Abu Dhabi is changing how it sells its oil, moving away from its goal of creating a global crude benchmark to rival Brent. Adnoc, the emirate’s national oil company, announced it would cease selling its Murban crude on an open market and revert to a system of quotas linked to Dubai-assessed benchmarks. This decision effectively ends the Murban futures contract on ICE Futures Abu Dhabi, which launched in 2021, much to the surprise of some market participants.
Five years ago, Abu Dhabi aimed to shake up the Gulf oil trade by pricing Murban crude through a futures contract on the new ICE Futures Abu Dhabi exchange, hoping it would stand alongside global markers like Brent and West Texas Intermediate. However, the Iran war and subsequent extreme oil market volatility highlighted a fundamental timing issue with the Murban futures contract. It was settled two months before oil loading, leading to price surges, especially when the Strait of Hormuz was closed, due to Murban's export location outside the strait. This created a security-of-supply premium that was then embedded in prices for cargoes loading weeks later, despite changing market conditions, prompting complaints from buyers.
From November, Adnoc will abandon Murban futures as the basis for its official selling prices, instead returning to a previous system that uses a regional Dubai benchmark published by Platts. This move is part of a "regular commercial review," according to Adnoc. Ben Jackson, president of Intercontinental Exchange, noted a shift away from Murban futures trading toward the more liquid Dubai contract, which is cash-settled. He believes this consolidation into a single regional Middle East marker may be a permanent shift, potentially signaling the end of the Abu Dhabi exchange's original ambitions. This change will bring the UAE more in line with other regional producers like Saudi Arabia and is significant for Asian oil refiners who are major buyers of the country's crude.
