FUJAIRAH, United Arab Emirates (Reuters) - State-owned Abu Dhabi National Oil Co (ADNOC) has chosen the Intercontinental Exchange (ICE) to launch a regional oil benchmark based on its Murban crude grade by next year, three sources familiar with the matter said.
The move is part of a broader transformation strategy by ADNOC as it seeks to emulate the success of rival oil majors and bolster its regional influence.
Two sources said ADNOC may launch a new Murban futures contract as early as February 2020.
“ADNOC has taken its decision. It chose ICE and plans to start trading Murban in February next year,” one of the sources said.
Reuters reported in July that ADNOC was in talks over the Murban benchmark plan with a number of exchanges, including ICE and the Chicago Mercantile Exchange (CME), as part of the company’s plans to overhaul its trading operations.
The Murban contract will create an alternative benchmark to the most commonly used Middle East standard, the Dubai/Oman benchmark operated by the Dubai Mercantile Exchange and traded on CME’s electronic platform.
The UAE, the third-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia and Iraq, pumps around 3 million barrels per day (bpd), produced mostly by Abu Dhabi-based ADNOC.
Murban light crude grade production is around 1.6-1.7 million bpd, and is exported from Fujairah on the Gulf of Oman.
For many years the UAE has traditionally sold oil directly to end-users, mainly in Asia, based on a retroactive pricing system rather than the forward pricing used by Saudi Arabia, Kuwait and Iraq.
Most Middle Eastern grades, including those of Saudi Arabia, are currently priced off the Dubai/Oman benchmark for Asian exports, off Brent-related indices for European exports and U.S. indices for U.S. shipments.
The world’s long-established top benchmarks, Brent crude and West Texas International (WTI), also deal in light crude oil, and trade at vast volumes.
ADNOC and ICE declined to comment.
Reporting by Rania El Gamal in Fujairah, additional reporting by Noah Browning in London; editing by Christian Schmollinger, Veronica Brown and Jan Harvey