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Mon 11 Nov 2019 02:11 PM

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Plans confirmed to launch Abu Dhabi oil futures exchange

Intercontinental Exchange says new exchange will host futures contracts based on ADNOC Murban crude oil next year

Plans confirmed to launch Abu Dhabi oil futures exchange

ICE Futures Abu Dhabi (IFAD) will host the world’s first futures contracts based on Abu Dhabi National Oil Company’s (ADNOC) Murban crude oil.

Intercontinental Exchange, an operator of global exchanges and clearing houses and provider of data and listings services, on Monday announced that it will launch a new exchange in Abu Dhabi.

ICE Futures Abu Dhabi (IFAD) will host the world’s first futures contracts based on Abu Dhabi National Oil Company’s (ADNOC) Murban crude oil.

Nine of the world’s largest energy traders are supporting the launch of ICE Futures Abu Dhabi including BP, GS Caltex, INPEX, JXTG, PetroChina, PTT, Shell, TOTSA, (Total) and Vitol.

On November 4, Abu Dhabi’s Supreme Petroleum Council (SPC) announced that it would implement a new pricing mechanism for ADNOC’s Murban crude.

As a result, Murban pricing will move from a retroactive official selling price to market-driven, forward pricing using a Murban futures contract as its price marker.

Established in Abu Dhabi Global Market (ADGM), IFAD has been granted recognition by the Financial Services Regulatory Authority as a recognised investment exchange.

Contracts traded at IFAD will, subject to regulatory approval, be cleared at ICE Clear Europe, one of the world’s leading clearing houses, and will clear alongside ICE Brent, ICE WTI, ICE (Platts) Dubai and ICE Low Sulphur Gasoil allowing customers to benefit from associated margin offsets and delivering meaningful capital efficiencies.

IFAD and ICE Clear Europe are working to receive regulatory approval from key jurisdictions and, subject to receiving these, expect to launch in the first half of 2020.

“ICE was founded with a vision to create an open, transparent electronic marketplace for energy trading,” said Jeffrey C Sprecher, chairman and CEO, Intercontinental Exchange.

“With the launch next year of ICE Futures Abu Dhabi, Murban futures will sit alongside the most significant global oil benchmarks, providing the opportunity for the first time for a much larger group of participants to trade and hedge Murban in a regulated, transparent and accessible venue.”

ICE Murban Futures will be a physically delivered contract with delivery at Fujairah on a free on board basis. Murban Crude is a light sweet crude produced by ADNOC.

ADNOC produces around 3 million barrels of oil per day of which some 1.7 million barrels per day is Murban crude.

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