Contracts for the future delivery of Murban crude oil will be bought and sold on a commodities exchange in Abu Dhabi from Monday.
This oil is already in demand from customers in Asian markets, such as China, India and Japan. The trading of a Murban futures contract will put it in elite company in terms of oil price benchmarks such as Brent crude and West Texas Intermediate crude. Murban differs physically from Brent, WTI or other oil produced elsewhere in the world.
Murban and other grades
Not all crude is created equal. Oil, formed millions of years ago from the remnants of ancient marine organisms varies considerably from place to place. The trade in global oil is differentiated by the type of crude grade, which categorises oil by the levels of viscosity, sulphur and density. The different variants of oil help deliver different products and serve different purposes in the global economy. Some are easier to refine to different products, while others require additional processes.
Refineries were traditionally built to run on a specific grade of crude. Some refineries can refine several grades of crude.
Broadly, oil falls under light, sweet, heavy crude grades. We take a look at what these terms actually mean.
It is a type of crude with low density, viscosity and a low specific gravity. The crude grade also has a high API gravity, which is a measure devised by the American Petroleum Institute on how heavy a petroleum liquid is when compared with water. Light crude has a high API gravity, which means it can float on water. Light crude is favoured over other types as it can be easily converted into products that are in high demand such as gasoline. Murban, Abu Dhabi's flagship crude grade is an example of this type of oil.
It refers to a crude grade with an API gravity less than 20, which means it cannot float on water. Heavy crudes find uses in the manufacturing of plastics, petrochemicals and road surfacing, and thus play an important role in the world economy. Venezuelan crude for instance, is heavy and is known to ooze rather than flow. The crude grade is favoured by many US refineries, who have had to scramble for alternatives following sanctions on the regime of Nicolas Maduro.
This is a type of crude, with sulphur content that is less than 0.5 per cent. It is highly favoured for its efficiency in yielding products such as gasoline, diesel and even plastics. In the Middle East, Libya, is well known for its production of light, sweet crude.
It is a type of crude that is the least favoured by refiners worldwide as the high content of sulphur makes it difficult to refine and turn into products. North America has several sour crude grades, while Iraq and Kuwait in the Middle East also have oil with similar properties.