Adnoc will move its pricing benchmark to the Platts Dubai system from November 1, as it seeks to sustain the strong demand for its crude oil products amid shifting geopolitical patterns.
The move will involve the industry major transitioning from the current Ice Futures Abu Dhabi-based pricing methodology and will apply to its crude grades including Murban, Das, Umm Lulu and Upper Zakum, Adnoc said in a statement on Friday.
It will also move Adnoc's official selling prices to a prompt-month pricing methodology, in addition to a differential Adnoc will be announcing in the month preceding the target delivery month to align costs closer to the month of loading, it said.
Ice Futures uses the Murban futures contract and prices crude two months before loading. Platts Dubai, on the other hand, refers to the physical price of Dubai crude oil loading through the month of assessment by S&P Global Energy.
The Dubai price is the primary physical pricing reference for crude oil loading from the Middle East Gulf, Far East Russia and other parts of the world to refiners and has been since spot markets first emerged in the 1980s.
"The change in pricing mechanism is not expected to have a material impact on any Adnoc listed instruments, including issuances completed under Adnoc Murban’s GMTN or sukuk programmes," the company said.
"Adnoc Group will continue to meet all of its obligations with regard to delivery of its Abu Dhabi onshore and offshore crude grades."
Adnoc continues to experience strong demand for its crude grades and remains focused on providing energy supplies to customers around the world, supported by its trading, shipping and logistics capabilities.
Moreover, the new pricing mechanism reinforces Adnoc's commitment to pricing transparency for its growing customer and investor base.
Adnoc's decision is seen as "welcome news to those looking for more joined-up benchmark pricing", said Joel Hanley, executive director for strategy and development at S&P Global Energy.
"Basis risk in benchmarks exists when pricing schisms occur, but consistency, like transparency, is key," he said.
"Another interesting facet of the change is a move to closer pricing dates, perhaps better reflecting the way grades now trade, rather than two months ahead of loading, as has been normal in some regions. The evolution of Adnoc's OSPs could lead to other interesting moves in the region and beyond."
