Abu Dhabi chooses ICE for Murban oil futures

Abu Dhabi plans next year to start a commodities exchange to offer trading in the emirate’s first crude futures contract.

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.

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

Although oil producers across the Arabian Gulf pump about a fifth of the world’s oil, they have never had a region-wide, exchange-traded crude benchmark. Adnoc wants the new futures contract for its flagship Murban crude to eventually serve that function.

Futures trading

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.

Adnoc confirmed this week that it would offer futures in its Murban grade during the second or third quarter of 2020, without specifying where the contract would be listed. Murban is Adnoc’s most plentiful grade, at about 1.7 million barrels a day, and accounts for more than half of the crude pumped in the UAE. Abu Dhabi holds most of the oil in the UAE, the third-largest producer in the Organisation of Petroleum Exporting Countries.