Abu Dhabi National Oil Co. (ADNOC) is proposing a significant change to how it prices crude oil for its term customers. The company plans to set official selling prices (OSPs) for its Upper Zakum, Das, and Umm Lulu crude grades at a differential to the Dubai benchmark for cargoes loading two months ahead. Currently, these grades are priced at a differential to Murban futures, which are traded on the ICE Futures Abu Dhabi platform. This new methodology would align ADNOC's offshore crude pricing with wider regional trading norms and allow for easier comparison with other regional crudes like Oman and Al-Shaheen, which also typically trade against the Dubai benchmark on the spot market. No changes are proposed for the OSP formulation of Murban crude, Abu Dhabi’s flagship grade.
ADNOC's crude-marketing team has been in discussions with refiners and traders about these proposed changes, including recent visits to Singapore and Japan to explain the new approach. This shift could support ADNOC's plans to ramp up production and crude shipments, particularly following the United Arab Emirates’ exit from the Organization of the Petroleum Exporting Countries (OPEC) in May. The UAE’s departure from OPEC aims to maximize the value of its resources, free from the constraints of the producer group's quotas.
While ADNOC declined to comment on the proposed changes, sources familiar with the matter indicate that the company has already been tendering cargoes of these three grades, loading inside the Persian Gulf, at differentials to Dubai quotes this month, suggesting a trial of the new pricing approach. The exact timeline for the review or implementation of this new pricing system has not yet been outlined.
