Abu Dhabi launches new oil futures as it targets Asian refiners

Abu Dhabi began trading futures contracts for its most important oil grade Murban on Monday as the emirate seeks to create a rival regional benchmark as part of a big shake-up in the way its crude is traded. 

The Abu Dhabi National Oil Company began trading Murban futures on a new local exchange, the ICE Futures Abu Dhabi. It will compete with Dubai, operated by S&P Global Platts, and the Oman crude futures on the Dubai Mercantile Exchange.

The contract was priced at $64.03 a barrel as of midday in London with 6,293 lots traded, ICE said on Twitter. Each lot is equivalent to 1,000 barrels.

Adnoc said on Monday that the introduction of the Murban futures contract was the latest step in the company’s “transformation into a more market and customer-centric organisation”, giving buyers better price transparency, hedging flexibility and risk management abilities. 

By handing over pricing controls to traders and other investors, Abu Dhabi seeks to bolster its position in the international oil market, ultimately making Murban more attractive to Asian refiners that will drive crude demand in the coming years. 

Middle Eastern oil producers tend to base their export prices on benchmarks outside of the region, but for decades Adnoc has not, using a retroactive system for its direct sales to buyers. Rather than being told the price at which they will lift their cargoes at the end of each month, prices for June deliveries will be set two months in advance, using the Murban futures as a reference. 

Destination restrictions will also be removed from Murban, meaning it can be freely traded, unlike other major producers in the region that have for decades tended to stop buyers from reselling their oil as a means of asserting control over its crude.

“Murban . . . becomes even more attractive to market participants and will deliver greater value to Adnoc and its partners. This historic and strategic milestone reinforces the UAE and Abu Dhabi’s status as a leading global energy hub,” said Sultan Al Jaber, Adnoc chief executive.

Murban production stands at about 1.7m barrels a day, with output capacity of this crude accounting for half of the country’s total. Adnoc will price its other three crude grades, Das, Umm Lulu and Upper Zakum, at differentials to the Murban contract.

The new futures contracts will allow Asian refiners to directly hedge against market moves in Murban prices, rather than using derivatives linked to the Dubai crude grade. 



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