ABU Dhabi yesterday started trading futures contracts for Murban crude, its biggest oil grade, in a bid to create a benchmark for the global energy market.

The aim is “to make sure that Murban is a globally freely traded commodity and allows everybody around the world to use it either for pricing or hedging their risk,” said Khaled Salmeen, executive director of supply and trading at government-run Abu Dhabi National Oil Co. (ADNOC). “It provides an additional tool that the market has been looking for.”

ADNOC began trading Murban futures on an Abu Dhabi exchange yesterday, marking the first time a Persian Gulf OPEC member has allowed its oil to be freely sold and shipped anywhere in the world. Atlanta-based Intercontinental Exchange Inc. is operating the platform known as ICE Futures Abu Dhabi.

Trading on the contract’s first day has “been a real success so far,” Stuart Williams, president of ICE Futures Europe, said. “We have greater aspirations for this contract,” Williams said of the ambition to establish Murban as a regional benchmark.

Once trading volumes and liquidity are established, ICE and ADNOC will seek to advance talks with other national oil companies in the region about adopting Murban futures as a pricing reference for their sales.

The region’s main producers, including Saudi Arabia, Iraq and the United Arab Emirates, of which Abu Dhabi is the capital, tend to stop buyers from reselling their oil. They also use benchmarks from outside the Middle East to price much of their crude.

ADNOC can produce about 2 million barrels of Murban crude a day and has pledged to guarantee at least 1 million barrels of daily exports to support trading on the exchange.

The UAE is the third-largest producer in the Organization of Petroleum Exporting Counties, which cut supplies last year as the coronavirus crushed energy demand.

ADNOC has more than 60 customers in about 30 countries, which will help support demand for Murban and ensure no buyer can exert undue influence on the market, Salmeen said.

OPEC+, a broader group including countries like Russia, meets this week to discuss whether to further ease the production cuts that began last May. Those supply curbs and the rollout of vaccines have caused the established global benchmark, Brent crude, to surge roughly 63 percent since the start of November to about US$63.50 a barrel.

Still, the rally has faded this month amid a new wave of virus cases, which may push some OPEC+ members to argue that the cartel can’t raise output just yet.

Price levels in the range of US$60 a barrel are “a sustainable average,” Salmeen said.

Last week’s closure of the Suez Canal after the Ever Given container ship ran aground won’t cause major issues for oil markets, he said. Markets are well supplied and buyers can draw from high inventories to avoid any shortages, he said. (SD-Agencies)