UAE Tweaks Offshore Oil Pricing to Support Non-Hormuz Options
Abu Dhabi National Oil Co. will sell offshore crude oil for collection outside the Strait of Hormuz at levels indexed to the Dubai benchmark, according to a price sheet seen by Bloomberg.
The United Arab Emirates’ largest oil company has been adjusting its oil policy following the outbreak of the Iran war, given disruptions to flows through Hormuz that have convulsed the market and stoked regional tensions. Among recent changes, the country quit OPEC in May, and accelerated work on a pipeline to expand flows to Fujairah.
Adnoc was offering the new, alternative prices and delivery conditions for offshore grades “in light of current market conditions,” it said in the price sheet, without elaborating. The company’s crude-marketing team had spoken with refiners and traders in at least Singapore and Japan since late last month on the planned changes, Bloomberg reported earlier.
Pricing Adjustments
The UAE has been tweaking its oil pricing strategy to support non-Hormuz options. According to a price sheet seen by Bloomberg, Adnoc will set the price of offshore crude oil collected outside the Strait of Hormuz at levels indexed to the Dubai benchmark for August. Upper Zakum and Das crudes can be bought at an 80-cents-a-barrel premium to Dubai, while Umm Lulu will be priced at a $1-a-barrel premium.
These grades originate from locations inside the Persian Gulf. The same crudes are still being offered from their usual sites. Adnoc was offering the new, alternative prices and delivery conditions for offshore grades “in light of current market conditions,” it said in the price sheet, without elaborating.
Production and Exports
Despite the ongoing conflict, the country boosted oil production to an all-time high last month, according to the International Energy Agency. The UAE has been accelerating work on a pipeline to expand flows to Fujairah, which is expected to increase the country’s oil export capacity.
The company also set prices for all of its crudes on a loading basis at their respective terminals, in line with practices in previous months. The price of Adnoc’s flagship Murban grade was set at $80.01 a barrel for August loading, based on trading on an exchange in the emirate, according to the price sheet. All other grades are priced at a parity to Murban if bought on a loading basis — meaning buyers have to arrange their own shipping.
Market Impact
The UAE‘s oil pricing adjustments are expected to have a significant impact on the global oil market. The country is one of the world’s largest oil producers and exporters, and its decisions can influence global oil prices. The move is seen as an attempt by the UAE to diversify its oil exports and reduce its reliance on Hormuz.
The company’s crude-marketing team had spoken with refiners and traders in at least Singapore and Japan since late last month on the planned changes, Bloomberg reported earlier. The UAE‘s decision to quit OPEC in May has also contributed to the country’s efforts to diversify its oil exports and reduce its reliance on Hormuz.
Conclusion
The UAE‘s decision to tweak its offshore oil pricing strategy is a significant development in the global oil market. The move is expected to have a significant impact on the country’s oil exports and could influence global oil prices. The UAE’s efforts to diversify its oil exports and reduce its reliance on Hormuz are seen as an attempt to mitigate the risks associated with the ongoing conflict in the region.
Original Article: UAE Tweaks Offshore Oil Pricing to Support Non-Hormuz Options — Yahoo