Oil traders prepare to unwind positions after ADNOC benchmark shift

Oil traders were preparing to unwind positions tied to the UAE’s Murban contract after Abu Dhabi National Oil Co. said it would switch the pricing benchmark for its crude grades to prompt-month Platts Dubai from Nov. 1. The change covers Murban, Das, Umm Lulu and Upper Zakum, and ADNOC said it was designed to align official selling prices more closely with the month cargoes are loaded.

ICE Futures Abu Dhabi moved quickly to address the shift. In Circular 26/013 dated July 31, the exchange said the ADNOC Murban Official Selling Price Methodology Change would involve suspension of certain ICE Murban crude oil futures contracts. That matters because benchmark-linked futures are not just paper instruments: they anchor physical cargo deals, shape hedging costs and help set the price signals that refiners and traders use across the Gulf.

The switch cuts into the logic that helped build Murban as a trading reference in the first place. ADNOC removed destination restrictions from its crude grades in March 2021 before the Murban futures launch, and ICE Murban crude oil futures began trading on March 29, 2021. ICE later said 20,124 Murban contracts changed hands on July 6, 2021, a record at the time, showing how quickly the market had built depth around the contract.

Now the balance is shifting back toward Dubai-linked pricing, which has been the main Asian benchmark since the mid-1980s, according to the Oxford Institute for Energy Studies. That benchmark prices almost 30 million barrels a day of crude exported to Asia. A 2019 Oxford paper described Murban as a potential benchmark for the Middle East, underscoring why ADNOC’s earlier push to elevate Murban was viewed as a strategic bid for pricing influence in the region.

For traders and refiners, the immediate question is whether open interest in Murban futures will be closed or rolled into other contracts as ADNOC’s official selling prices migrate to a different reference point. When the contract used to price physical barrels loses part of its central role, liquidity can drain quickly, spreads can widen and nearby delivery months can become harder to hedge with confidence. That has direct consequences for cargo pricing in the Gulf and for the credibility of Middle East oil references more broadly.

Reuters reported on June 30 that ADNOC had been mulling changes to the pricing mechanism for three oil grades, signaling that the shift had been under discussion before the formal announcement. The latest move is one of the biggest changes to Middle East crude pricing in years, and it raises the likelihood that trading activity will migrate toward Dubai-linked references rather than stay concentrated in Murban.