UAE to revamp crude oil pricing mechanism after extreme volatility amid Iran war

The United Arab Emirates is set to overhaul its crude oil pricing system starting November 1, shifting from the ICE Futures Abu Dhabi Murban futures contract to the Platts Dubai benchmark for all onshore and offshore grades. The decision follows extreme price swings triggered by the Iran war, which disrupted crude flows through the Strait of Hormuz and pushed Murban futures above $160 per barrel at one point. Under the new system, pricing will be announced one month before loading instead of two, aligning the UAE more closely with regional peers like Saudi Arabia. The move is significant for Asian refiners, the primary buyers of UAE crude. Abu Dhabi National Oil Co. (ADNOC) stated the change reinforces its commitment to pricing transparency. ICE will immediately suspend Murban futures contracts with no open interest and phase out remaining contracts as trading shifts to the Dubai benchmark. The Murban contract, launched in 2021 after years of development, will effectively shut down after just a few years of trading. ICE President Ben Jackson noted a shift away from Murban due to risks associated with physical settlement amid Strait of Hormuz uncertainties. The regional oil pricing turmoil has extended beyond crude, with a top commodity trader pursuing legal action over distorted shipping rates in the region.