Abu Dhabi Set to Open ICE-Operated Exchange for Murban Oil Futures

BY Tiya Chatterji 14.Nov.2019

Oil-rich Abu Dhabi plans to begin a commodities exchange to propose trading in the emirate’s first crude futures contract by next year. The platform will be based in Abu Dhabi’s financial district and operated by Intercontinental Exchange Inc, according to people with knowledge of the situation. Atlanta-based ICE will be the majority owner, with Abu Dhabi National Oil Co. and several European and Asian oil companies and traders taking minority stakes, the people said, asking not to be identified because the information isn’t public as of now.

Media officials for ICE and government-run Adnoc declined to comment.

Murban is lighter and contains less sulphur than most Middle Eastern crudes, making it easier to refine. It generally fetches higher prices on global markets and is very similar in quality to Brent crude, the global benchmark. Brent crude futures are traded on the London-based ICE Futures Europe Exchange. The oil producers across the Arabian Gulf pump about a fifth of the world’s oil, although they have never had a region-wide, exchange-traded crude benchmark. Adnoc wants to explore new futures contract for its flagship Murban crude to eventually serve that function.

Futures trading “is going to capture more value” from the sales, UAE Energy Minister Suhail Al-Mazrouei said on Wednesday. Abu Dhabi’s production and reserves are large enough to support Murban as a benchmark, though “we will wait and see” whether regional producers adopt the contract as a basis for pricing, he told reporters.