Shake-ups in the international oil pricing system do not come along very often. When backed by one of the world’s largest national oil companies, one of the biggest futures exchanges and a group of leading traders, a new benchmark must be taken seriously.
Adnoc, the Intercontinental Exchange and their partners, including leading traders and oil companies, are launching ICE Futures Abu Dhabi, or IFAD, on Monday.
IFAD will trade Murban crude oil futures on a physically settled basis. When it expires each month, holders of the contract will receive tanks of real oil.
Murban is “a great crude to build a contract around”, says ICE Futures Europe president Stuart Williams of Abu Dhabi’s key export oil grade.
The launch of Murban futures reflects three major developments. Firstly, the ever-growing shift to Asia as the world’s key growth area for oil demand and imports. Secondly, the rise of exports of very light US crude, again with Asia as an important market, creating a new trade flow and need for benchmarks.
Thirdly, the problems with other price markers make Murban’s launch relevant. US benchmark West Texas Intermediate and Brent from the North Sea are both light, sweet (low sulphur) crudes, typically preferred by refiners. They have long and illustrious histories.
WTI futures first traded in 1983 and Brent in 1988, as the Opec-based price system of the 1970s collapsed in the face of new competing and freely traded production.
WTI prices went negative last April amid a coronavirus-induced decline in oil demand after paper traders were stuck with physical crude they could not take or sell on. It is a landlocked crude priced at Cushing, Oklahoma, and often more representative of domestic US factors than international ones.
Although Brent has a long history, it has required repeated fixes as production of the British and Norwegian crudes that underpin it declines.
S&P Global Platts reports Dated Brent, the price of physical crude that is closely linked to Brent futures. In February, Platts announced a radical change: moving to Brent as a benchmark for suitable crudes delivered into Rotterdam rather than produced in the North Sea. But this move was not well received by the industry and was suspended for consultation.
DME Oman, traded on the Dubai Mercantile Exchange, is based on a medium gravity, sour (high sulphur) crude, typical of Middle Eastern oil exports. It has proved to be an excellent mechanism for buyers to obtain physical oil and in 2018, Saudi Aramco began to use it to price some of its exports.
However, trading levels are significantly lower than for Brent and WTI.
Murban addresses many of these issues. It is a light, sweetish crude, a little higher in sulphur than Brent and WTI but close enough. It is loaded in Fujairah, outside the potentially risky Strait of Hormuz, a major port with growing storage and refining capacity. Its production quality is consistent, and volumes are large and poised to grow.
So why now? The idea of Murban futures has been around for more than a decade but the current process was initiated in mid-2018. It reflects partly the market changes mentioned above, but also the willingness within the reformed Adnoc to think differently and break taboos.
To make Murban futures work, Adnoc has switched to forward pricing of its crude – two months ahead – instead of the old retroactive system where buyers only knew the price after a cargo had been loaded. The price for Murban will be based on the exchange instead of a national oil company determining official selling prices based on its reading of the market and setting premiums or discounts to another benchmark.
Adnoc has also made Murban freely tradable instead of the usual Middle East system, in which buyers have to nominate the final destination. It has issued a rolling 12-month forecast of Murban availability, which indicates more than 1 million barrels per day out to next March, compared with Brent, which now depends on a depleting stream of less than 0.8 million bpd. Murban volumes will grow over time as Adnoc’s capacity expansion plans proceed.
However, Murban is not intended to replace Brent or WTI but to complement them with a range of other derivatives that serve the needs of traders and refiners. New futures contracts need to attract liquidity, which begets further liquidity, to survive and flourish.
Adnoc, ICE and their partners – Shell, PetroChina, Vitol and others – have done all they can to assure success. Now the market will judge.
The launch of Murban futures is about enhancing the efficiency of global oil pricing. It is also intended to be part of Adnoc’s and Abu Dhabi’s growing economic sophistication. As Mr Williams says, “IFAD is our 13th exchange but the first in the Middle East. The story is a global exchange setting up shop. The Abu Dhabi Global Market will be connected to the global clearing infrastructure and capital that sits in London. ICE is not just an energy exchange and we see an opportunity to expand our network here”.
IFAD might help end the anomaly that the Middle East produces the biggest share of world oil but does not host its own pricing mechanism. Yet, at the same time, it is also helping the region move beyond reliance on crude exports.
Robin Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis
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HIJRA
Starring: Lamar Faden, Khairiah Nathmy, Nawaf Al-Dhufairy
Director: Shahad Ameen
Rating: 3/5
Mia Man’s tips for fermentation
- Start with a simple recipe such as yogurt or sauerkraut
- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.
- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.
- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.
