Dubai is worldwide famous for its oil fields. It is a heavenly place for businessmen and entrepreneurs who are looking to make their way into the oil business. The scope of this business is ever-growing in the UAE and the rest of the world. The oil business makes a huge contribution to Dubai’s GDP. So, it is safe to say that starting this business is a promising way to earn a good chunk of money.
Now that your interest in it has even grown more, the next thing is to get to know how to start an oil trading business in Dubai, UAE. In this informative piece of writing, you will learn the detailed process of establishing your oil business in Dubai without making any errors and in a timely fashion. So without any further ado, let’s jump right into it.
Required Documents to Start an Oil Trading Business in Dubai, UAE
There are a few different forms of identification, as well as a number of other documents, that must be shown when opening an oil trading business in Dubai, UAE. Before submitting your application, you should coordinate with the appropriate government bodies to make sure all of your paperwork is accurate and available.
Your business’s needs will determine exactly what you should have. However, you will typically be required to submit the following for setting up as an oil trader:
- Filled license application form
- Entry visa or stamp page copy
- a copy of your passport and business shareholders, if any
- two color passport photos
- A business plan
Process to Setup Oil Trading Business in Dubai
It is very easy to setup an oil trading business in Dubai, UAE. Simply follow the steps mentioned above and you will be on your way to running your own company. But remember that there are certain requirements that you must meet in order to open your oil company.
It is best for you to reach out to professional business setup consultants in Dubai like Riz and Mona to know about those special requirements. Furthermore, they will also help you out at every step of the process.
To start your oil trading business in the UAE, you need to do the following:
Step 1. Select a Company Name
The first step of the establishment of an oil trading company in the UAE is the selection of a name same to any other firm. In UAE You need to follow specific naming conventions while picking a business name.
In general, you should be avoiding using vulgar or unpleasant words. You should avoid abbreviations, blasphemous language, and popular corporate names when naming your business after yourself. For example, Mike Feather Oil Traders is perfect instead of M Feather Oil Traders. Additionally, make sure that your desired name is available for registration, or else you will require to choose some other name.
Step 2. Get an Idea of the Dubai Oil Market to be Successful
You must gain some knowledge of oil futures and available choices in order to comprehend the oil market. If you know how the oil market works, you can flourish in the market. One of the most popular ways to trade and acquire oil in the UAE is an agreement or contract. Oil futures are agreements between traders to swap a specific quantity of oil for a specific price on a specific date. You can make contracts with them on futures exchanges.
Like shares, oil futures are traded on exchanges. However, you can start them in the shape of oil benchmarks, which is not the case with stocks. The majority shareholder in the United Arab Emirates is Abu Dhabi National Oil Company (ADNOC), with the remainder owned by China National Petroleum Corporation (CNPC).
Now, let’s talk about oil options. As far as oil options, they are comparable to oil futures with one important exception. You are allowed to purchase a decided quantity of oil at a decided cost with an oil option before a specific date. Furthermore, the choice of trade is up to you. If you don’t want to trade then there isn’t a strict requirement to trade.
Step 3. Select a Trading Method
You also need to select a trading method for your oil business. As you have a number of ways to trade, you need to select a trading strategy wisely. You can look into the choices of trading investing in oil, CFDs, purchasing futures or options, and establishing your business in Abu Dhabi or Dubai.
Step 4. Look for a Local Sponsor for Your Company
Even if you are sharing ownership with a local sponsor, you will retain all the decision-making power. You do not have to share the profits according to the shared ownership. You need to pay the local sponsor a flat annual fee.
The UAE government prohibits foreigners from owning 100 percent of a company in industries that are vital to the nation’s strategic interests such as the oil and gas industry. This industrial sector plays an important role in generating UAE’s wealth. This is why they have a great deal of importance in the eyes of the UAE government. As a result, you will need to look for a local sponsor to co-own the business with you. These regional sponsors may be Emirati or UAE-based companies.
