Abu Dhabi National Oil Co. is proposing a new pricing methodology for crude supplies to term customers, opting for an approach more aligned with wider regional trading norms. According to people with direct knowledge of the matter, the UAE's biggest oil company has spoken with refiners and traders about the changes and traveled to Singapore to explain the proposals, with the team subsequently visiting Japan for similar discussions. The crude-marketing team has been discussing these changes with industry participants while maintaining the confidentiality of ongoing negotiations.
Under the proposed plan, monthly official selling prices for Upper Zakum, Das and Umm Lulu crude grades would be set at a differential to the Dubai benchmark for cargoes loading two months ahead, as reported by people with direct knowledge of the matter. Currently, these OSPs are set by Adnoc at a differential to Murban futures, which are priced on the ICE Futures Abu Dhabi platform. No change was proposed for the OSP formulation for Murban crude, Abu Dhabi's flagship grade. The new pricing structure would allow easier comparison of relative pricing for these Gulf crudes with other varieties such as Oman and Al-Shaheen, which typically trade against the Dubai benchmark on the spot market. As noted by Vandana Hari, founder of Vanda Insights in Singapore, "the divergence between Murban and Dubai pricing over recent months also makes the rationale for the change even stronger."
No timeline for the review or implementation of these proposed changes has been outlined, according to people with direct knowledge of the matter. Adnoc has declined to comment on the proposed changes to its crude pricing methodology. The company's current pricing approach has been among the most successful in the Persian Gulf region for shipping crude through the Strait of Hormuz during recent months of war, including the use of dark tactics like turning off transponders.
The proposed changes could support Adnoc's plan to ramp up production and shipment of its crude following the United Arab Emirates' exit from the Organization of the Petroleum Exporting Countries in May, as reported by people with direct knowledge of the matter. The company has been among the most successful Persian Gulf producers in shipping crude through the Strait of Hormuz over the past months of war, including with dark tactics like turning off transponders. Adnoc also sold tens of millions of barrels of prompt crude in the spot market while pushing term buyers to collect their oil from inside the gulf to keep exports flowing. The change, if implemented, would particularly benefit Upper Zakum, Umm Lulu and Das crude grades, which are medium sour crudes with higher sulfur content and would be better priced off similar-quality Dubai rather than lower-sulfur Murban.
