Key takeaways
- ADNOC will price all four of its Abu Dhabi crude grades against prompt-month Platts Dubai assessments from November 1.
- The new formula replaces a system based on Murban futures priced two months before cargoes load.
- Dubai’s spot premium strengthened Friday as trading activity increased, although Dubai and Oman premiums declined across July.
- The overhaul could reduce pricing and hedging mismatches during volatile periods while strengthening Dubai’s role as a regional oil benchmark.
Abu Dhabi National Oil Company is making a major change to the way it prices crude for international customers, shifting all four of its principal grades to the Platts Dubai benchmark as physical trading activity in the Middle East picks up.
Beginning November 1, official selling prices for Murban, Das, Umm Lulu and Upper Zakum crude will be calculated using prompt-month Platts Dubai assessments. ADNOC will add a premium or discount for each grade, announced during the month before the cargo is scheduled to load.
The mechanism replaces ADNOC’s current use of Murban futures traded on ICE Futures Abu Dhabi. Under that system, crude prices are determined two months before loading, potentially creating a gap between the official price and physical market conditions when volatility increases.
“The new pricing mechanism reinforces ADNOC’s commitment to pricing transparency for its growing customer and investor base,” ADNOC said.
Dubai benchmark gains greater influence
The overhaul represents a significant reversal for Murban’s role in regional pricing. ICE Futures Abu Dhabi launched Murban futures in 2021, making it the first Middle Eastern crude grade supported by its own tradable futures contract.
ADNOC initially considered moving only its offshore grades to Dubai-linked pricing. The final decision also includes Murban, the company’s flagship onshore crude and reportedly around two-thirds of its production.
ADNOC said the change should not materially affect its listed financial instruments, including bonds issued through its Murban GMTN and Sukuk programs. The producer also said it would continue meeting its delivery obligations.
ICE Futures Abu Dhabi said Murban futures contract months with existing open interest would continue trading, while months without open positions were suspended Friday. That leaves uncertainty over the contract’s longer-term position as a regional benchmark.
Physical crude trading picks up
The announcement came as the spot premium for benchmark Dubai crude increased during Friday’s trading session. Trafigura was the leading bidder for a third consecutive day, while premiums for Oman and Murban crude moved lower.
Despite Friday’s improvement, both Dubai and Oman premiums declined over July. Increased tanker movements through the Strait of Hormuz had improved supply expectations earlier in the month, but renewed Persian Gulf tensions have returned shipping risks to the market.
Two very large crude carriers carrying approximately two million barrels each passed through the Strait of Hormuz Friday. One was carrying Saudi crude loaded at Ras Tanura, while the other was transporting Iraqi Basrah crude to China. Overall traffic through the waterway remained limited.
By linking selling prices more closely to the physical loading month, ADNOC’s new formula could help customers manage pricing and hedging risk during periods of disrupted supply. It also gives the Platts Dubai assessment greater influence over Middle Eastern crude pricing at a time when regional trade flows remain unusually volatile.