The Abu Dhabi National Oil Company (ADNOC) announced on Friday a comprehensive overhaul of the pricing methodology for its flagship crude grades, shifting away from its ICE Futures Abu Dhabi (IFAD) Murban-based system to a prompt-month pricing model linked to the Platts Dubai benchmark.

The new framework takes effect on November 1 and applies to all four of ADNOC's Abu Dhabi crude grades: Murban, Das, Umm Lulu, and Upper Zakum. Under the revised formula, ADNOC will determine official selling prices using the Platts Dubai assessment plus a company-announced differential, which will be disclosed the month before the target delivery month. The approach mirrors how most other major Gulf producers — including Saudi Aramco, Kuwait Petroleum Corporation, and Iraq's SOMO — already price their crude exports, using published benchmark assessments plus a differential.

According to ADNOC's official announcement, the change is designed to align pricing more closely with the actual month in which crude cargoes load. The previous system, in place since the IFAD Murban futures contract launched in 2021, had set prices two months ahead of loading. That forward-setting structure had been unusual among Middle East sellers, most of whom set official selling prices closer to the loading month, and it had occasionally drawn complaints from buyers in Asia — ADNOC's largest customer base — when market prices moved sharply between the pricing and loading windows.

The 2021 launch of the Murban futures contract marked a milestone, making Murban the first Middle East crude grade with its own tradeable futures contract. ADNOC spent years positioning it as a regional alternative to Brent and WTI. Five years on, the company is now moving its own official pricing away from that contract, even as trading in Murban futures continues. The decision raises questions about the role of the IFAD Murban contract going forward, though ADNOC has not indicated any plans to alter the contract itself.

Friday's decision goes beyond a narrower proposal reported by MEES earlier in July, which had envisioned only ADNOC's offshore grades — Das, Umm Lulu, and Upper Zakum — shifting to Dubai-linked pricing while Murban remained on futures-based pricing. The final announcement pulls Murban, which accounts for roughly two-thirds of ADNOC's total output, into the Dubai-linked system as well.

The pricing overhaul comes three months after the UAE's exit from OPEC and OPEC+, effective May 1, which removed ADNOC from the groups' production quotas and granted the company greater flexibility to set its own commercial terms. The pricing shift is among the most significant commercial decisions ADNOC has made since that exit, and it positions the company to compete more directly with other Gulf producers on pricing terms as it seeks to grow its share of Asian crude demand.

Platts, a division of S&P Global Commodity Insights, had already been adjusting how Murban factors into the Dubai benchmark basket. The price reporting agency removed the floor tying Murban's value to Dubai back in January, a move driven by years of rising Murban supply and a declining volume of medium-sour barrels, which had pushed Murban into a larger role in setting the benchmark. ADNOC's announcement now formalizes that shift from the seller's perspective.

ADNOC stated that the pricing change will not materially affect any of its listed instruments, including bonds issued under the ADNOC Murban GMTN and Sukuk programs. The company also confirmed it will continue meeting all delivery obligations across both its onshore and offshore grades.

By Charles Kennedy for Oilprice.com.