Is ADNOC’s Murban Futures a Threat to OPEC’s Cohesion?

Is ADNOC’s Murban Futures a Threat to OPEC’s Cohesion?

The first expiry month for new Murban crude futures will be June 2021. Abu Dhabi National Oil Company (ADNOC) will soon start its futures market for its flagship Murban crude, which from June 2021 will form the basis for its monthly official selling price for oil exports. The Intercontinental Exchange plans to launch an Abu Dhabi-based exchange, on which the Murban futures contracts and related cash-settled derivatives and inter-commodity spreads will start trading by the end of this month. The first expiry month for new Murban crude futures will be June 2021. The Murban crude forward pricing might also be used as a hedging mechanism as it will be traded in the physical spot market. However, it is not yet clear if the Murban futures contract will be a suitable tool to hedge all of the Arabian Gulf sour crude exposures, as Asian refiners and international traders need to hedge their sour crude grades from the Arabian Gulf. Asian refiners currently struggle to have a proper hedging tool. Their basis risk is large as the quality of the Arabian Gulf sour crude grades differ from Brent and West Texas Intermediate benchmarks and are very different from Murban itself. Furthermore, ADNOC