Qatar joins Gulf producers in oil-price formula overhaul

Serene Cheong and Sharon Cho November 14, 2019

SINGAPORE (Bloomberg) - The days of using arcane ways to price oil are disappearing as more Middle Eastern producers ditch traditional selling methods.

Qatar Petroleum is set to join most of its Persian Gulf counterparts and price its crude before loading instead of afterward from next year, according to people familiar with the plans. That comes a couple of months after reports that Abu Dhabi National Oil Co. plans to list its flagship Murban crude as a futures contract in 2020.

Qatar and Abu Dhabi are the last two major Middle Eastern producers that still price their crude retroactively, with Saudi Arabia, Iraq, Iran and Oman all using forward pricing. Oil buyers have long grumbled about not knowing the price until a month after the shipment has loaded, making it challenging to compare the relative cost of different grades.

In addition to the switch to forward pricing, Qatar Petroleum is also planning to set its official selling prices at a differential to regional benchmark grades such as Dubai and Oman, said the people who were notified directly by the company and asked not to be identified as the information is private. It currently sells at outright prices.

The producer offered a rare cargo of January-loading Qatar Marine crude in a tender this week. That’s seen as a move to gather more information on the grade’s value against Dubai oil, the region’s most widely used benchmark.

Qatar Petroleum hasn’t finalized the exact timing for the implementation, although it could come as early as the first quarter, the people said. An email sent to the company’s media department wasn’t immediately answered.

Qatar, which left the Organization for Petroleum Exporting Countries this year, exported about 909,000 barrels a day of crude last month, with most of it going to Asia, according to data compiled by Bloomberg.

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