Murban: a benchmark for Middle East crude?
The Middle East is one of the largest producers and exporters of crude oil globally. The majority of its oil flows east, into major refining centers located across China, India, Japan and a multitude of other Asian nations. The region’s plentiful and varied production of oil has historically been priced against two similar grades of medium-heavy high sulfur crude: Dubai and Oman. But as the region’s cushioned position unravels in the face of rising oil production from other corners of the world, Middle East NOCs face a fresh challenge: how to remain competitive to their largest, most profitable customer base. The solution to this is more layered than simply keeping prices low. As Asia’s refiners buy increasing volumes of crude oil from previously inaccessible origins, they are also exposed to dynamic pricing and hedging options.
In this context, this paper examines the viability of Murban – a light, high sulfur crude oil produced onshore in the Abu Dhabi emirate of the UAE – as a light crude reference marker of its own to rival the production value and yield of globally established benchmarks in Europe and the Americas.