The decision-making power will still remain in your hands even if you and a regional sponsor are co-owners of the company. According to shared ownership, you are not required to split the profits earned through the business. Instead, you must pay a certain fee every year to your regional sponsor.
Step 5. Submit Your License Application
The most crucial procedure step is to request your UAE trade license once you are done with making the previous critical decisions of establishing your oil trading company.
You have to establish a mainland firm. For that, you must apply directly to the Department of Economic Development (DED) Dubai or the local equivalent in another emirate of the UAE. The majority of this process is done online, hence it is not a time taking process.
Step 6. Submit Your Visa Application
To work as an oil trader in the UAE, it is necessary to own both a trade license and a resident visa. There are various processes involved in applying for a visa, such as a physical examination, chest x-ray, and biometric scanning.
Additionally, you are able to sponsor individuals for visas if you have a UAE business license. If you are eligible, you can easily sponsor house workers, spouses, parents, or children.
Your eligibility to apply for a certain number of visas is dependent on the size of your business, the setup you’ve chosen, and your own financial situation in the case of dependent visas.
Step 7. Obtain Additional Approvals
In the next step, you will need to obtain other approvals after getting your visa and trading license. You must obtain clearance or approval from the SPC (Supreme Petroleum Council) depending on the commercial activity you decide to engage in and the type of business you are looking to run.
Step 8. Open an Account in Corporate Bank
Opening a corporate bank account is the last stage in launching an oil trading business in Dubai, UAE. As an investor from abroad, it can be challenging to obtain a bank account here. However, if you have an oil trading firm and a resident visa for Dubai, opening an account in any corporate bank will be easy.
Benefits of Opening an Oil Trading Company in Dubai
Most likely, you will know the lucrative advantages of black gold. For those who don’t know, establishing an oil trading business can do wonders for you such as:
- Taking advantage of the low customs, income, and corporate tax rates in the UAE, you can effortlessly deal in this valuable commodity.
- The procedure of forming a company in Dubai is quick and reasonably priced.
- Dubai is in a prime location that facilitates efficient transportation and overlaps the time zones of various international oil markets.
- The Emirates offers 100% repatriation of profits and capital.
- International trading via Dubai is very simple.
- There is no restriction on currency in Dubai.
- Dubai provides simple communication and easy cooperation with some of the most significant oil markets worldwide
FAQs – Frequently Asked Questions
How can I start an oil trading business in Dubai?
Step 1. Choose your company name
Step 2. Get an Idea of the Dubai Oil Market to be Successful
Step 3. Choose the Method of Trading
Step 4. Find a Local Sponsor for Your Company
Step 5. Submit Your License Application
Step 6. Make your visa applications
Step 7. Get Additional Approvals
How much does it cost to start trading in Dubai?
The cost to start trading in Dubai depends on the type of trading you want to opt for. We recommend getting in touch with business setup consultants in Dubai, UAE like Riz and Mona to get details of the cost to begin trading in Dubai.
How much is a trade license in Dubai?
The cost of a trade license varies from case to case. But, in general, it costs starts from AED 10,000 to obtain a Dubai trade license. Depending on the type of business activity, activity fees range from 150 to 500 AED.
Begin to Trade Oil in Dubai, UAE with Riz and Mona
That brings us to the end of the process of establishing an oil trading business in Dubai. We are confident that you are now aware of the advantages and the procedure for establishing an oil trading company in Dubai, you can start the legal process for it right away. However, if you are someone new to this business, it might not be simple. Therefore, it is important to get advice from professionals in the business setup before moving forward.
Riz and Mona are company formation specialists in Dubai having years of experience in this sector. We are immensely knowledgeable about the business and how the oil market works. We will help you with every stage of the process, with location selection, and with advice on the best ways to trade oil.
The legal paperwork can also be time taking and requires a lot of effort. But fret not, we can flawlessly complete it on your behalf on time. In addition to that, on your behalf, we can compile the necessary paperwork, submit it, and issue the necessary departmental approvals. You also won’t need to bother about getting a license. So, without wasting any more of your precious time, just contact us, and the rest will be handled for you with ease.