Previously, we reported that Abu Dhabi’s flagship crude, Murban crude, has rapidly risen to prominence, with Murban crude futures having rapidly evolved from a regional benchmark into a primary global pricing standard. Known for its high API gravity and low sulfur content, Murban serves as a globally recognized energy benchmark traded on the ICE Futures Abu Dhabi (IFAD) exchange. By offering continuous screen-trading, deep liquidity and the removal of destination restrictions, Murban has bypassed older, restricted benchmarks like Platts Dubai, introducing unprecedented transparency and price discovery to Middle Eastern crude. However, the Middle East conflict has upended oil market dynamics, giving Asian refiners a distinctive advantage.
The Abu Dhabi National Oil Co. (ADNOC) is now transitioning the Official Selling Prices (OSPs) for its three offshore crude grades–Upper Zakum, Das, and Umm Lulu–from a differential against Murban futures to a differential against the Dubai benchmark. This change will apply to prompt cargoes loading two months ahead, while the flagship Murban crude remains tied to Murban futures.
ADNOC’s decision to price its offshore crude grades against the Dubai benchmark instead of Murban corrects a structural economic distortion that has penalized buyers for years. Murban is a premium, light-sweet crude grade, whereas the offshore grades—Upper Zakum, Das, and Umm Lulu—are medium-sour barrels, yielding completely different product slates.
During the height of the U.S.-Iran conflict, extreme market backwardation and sudden premium demand for light ends caused front-month Murban futures on the IFAD exchange to surge. Because Upper Zakum and Das were priced as a differential pegged directly to Murban, these medium-sour barrels became artificially and prohibitively expensive for Asian refiners, completely detached from their actual physical market fundamentals. By shifting the offshore grades to a Dubai-linked formula—the undisputed global baseline for medium-sour crude—ADNOC is realigning these crudes with their true physical peers, such as Oman and Qatar’s Al-Shaheen.
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Expecting a prolonged disruption, refiners across Asia secured alternative supplies, including premium-priced U.S. WTI and West African crude, leaving most July and August requirements already covered. With the U.S. naval blockade lifted and traffic through the Strait of Hormuz recovering, crude that had accumulated in floating storage is now returning to the market, increasing available supply just as buying interest has eased.
But now, Asian buyers no longer need prompt volumes and have drastically cut back on spot purchases, leaving regional state producers competing for fewer remaining buyers.
Refiners in Japan, South Korea and India are now in a stronger position to demand discounts on Dubai-linked offshore grades. They are well supplied, while Middle Eastern producers need to keep crude moving through the reopened shipping lanes.
During the conflict, these Asian refiners were among the biggest buyers of ADNOC’s emergency crude sales, helping absorb at least 30 million barrels of Das, Upper Zakum and Umm Lulu crude. Indian refiners purchased about 6 million barrels, Japan’s Eneos bought 3 million barrels, while South Korea’s SK Energy and GS Energy secured another 8 million barrels between them. Those purchases covered much of their summer crude requirements. Now, with traffic through Hormuz recovering and additional Gulf supply returning, producers are competing for buyers whose near-term needs are already met, giving Asian refiners greater leverage to negotiate discounts on prompt Dubai-linked cargoes.
Buyers are also pushing for pricing that better matches the physical market in Asia. Murban trades further forward, which makes it less useful for offshore grades being sold into a prompt market. Dubai gives buyers a clearer read on near-term demand and cargo values. By shifting Upper Zakum, Das and Umm Lulu to a Dubai-linked formula, ADNOC is giving those grades a pricing structure that better reflects current market conditions and gives it more flexibility after the UAE’s OPEC exit.
And, ADNOC’s new modus operandi is likely to be the new normal.
Market analysts and industry sources suggest this move toward Dubai is a strategic alignment with the broader Asian and Middle Eastern market baskets. By separating the pricing streams–maintaining Murban as a standalone light sweet benchmark while pegging medium-sour offshore grades to Dubai–ADNOC accommodates the distinct physical characteristics of its crudes. A full return to a purely Murban futures-based OSP system for these offshore grades would likely require the Murban contract to consistently trade at a premium, which has proven difficult to guarantee against competing global barrels.
Following its historic departure from OPEC, the UAE is projected to increase its total oil output to 5.0 million barrels per day (bpd) in 2027, marking an immediate year-on-year supply increase of 730,000 bpd. Free of previous OPEC caps that restricted actual crude production to roughly 3.2-3.5 million bpd, the International Energy Agency (IEA) forecasts total oil output (including crude, condensates, and natural gas liquids) will top 5.2 million bpd next year.
To achieve these targets, ADNOC will leverage billions in capital investments to drive a massive expansion strategy, including a $150 billion capital expenditure program for 2026-2030 as well as an additional Dh200 billion local project pipeline to boost daily production capacity, enhance export infrastructure like the new West-East pipeline to double export capacity through the vital shipping hub of Fujairah and expand global operations. The company is also accelerating investments in low-carbon solutions and renewables, including investments to decarbonize operations, expand petrochemical integration and grow its international energy footprint through units like XRG.
By Alex Kimani for Oilprice.com
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