ADNOC Abandons Murban Crude Benchmark in Favor of Dubai Pricing

Oil traders are preparing to close out positions in Murban crude futures contracts on the ICE Futures Abu Dhabi (IFAD) exchange, as Abu Dhabi National Oil Company (ADNOC) shifts its pricing mechanism. The change will take effect from November 1 and affects all ADNOC crude grades, including Murban, Das, Umm Lulu, and Upper Zakum.

The move comes after the Iran war disrupted oil exports through the Strait of Hormuz waterway, causing significant hedging losses among traders who deal with Abu Dhabi oil. Traders have used the Murban futures contract to hedge exposure to ADNOC's Official Selling Prices (OSPs), but this will no longer be relevant under the new methodology.

Jorge Montepeque, managing director of Onyx Capital Group, said that 'the recurrent closure of the Strait of Hormuz and general cautiousness by sellers and their buyers plus sudden changes in pricing methodologies has prompted a need for change in OSP formulas and spot selling practices.'