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The Intercontinental Exchange (ICE) Futures Abu Dhabi (IFAD) and its new benchmark, Murban crude, is important as far as global energy trade is concerned, BP Chief Executive Bernard Looney said.
"The first important reason is location. The Middle East and Asia are near neighbours and the Asia is the driving force for the world's growing demand for energy. The second important reason is confidence. This new benchmark will help manage risk for all oil buyers. Risk management increases confidence, which can help energy to flow more freely, where it is need most, not just in this region, but globally," Looney said.
IFAD will begin trading ICE Murban Crude Oil Futures and many related cash settled derivatives against Brent and WTI, as well as inter-commodity spreads, on March 29, 2021.
The key new derivatives are the Murban futures linked to the Emirati crude oil grade.
IFAD is established in Abu Dhabi Global Market. ADNOC, BP, GS Caltex, INPEX, ENEOS (formally known as JXTG), PetroChina, PTT, Shell, Total (TOTSA) and Vitol are partnering with ICE to support the launch of IFAD.
Murban futures will go to physical delivery two months ahead and, as such, the first Murban futures contract to expire will be the June 2021 contract month, which will expire at the end of April 2021.
On Thursday, ICE has named 24 financial institutions as exchange members allowed to directly trade Abu Dhabi's new Murban crude oil futures contract and related derivatives. The exchange includes major global banks such as Citibank, ABN Amro and BNP Paribas.
UAE's largest oil company ADNOC moved to forward pricing of its crude oil in March 2020 and currently prices Murban using Platts Dubai to identify its selling price. It will move its pricing mechanism for Murban to the ICE Murban Futures Contract in the first month of lifting for this new contract.
ADNOC expects expects Murban crude to contribute about 50 percent of the company’s 5 million bpd oil capacity by 2030.
(Reporting by Seban Scaria; editing by Anoop Menon)
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