LA LIGA FIXTURES
Saturday (All UAE kick-off times)
Valencia v Atletico Madrid (midnight)
Mallorca v Alaves (4pm)
Barcelona v Getafe (7pm)
Villarreal v Levante (9.30pm)
Sunday
Granada v Real Volladolid (midnight)
Sevilla v Espanyol (3pm)
Leganes v Real Betis (5pm)
Eibar v Real Sociedad (7pm)
Athletic Bilbao v Osasuna (9.30pm)
Monday
Real Madrid v Celta Vigo (midnight)
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
The five pillars of Islam
Evacuations to France hit by controversy
- Over 500 Gazans have been evacuated to France since November 2023
- Evacuations were paused after a student already in France posted anti-Semitic content and was subsequently expelled to Qatar
- The Foreign Ministry launched a review to determine how authorities failed to detect the posts before her entry
- Artists and researchers fall under a programme called Pause that began in 2017
- It has benefited more than 700 people from 44 countries, including Syria, Turkey, Iran, and Sudan
- Since the start of the Gaza war, it has also included 45 Gazan beneficiaries
- Unlike students, they are allowed to bring their families to France
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
more from Janine di Giovanni
South Africa squad
: Faf du Plessis (captain), Hashim Amla, Temba Bavuma, Quinton de Kock (wkt), Theunis de Bruyn, AB de Villiers, Dean Elgar, Heinrich Klaasen (wkt), Keshav Maharaj, Aiden Markram, Morne Morkel, Chris Morris, Wiaan Mulder, Lungi Ngidi, Duanne Olivier, Vernon Philander and Kagiso Rabada.
Killing of Qassem Suleimani
Iftar programme at the Sheikh Mohammed Centre for Cultural Understanding
Established in 1998, the Sheikh Mohammed Centre for Cultural Understanding was created with a vision to teach residents about the traditions and customs of the UAE. Its motto is ‘open doors, open minds’. All year-round, visitors can sign up for a traditional Emirati breakfast, lunch or dinner meal, as well as a range of walking tours, including ones to sites such as the Jumeirah Mosque or Al Fahidi Historical Neighbourhood.
Every year during Ramadan, an iftar programme is rolled out. This allows guests to break their fast with the centre’s presenters, visit a nearby mosque and observe their guides while they pray. These events last for about two hours and are open to the public, or can be booked for a private event.
Until the end of Ramadan, the iftar events take place from 7pm until 9pm, from Saturday to Thursday. Advanced booking is required.
For more details, email openminds@cultures.ae or visit www.cultures.ae
THE BIO: Martin Van Almsick
Hometown: Cologne, Germany
Family: Wife Hanan Ahmed and their three children, Marrah (23), Tibijan (19), Amon (13)
Favourite dessert: Umm Ali with dark camel milk chocolate flakes
Favourite hobby: Football
Breakfast routine: a tall glass of camel milk
UAE currency: the story behind the money in your pockets
England Test squad
Ben Stokes (captain), Joe Root, James Anderson, Jonny Bairstow, Stuart Broad, Harry Brook, Zak Crawley, Ben Foakes, Jack Leach, Alex Lees, Craig Overton, Ollie Pope, Matthew Potts
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
Brave CF 27 fight card
Welterweight:
Abdoul Abdouraguimov (champion, FRA) v Jarrah Al Selawe (JOR)
Lightweight:
Anas Siraj Mounir (TUN) v Alex Martinez (CAN)
Welterweight:
Mzwandile Hlongwa (RSA) v Khamzat Chimaev (SWE)
Middleweight:
Tarek Suleiman (SYR) v Rustam Chsiev (RUS)
Mohammad Fakhreddine (LEB) v Christofer Silva (BRA)
Super lightweight:
Alex Nacfur (BRA) v Dwight Brooks (USA)
Bantamweight:
Jalal Al Daaja (JOR) v Tariq Ismail (CAN)
Chris Corton (PHI) v Zia Mashwani (PAK)
Featherweight:
Sulaiman (KUW) v Abdullatip (RUS)
Super lightweight:
Flavio Serafin (BRA) v Mohammad Al Katib (JOR)
Results
1. New Zealand Daniel Meech – Fine (name of horse), Richard Gardner – Calisto, Bruce Goodin - Backatorps Danny V, Samantha McIntosh – Check In. Team total First round: 200.22; Second round: 201.75 – Penalties 12 (jump-off 40.16 seconds) Prize €64,000
2. Ireland Cameron Hanley – Aiyetoro, David Simpson – Keoki, Paul Kennedy – Cartown Danger Mouse, Shane Breen – Laith. Team total 200.25/202.84 – P 12 (jump-off 51.79 – P17) Prize €40,000
3. Italy Luca Maria Moneta – Connery, Luca Coata – Crandessa, Simone Coata – Dardonge, Natale Chiaudani – Almero. Team total 130.82/198.-4 – P20. Prize €32,000
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
Specs
Engine: 51.5kW electric motor
Range: 400km
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Torque: 175Nm
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Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
Director: Kaouther Ben Hania
Rating: 4/5
Results
1.30pm Handicap (PA) Dh50,000 (Dirt) 1,400m
Winner Al Suhooj, Saif Al Balushi (jockey), Khalifa Al Neyadi (trainer)
2pm Handicap (TB) 68,000 (D) 1,950m
Winner Miracle Maker, Xavier Ziani, Salem bin Ghadayer
2.30pm Maiden (TB) Dh60,000 (D) 1,600m
Winner Mazagran, Tadhg O’Shea, Satish Seemar
3pm Handicap (TB) Dh84,000 (D) 1,800m
Winner Tailor’s Row, Royston Ffrench, Salem bin Ghadayer
3.30pm Handicap (TB) Dh76,000 (D) 1,400m
Winner Alla Mahlak, Adrie de Vries, Rashed Bouresly
4pm Maiden (TB) Dh60,000 (D) 1,200m
Winner Hurry Up, Royston Ffrench, Salem bin Ghadayer
4.30pm Handicap (TB) Dh68,000 (D) 1,200m
