Reports

New era in oil pricing: What you need to know about UAE ICE Murban Futures

Published on : 2021-03-29


Abu Dhabi has started trading its Murban oil futures contract today, aiming to consolidate UAE's position as a global oil power.

Murban is Abu Dhabi’s flagship crude grade and makes up more than half of the UAE’s total output. Besides helping to consolidate the UAE's role as a major producer in the future, the forward-based pricing method for oil will benefit producers, consumers and refiners as well as the world's crude oil markets as a whole, experts said. 

 

Here are the top 10 features of the Murban Futures contract you should know about:   

  1. Intercontinental Exchange Inc (ICE), an operator of global exchanges, clearing houses and a provider of data and listings services, has launched ICE Futures Abu Dhabi (IFAD), to host the world’s first futures contracts based on Abu Dhabi National Oil Company’s (ADNOC) Murban crude oil. 
  2. ADNOC produces around 3 million barrels per day (bpd) of crude, of which Murban light crude is about 1.6 million to 1.7 million barrels per day (bpd).  
  3. The futures contract for Murban, trading on the IFAD Exchange, will replace the less transparent retroactive pricing methods that have been used in the past years. It will adopt a forward-pricing method using the Murban futures contract as its price marker. 
  4. Besides Murban, ADNOC's other crudes are Das, Upper Zakum and Umm Lulu.   
  5. The new contract will create an alternative benchmark to the most commonly used Middle East standard, the Dubai/Oman benchmarks operated by S&P Global Platts and the Dubai Mercantile Exchange (DME).   
  6. ICE Murban Futures will be a physically delivered contract, with delivery at Fujairah in the UAE on a free on board (FOB) basis.    
  7. ADNOC had said it will remove all destination restrictions for all its crude grades ahead of launching its Murban futures contract. It has signed initial deals with Rongsheng Petrochemicals and Unipec to explore the use of Murban futures with Chinese end-users.   
  8. The ICE has approved 24 exchange members, of which 18 will be clearing members for IFAD. The exchange includes major global banks such as Citibank, ABN Amro and BNP Paribas.   
  9. Oil giants such as BP, Total, Inpex, Vitol, Shell, Petrochina, South Korea's GS Caltex, Japan's JXTG and Thailand's PTT have agreed to be partners in the exchange. 
  10. The Murban crude futures contract launched on Monday. The contract was priced at $63.93 per barrel as of 0100 GMT with 2,132 lots traded, ICE said on Twitter. Each lot is 1,000 barrels. 

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