UAE to Overhaul How It Prices All Crude Oil After Big Swings

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessUAE to Overhaul How It Prices All Crude Oil After Big SwingsAbu Dhabi National Oil Co., the UAE’s state oil company, said it would change how it prices its crude oil grades, months after wild swings in the benchmark it has been using to underpin its sales.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Abu Dhabi National Oil Co., the UAE’s state oil company, said it would change how it prices its crude oil grades, months after wild swings in the benchmark it has been using to underpin its sales. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountFrom Nov. 1, all Adnoc onshore and offshore crudes will price using a regional Dubai benchmark published by Platts, rather than the ICE Futures Abu Dhabi Murban contract that started in 2021. It also means pricing will be announced in the month prior to loading, rather than two months ahead. Bloomberg reported earlier this month that Adnoc had talked about making the switch for offshore grades, but Friday’s statement goes further. Middle Eastern oil pricing has been a major pinch point during the Iran war. The intermittent disruption to crude flows through the Strait of Hormuz has meant that prices have been hugely volatile, while some traders amassed large positions in regional benchmarks, adding to the bigger price swings. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe move will bring the United Arab Emirates more in line with other regional producers, like Saudi Arabia, and is significant for Asian oil refiners who usually dominate buying of the country’s barrels. But it also draws the curtain on the UAE’s efforts to establish its Murban oil grade as a regional oil-trading benchmark barely five years after it began trading. “The new pricing mechanism reinforces Adnoc’s commitment to pricing transparency for its growing customer and investor base,” the company said in a statement. Since the war began, Adnoc has been selling large volumes in tenders as it shuttles supplies out of Hormuz. In total, about 110 million barrels have been sold so far. It also has long-term agreements with customers.At one point in March, the Murban futures contract used to underpin Adnoc’s prices was trading north of $160 a barrel as supplies in the region were hit. Brent futures have peaked this year at $126 a barrel, though the physical Dated Brent benchmark topped $140. “It highlights the challenge of trying to be all things at once: a producer, a trader and a benchmark provider,” said Ahmed Mehdi, managing director of Renaissance Energy Advisors. “The contract suffered during the Hormuz crisis and this shift helps rebuild trust with customers.”Highly volatile regional pricing hasn’t just centered on oil. One of the world’s top commodity traders has embarked on a court case around the main shipping rate in and out of the region, arguing it has become distorted.ICE said in a circular that it would suspend all Murban futures contracts with no open interest immediately. It added that contracts with open interest would cease trading either when they expire or when they no longer have any open interest. Traders will still be allowed to deliver barrels at expiry for those contracts that continue to trade. It means a marker that launched in 2021 — but years in the making — will effectively shut down after just a few years trading. ICE President Ben Jackson said on the company’s earnings call on Thursday that it had seen a shift away from the Murban contract towards its Dubai marker, which is more actively traded. ICE said in its circular that it would meet the needs of customers currently trading Murban futures with its Dubai contracts instead. “We have seen a combination of more risks to be managed, but concerns around doing so with a physically settled contract as a result of uncertainties with the closure of the Strait of Hormuz,” Jackson said. Refiners that are allocated Adnoc supplies would usually convert their pricing exposure from IFAD Murban to the more liquid Dubai swaps — used by the majority of Asian refiners to hedge their price risk, according to Renaissance’s Mehdi. Platts is part of S&P Global Inc.(Updates from fourth paragraph with additional background on Murban and comment)This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.