draw back 100,000 bpd and 80,000 bpd in June.

The supply cuts also boosted West Texas Intermediate, the gauge for US oil, raising the benchmark above $30 per barrel for the first time in two months during the opening session. WTI was up 9.24 per cent at $32.15 per barrel at 4.10pm UAE time. Brent, the international crude benchmark, was up 5.91 per cent at $34.42 per barrel.

WTI's ascent above $30 is in sharp contrast to its performance during the same time last month when it plunged to a record low of -$40 per barrel as the May futures contract neared expiring.