ABU DHABI - Abu Dhabi National Oil Co (ADNOC) has cut the price range for an initial public offer of shares in its fuel distribution unit and will sell only a 10 percent stake in the unit, valuing the potential deal at $900 million.

United Arab Emirates stock markets have been hit hard this year by subdued economic growth due to low oil prices, a weak real estate market and geopolitical tensions in the Middle East.

Abu Dhabi's state-owned oil firm had indicated last month that it could sell as much as 20 percent of ADNOC Distribution at a higher price range, which would have valued the deal as high as $2 billion, making it the UAE's biggest IPO since 2007.

But on Wednesday, bookrunners said ADNOC had revised the price range to between 2.35 dirhams a share and 2.65 dirhams, compared to an earlier range of 2.35-2.95 dirhams.

It plans to sell 1.25 billion shares, which would value the IPO at 3.31 billion dirhams ($901.37 million) at the top of the range.

The price cut reflects a cautious attitude among institutional investors who have become "price-sensitive", said a source familiar with the deal. However, the retail portion of the offer is 14 times oversubscribed, the source said.

Last month's market debut of Dubai real estate firm Emaar Development was weak, and the stock has now dropped to 5.56 dirhams from the IPO price of 6.03 dirhams. The IPO raised $1.3 billion for Emaar Properties .

Abu Dhabi's main share index was flat on Wednesday but has fallen 6.2 percent so far this year.

(Reporting by Stanley Carvalho and Saeed Azhar; Editing by Andrew Torchia) ((Saeed.Azhar@thomsonreuters.com; +971 44536787; Reuters Messaging: saeed.azhar.reuters.com@reuters.net))