Qatar has dropped the link to Oman's crude for pricing oil exports from August, the month that Oman started using the Dubai Mercantile Exchange's futures contract, an industry source said on Sunday.
The change means Qatar's oil will not be valued at a price directly related to the DME. "The contracts are being reworded and no longer use Oman as a reference," the source said. "They thought it better to change since Oman has changed to the Dubai Mercantile Exchange."
Until now, Qatar has priced its crude retroactively using as one of its references a differential to the price of Oman oil in the spot market. But Oman has switched its oil pricing to the new futures contract on the DME, effective from August.
Qatar will continue to price its crude retroactively but will use other references to set the official selling price, the source said. "Qatar already used other references, not just Oman, to set the outright price," he said. "This will continue. The only difference is that Qatar won't use Oman."
Qatar has not ruled out using Oman again in the future and will be monitoring the performance of the DME futures contract, the source said. The DME launched its Oman futures contract three months ago, the first sour crude futures contract backed by Middle East producers.
Both Oman and Dubai have said they would price their crude against the futures contract. The DME had hoped that other larger oil producers would follow suit, but none to date has done so.
Oil traders hoped the contract would change the way some 12 million barrels per day (bpd) of oil heading to Asia was priced. Qatar is OPEC's smallest producer, with crude output of around 800,000 bpd.