Will Murban futures rock OPEC’s cohesion?

Will Murban futures rock OPEC’s cohesion?

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 has yet to provide details on the loading port, cargo size, quality and volume that it intends to put into this new venture. That being said, if ADNOC is expected to continue using its reference price as the average of Dubai/Oman, there will be no need for this data, which is currently provided today by the Price Reporting Agencies (PRAs). Otherwise, Murban would be the first Arabian Gulf crude grade that will not use PRAs. Murban is a sour crude but will be linked to the international futures price and, therefore, may not be linked solely to the Far East market. While other similar quality sour crude grades in the Arabian Gulf will continue to reflect prices of the Far East, only in distressed situations will Murban be linked to non-Asian destinations. The thing to watch is the introduction of new players. It is important that ADNOC not give to traders the possibility of manipulation. It will