Rivalry for Asia oil benchmark heats up

China will increasingly dominate global oil trade with a fuel import bill worth US$500 billion a year by the end of the decade - a lucrative prospect for futures exchanges battling to provide the benchmark to price Asia's oil.

There is no dominant Asian contract to value the 30 million barrels of oil consumed on the continent every day - a third of global demand. The pricing competition is heating up as fuel trade tilts east, a long-term shift that saw China eclipse the United States as the world's top net oil importer in September.

Much of the world's oil supply is priced against futures contracts based on North Sea Brent and West Texas crude.

Crude exported to Asia is mostly produced in the Middle East and West Africa, and its value is linked to Brent.

Exchanges in Shanghai, Dubai and Atlanta are vying for dominance in Asian oil pricing, with crude from Oman and Siberia among contenders to unseat North Sea Brent.

"I just think it is unacceptable that there is no futures benchmark for Asia given the growing volume of demand," said Tony Nunan, a senior adviser on risk management for oil trading at Mitsubishi.

Without an Asian benchmark, global producers and traders lacked a clear price signal from the region, Nunan said.