The energy market could have a new benchmark oil price when Dubai launches its Middle East sour crude futures contract as an alternative to New York's NYMEX light crude oil futures and London's IPE Brent crude oil.
The futures contract starts trading at 6 pm New York time.
The launch comes after market players recently began to recognize London Brent crude futures as more representative of the global market than the main crude-oil benchmark trading on Nymex Holdings' New York Mercantile Exchange, the Wall Street Journal reported.
The Middle East contract launch is not expected to rob NYMEX of its market share. Instead NYMEX Chief Executive James Newsome predicts the contract to expand trading volumes, the paper said.
The Middle East accounts for about a third of global oil production.
The DME is a joint venture of Tatweer, a unit of the Dubai government's investment vehicle Dubai Holding, and the New York Mercantile Exchange.
The DME's objective is to give the Asian oil consumer a "more transparent, publicly traded pricing mechanism to gauge sour-crude prices and manage the risks of volatile energy markets", according to the Journal.
Sour crude has higher sulfur content and is more difficult to refine than types of lower-sulfur-content oil know as sweet crude.
There have been attempts before to develop a benchmark futures contract for Middle East sour, including one by the NYMEX in 1992, but those have failed to attract investor and trader interest, Reuters reported.