This article covers how you can start an oil trading business in the UAE.
The UAE is one of the world’s largest producers and exporters of oil, and the industry is a critical component of its economy. The UAE’s oil sector is dominated by the state-owned Abu Dhabi National Oil Company (ADNOC), which controls most of the country’s oil reserves.
Oil trading in the UAE primarily centers around the Dubai Mercantile Exchange (DME), established in 2007. The DME provides a platform for trading crude oil futures contracts, focusing on Middle Eastern sour crude oil, a crucial benchmark for regional oil pricing.
Other significant players in the UAE’s oil trading sector include international oil companies such as BP, Shell, and Total, with substantial operations in the country. These companies engage in various activities, including exploration, production, and marketing of oil and gas products.
The UAE is also home to several oil storage and trading hubs, including the Fujairah Oil Terminal in the Emirate of Fujairah, one of the world’s largest crude oil storage facilities. The facility serves as a key distribution point for oil shipments to and from the Middle East, Asia, and Europe.
Overall, the oil trading sector is a critical component of the UAE’s economy. It is accounting for a significant portion of the country’s GDP and provides employment opportunities for many people. Moreover, as global oil demand grows, the UAE will likely remain a key player in the global oil trading market.
Starting your Oil Trading Business
The UAE does not allow foreigners to fully own businesses in sectors that are strategically important to the nation. The oil industry is accountable for most of the country’s wealth, so it is deemed strategically significant. In short, you will require either a local national or a local company to have shares in your new local venture.
Professional services such as lawyers, accountants, and business consultants help you identify potential business partners in the UAE. Also, they guide you through the legal and regulatory requirements of doing business in the country.
Dubai Department of Economic Development (DED)
Hence, to incorporate a local oil trading company via the Dubai Department of Economic Development (DED), the following steps need to be taken:
- You will need a unique trade name for your oil trading business that complies with the DED’s naming guidelines. The name reservation can be done online.
- After choosing a trading name, you must obtain initial approval from the DED. This involves submitting the necessary documents. And these documents include a Memorandum of Association (MOA) and Articles of Association (AOA), to the DED.
- Once you have received the initial approval, the MOA and AOA must be notarized at the Dubai Courts Notary Public.
- You must obtain additional approvals from government agencies, such as the Minister of Energy and Infrastructure and the Supreme Council for Financial and Economic Affairs.
- Apply for a trade license: The next step is to apply for a trade license from the DED. This involves submitting the notarized MOA and AOA, your business’s tenancy contract, and external approvals from UAE government entities. Finally, you will be issued an invoice to settle the license fees.
Dubai Multi Commodities Centre (DMCC)
If your oil trading business is not dealing with local energy resources from the UAE, you can incorporate your company in a free zone and retain full ownership.
The Dubai Multi Commodities Centre (DMCC) is a free zone in Dubai home to many international commodity traders, including oil traders. It is the ideal free zone to incorporate your business for oil trading with an external focus.
The DMCC hosts various events and conferences throughout the year. They provide opportunities for oil traders to network with other industry players and showcase their products and services. This can lead to business opportunities and partnerships that can help oil traders to grow their businesses.
Get Expert Advice to Start Your Oil Trading Business Faster!
Lastly, starting a business that requires several government agency approvals is a cumbersome affair for those unfamiliar with the process. Our team of company setup professionals has facilitated thousands of entrepreneurs across multiple sectors. We can make your dream of owning an oil trading business a reality. We know how to get expedited approvals by submitting the correct documents and avoiding unnecessary delays. After all, when time is money, you can count on us!
Don’t forget to try our Cost Calculator to get an estimate for your business setup in Dubai.