Almost four years into Dubai's bid to become the oil trading centre of the Middle East and Asia, the Dubai Mercantile Exchange (DME) is hitting ever higher trading volumes but has yet to land a major oil producer to push it into the big league.
Trading in the exchange's benchmark crude oil futures contract, the DME Oman, based on the grade of crude oil produced in Oman, grew 35 per cent last year compared with 2009. Its daily volumes were about 2,898 lots - the equivalent of almost 3 million barrels.
Despite efforts to convince more producers and refiners to price oil sales on the DME Oman, only the two founding partners of the exchange - Dubai and Oman - use the benchmark. Together they represent just 6 per cent of the oil production of the Gulf.
Thomas Leaver, the chief executive of the DME, said he was prepared to wait years if necessary for the exchange to become the dominant oil hub of the East of Suez market.
"The organic growth has been fantastic," Mr Leaver said. "There isn't any question in anyone's mind about that. The tipping point comes from more producers adopting it beyond Dubai and Oman."
He said he was confident that once one major oil producer or refiner made the transition to the DME Oman, many more would follow quickly.
Most East of Suez crude producers price their oil on Platts' Dubai/Oman assessments. The DME pitches itself as more accurate and less prone to manipulation.
Trades on the DME are physically settled, meaning oil is actually delivered at the end of a contract, and the DME is regulated by the Dubai Financial Services Authority. The DME Oman is also based on crude oil not subject to Opec quotas and better reflects the supply-and-demand fundamentals of the Middle East.
Of the Platts methodology, Mr Leaver said: "It isn't as transparent as buyers meeting sellers and establishing a price, as one sees every day on the DME".
The DME's strategy in the year ahead was focused on explaining to oil exporters, such as Abu Dhabi National Oil Company and Saudi Aramco, and refineries that the DME Oman contract was the most accurate benchmark for pricing their oil, Mr Leaver said.
Among the oil exporters targeted are Iran, Iraq, Abu Dhabi, Qatar, Saudi Arabia, Kuwait, Yemen, Sudan, Vietnam, Australia and Russia. The challenge is the "inherent conservative nature of many of these countries to move away from something they know", he said.
"Change comes slowly at a lot of national institutions, whether they be refiners or producers," he said.
Dubai's efforts to become an established oil trading hub have been slowed in recent years by the financial crisis, a spike in commodity prices in 2008 and this year, and social unrest in parts of the Middle East and North Africa, Mr Leaver said.
Video interview online with Thomas Leaver, the chief executive of the Dubai Mercantile Exchange, by Thomas Ashby, the business editor of The National
