WTI, Brent and Dubai are widely quoted crude oil benchmarks, each reflecting a different blend of oil, location and buyer. For anyone looking to invest in WTI or other oil-linked assets from the UAE, understanding how the benchmarks differ helps explain why their prices diverge and what each instrument actually tracks.
Risk warning: oil prices can be highly volatile. Futures and contracts for difference (CFDs) on oil are leveraged derivatives: they are complex, losses can be rapid and, for some products, can exceed the money initially deposited. They are not suitable for many investors, particularly those without experience of leveraged products.
Crude oil is graded mainly by density and sulphur content. “Light” crude has a high API gravity, meaning it is less dense; “sweet” crude is low in sulphur, while “sour” crude has more. Lighter, sweeter grades generally yield more petrol and diesel with less processing.
Dubai and Oman are medium-sour Middle East crudes, and their monthly averages have long been the benchmark for Middle East crude sold to Asia. Oman crude futures trade on the Gulf Mercantile Exchange (GME), formerly the Dubai Mercantile Exchange, which launched in 2007, is based in the DIFC and is regulated by the Dubai Financial Services Authority. According to GME, Oman adopted its futures price as the basis for pricing oil exports to Asia, and Dubai adopted it for its crude exports in 2009.
The UAE also hosts a newer benchmark. Murban futures began trading on ICE Futures Abu Dhabi (IFAD) on 29 March 2021, with delivery at Fujairah, outside the Strait of Hormuz. Murban, with an API gravity of about 40, is lighter than Brent, WTI and Oman, and slightly higher in sulphur than Brent and WTI (US Energy Information Administration).
Because Asian refiners can buy from the Gulf or the Atlantic Basin, the gap between Brent and Dubai prices may influence where they source cargoes, and can signal shifts in the balance of sweet and sour supply.
Buying physical barrels is impractical for individuals, so exposure usually comes through financial instruments, which differ widely in how closely they follow a benchmark and in their risks.
Shares of oil producers, refiners and service companies are listed on ADX, DFM and international exchanges. Their prices reflect oil, but also costs, debt, management decisions, dividends and the wider stock market, so they do not track any benchmark one-for-one. Our guides to investment in Dubai and the UAE and to global stock market investment cover access to these markets.
Some funds hold a diversified basket of energy shares, while commodity funds typically gain exposure through futures. Futures-based funds must sell expiring contracts and buy later ones; when later contracts are priced higher, this rolling can reduce returns even if the spot price is unchanged.
Futures are standardised exchange-traded contracts: WTI on NYMEX, Brent on ICE Futures Europe, Oman on GME and Murban on IFAD. They are traded on margin, so a small price move can produce a large gain or loss relative to the money deposited, and positions must be closed or rolled before expiry. April 2020 showed how extreme such moves can be.
“USOIL” and “UKOIL” are labels that many CFD providers use for contracts referencing WTI and Brent prices respectively; naming varies by provider. A CFD is an agreement with the provider to exchange the difference in price between opening and closing a position. It is a leveraged trading contract, not an investment in oil, and the holder owns neither oil nor a futures contract.
Each benchmark reflects a different market. WTI reflects US supply and inland logistics, Brent reflects seaborne crude in the Atlantic Basin and much of global trade, Dubai and Oman reflect Gulf crude sold to Asia, and Murban reflects light Gulf crude delivered at Fujairah. Benchmarks often move together, so the choice matters most when spreads widen. Liquidity also differs: WTI and Brent futures are heavily traded, while in 2021 the EIA noted that Oman futures had low trading volumes compared with Brent and WTI.
Oil prices are cyclical and can be very volatile, and oil produces no income in itself. Many UAE residents already have indirect exposure to the oil cycle through regional equities, property and employment, which is worth taking into account. Any oil exposure is usually judged as part of the whole portfolio, as set out in our guide to asset allocation for investment portfolios, and in the context of Elevate’s investment approach.
WTI is a light, sweet US crude priced at Cushing, Oklahoma, while Brent is based on North Sea crudes and serves as the reference for most seaborne crude. Their prices usually move together, but the spread varies with quality, transport costs and regional supply.
Buying physical crude is impractical for individuals because it requires storage, transport and delivery. Exposure is usually gained through energy equities, funds or derivatives, each with different risks.
No. USOIL is a label many CFD providers use for contracts referencing WTI. A CFD is a leveraged trading contract with a provider, not an investment in oil, and losses can be rapid.
Dubai and Oman monthly averages have long been the benchmark for Middle East crude sold to Asia. Oman futures on the Gulf Mercantile Exchange are used to price exports from Oman and Dubai.
Common routes are energy shares and funds that hold energy shares or futures. Futures and CFDs are leveraged derivatives used for trading rather than investing, carry a high risk of rapid losses and are not suitable for many investors. Any exposure should be considered as part of an overall portfolio, through firms licensed in the UAE.