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The oil and gas trading business in Dubai is one of the most lucrative businesses in the United Arab Emirates today. Dubai is famous for its oil fields and is considered to be a haven for entrepreneurs and businessmen alike as the scope for this business is ever-growing. So, starting an oil trading business in Dubai can be a very promising business to earn a good amount of money. If you are wondering How to Start an Oil Trading Business in Dubai, here we come to your rescue!
Also read: 5 Reasons Why Dubai Is the Best Place to Start a Business
Benefits of Starting an Oil Trading Business in Dubai
The financial advantages of trading in black gold might be well-known to most people. However, most of you might not know the added benefits of operating an oil trading business in Dubai.
The United Arab Emirates is ranked 7th on the top 10 list of oil-producing countries and it has many major benefits that come along with it.
- Best option to earn high profits when compared to other industries.
- UAE’s low-income, corporate, and customs tax rates are highly beneficial.
- Easy to trade overseas.
- Able to undertake any commercial activity which involves UAE oil reserves.
- Easy to network and collaborate with some of the world’s most important oil markets.
- The United Arab Emirates offers 100% repatriation of capital and profits.
- There are no currency restrictions imposed by the Dubai government.
- The prime location of the country with its strategic geographical location overlaps the time zones of various international markets and facilitates efficient transportation.
- Quick and economical company incorporation process.
- Complete support from the Dubai government.
These are some of the major key points to understand the benefits of starting an oil trading business in Dubai. Stop wasting time and start your very own oil trading business in Dubai by following these easy and simple steps we have curated just for you.
Even though these steps are easy and simple to do, some may find it difficult to get them done on time. Do not fret, we have got you! You can always get the help of business setup consultants in Dubai such as A&A Associate to get the job done for you while you sit back and relax.
How to Start an Oil Trading Business in Dubai?
Read this detailed step-by-step guide on how to start an oil trading business in Dubai and follow the steps accordingly. You can become the master of your own oil trading company in Dubai sooner than you think!
Step 1: Understand the Oil Market
Just as every industry requires prerequisite knowledge about the working of the industry before jumping head first into it, understanding the oil market is of primary importance. Knowing how the oil market works can help your oil trading business in Dubai flourish in no time. For that, you must gain some valuable knowledge about oil futures and other available options to completely understand the oil market.
The most popular way to trade and acquire oil in the United Arab Emirates is through an agreement or contract. Oil futures are contracts signed by two parties by agreeing to exchange a certain amount of oil for a specific price on a set date. This is one of the regular methods used by oil traders in Dubai. They can be contracted on futures exchanges that are similar to shares but unlike stocks, they are commenced in the form of oil benchmarks. In the United Arab Emirates, Abu Dhabi National Company (ADNOC) is the major shareholder with China National Petroleum Corporation (CNPC) owning the remaining shares.
Coming to oil options, they are similar to oil futures with one major difference. You can purchase a certain amount of oil for a specific price before the set date using the oil option. Moreover, the choice of trade is entirely up to you. If you do not wish to trade, you can cancel it anytime. Unlike oil futures, oil options do not give the buyer an obligation to trade.
Step 2: Decide the Way of Trading
The next step involves deciding the way of trading that you wish to implement for your oil business. As there are various ways through which oil trading can be done, selecting the right trading strategy is crucial for the success of your business.
You can decide whether you want to make an oil investment, trade via CFDs, buy oil options or futures, or start your own oil trading company in Dubai.
Step 3: Select a Location
Dubai offers you the option to establish your business either in the free zones, mainland, or offshore. As of now, there are more than 20 active free zones in Dubai. You can also start your oil company in the mainland of Dubai. But both these locations have their own set of advantages and disadvantages. Weigh out all the options before deciding to settle on a location for your oil company.
Step 4: Business Plan
A business plan is an essential and unavoidable part of starting any new business. You must prepare a detailed business plan for the oil trading business that you wish to establish in Dubai. Your business plan must include:
- Number of employees
- Products you wish to sell
- Markets
- Competitors
- Amount you wish to invest
- Critical success factors
- List of suppliers
- Marketing efforts
- Information about official operating office
- Details of business partners and financing
You can either start with a wholesale outlet or join hands with a foreign manufacturer to sell their products in the region.
Step 5: Select Business Name
Select a suitable name for your business and register it with the concerned legal department. You must follow certain conventions while choosing a name for your business in Dubai. Make sure that the name you chose is available for registration, otherwise, you will be required to choose some other name.
Step 6: Complete License Application Process
You are required to choose between a commercial license or a general trading license for your company. Even though a general trading license is costlier than a commercial license, it allows you to trade in the broader region.
Once you have decided on the license, you can apply for your trade license with the concerned legal body. Submit your application form along with all the necessary documents attached to it.
Step 7: Get Additional Approvals
Your trade license is just the first approval that you need for starting an oil company in Dubai. Depending on the nature of your activities, you will also be required to acquire approval from the SPC (Supreme Petroleum Council).
Step 8: Open a Corporate Bank Account
And finally, you need a corporate bank account to trade in the United Arab Emirates. Once you have completed all the legal formalities, you need to open a corporate v=ban account for seamless financial transactions.
Also read: How Business Consultants Can Help
Start Your Oil Trading Business in Dubai With A&A Associate
If you have the right knowledge, a detailed business plan, and the right documents, you can set up your oil trading company in Dubai without any complications.
Are you unsure about getting things right? A&A Associate can help you with business setup in Dubai. Sit back and trust us while your business unfolds.
