China is planning to launch its oil benchmark in October, similar to Brent and WTI, striving for a more important role in establishing crude prices.
Unlike the western benchmarks, the Chinese contracts will be nominated in the yuan, not the US dollar, RT reported.
Shanghai International Energy Exchange, also known as INE, sent a draft futures contract to market players in August, according to Reuters.
Oil futures will be the first Chinese contract to permit direct participation of foreign investors. However, this is not the first step for greater oil market openness in China.
In July, Beijing allowed private companies to import crude. Previously, importing was only done by state-run majors such as Sinopec, China National Petroleum Corporation and China National Offshore Oil Corporation.
A Shanghai-based contract will compete in the crude futures market, which is worth trillions of dollars and is dominated by two contracts, London's Brent, seen as the global benchmark, and WTI, the key US price.
"The development of a futures market is closely linked to the physical market," INE said in a statement in response to questions about the new contract. "The more physical players participate, the better the liquidity of the futures market will be."
The launch of Shanghai crude futures won state approval last year and would be the first Chinese contract that allows direct participation by international investors.
North Sea Brent crude was first developed in the 1970s. The ICE Brent futures contract was developed in 1988. With an approximate output of only 1 million barrels per day, this blend is considered a benchmark and its contracts are now used to set prices for roughly two-thirds of the world's oil.
China is one of the world's largest oil buyers. Nearly 60% of its oil consumption are fed by imports.
