Adnoc Ditches Murban Futures Amid Timing Flaws

Abu Dhabi's national oil company, Adnoc, is abandoning its plan to establish a global crude benchmark that could rival Brent. The decision follows a 'regular commercial review' and marks a retreat from an ambition to create a new market standard for the emirate's flagship grade of crude, Murban.

The move threatens the future of the Abu Dhabi exchange, with one crude trading specialist describing it as 'totally finished'. The exchange had hoped to attract buyers by pricing Murban through futures contracts, but extreme volatility in oil markets caused by the Iran war exposed a fundamental timing problem with the contract.

Adnoc will now revert to a previous system of quotas whose price is linked to benchmarks assessed in Dubai. This decision follows the UAE's announcement earlier this year that it would leave the oil producers group Opec, which could allow it to raise its oil production to over 5mn barrels a day by next year.

Ben Jackson, president of Intercontinental Exchange (ICE), said on Thursday that the exchange had already seen a shift away from trading Murban futures in Abu Dhabi to 'our more liquid Dubai contract', which is settled in cash. He described this as a 'permanent shift'.