Investments in refining infrastructure and rising regional production have led to calls for a dedicated Middle East gasoline benchmark
Global energy and commodity price reporting agency Argus has launched a new “MEBOB” daily assessment, directly reflecting the price of gasoline produced and loaded in the Middle East.
Refining capacity in the Mideast Gulf has risen to over 10.5mn b/d as of last year. Underlying demand has also grown in and around the region. The production of gasoline has increased in the past seven years from about 1.7mn b/d to close to 2.4mn b/d and gasoline exports have more than doubled to 654,000 b/d from 270,000 b/d, including intra-regional flows.
Historically, gasoline made in the Middle East has been priced using a Singapore market value adjusted for freight. But increasingly this approach does not reflect local supply and demand conditions. And recent volatility in tanker freight rates, caused by disruptions on key routes, has added further distortion.
As a result, the two markets are increasingly independent of each other.
The Argus MEBOB assessment is an outright price based on local activity during the UAE trading day and is not derived from the Singapore market. Argus is facilitating the conduct of trade with its Argus Open Markets platform — a real-time electronic price discovery tool.
Argus Media chairman and chief executive Adrian Binks said: “The Middle East needs its own independently assessed gasoline price representing local market fundamentals and not those of a faraway and increasingly disconnected region. The MEBOB price offers important transparency, will enable better risk management and planning, and completes a global market picture.”
The new MEBOB price has been developed in close consultation with local producing, consuming and trading companies. It represents the price of oxygenated 92 Ron gasoline, which is widely available in the region, as loaded in Fujairah, Jebel Ali or Sohar. Market information about other qualities of gasoline and loading ports can also be considered on an adjusted basis to create the price. Argus also publishes octane and crack spreads to further increase transparency in the region.
The MEBOB price complements the Argus Eurobob gasoline price, which is the industry-wide benchmark for Europe. Derivatives settled on Argus Eurobob are used to manage price exposure across Europe and the global gasoline complex.
Discover the latest trends and insights—explore the Business Insights Journal for up-to-date strategies and industry breakthroughs!
