Latest news with #Murban
Arabian Post
17 hours ago
- Business
- Arabian Post
UAE Supply Cut Prompts Murban Derivatives Losses for Oil Majors
A decision by Abu Dhabi National Oil Company to slash July shipments of its flagship Murban crude has led to significant trading losses for equity partners hedging their positions, with estimates reaching $12 per barrel. The move stunned major stakeholders, including BP Plc and TotalEnergies SE, forcing abrupt reshuffling in the derivatives market and weighing on profitability metrics. The volume cut, amounting to approximately 3–4 million barrels or around two days of production, was effected unevenly across equity holders—reducing cargoes by between 5% and 40%, according to industry sources. Term buyers under long-term contracts were reportedly unaffected, indicating a strategic move to preserve foundation relationships while squeezing discretionary volumes. This has created a hedging mismatch: partners had positioned in futures and options to offset anticipated Murban deliveries, but actual supply fell short. The result: mounting mark‑to‑market losses on paper positions, with some market estimates as high as $12 per barrel—a steep decline considering thin typical margins. ADVERTISEMENT Murban crude, trading via ICE Futures Abu Dhabi since March, has been gaining prominence as a Middle East light crude benchmark. However, the recent cut has triggered volatility in its futures market. While spot premiums had previously eased due to ample supply and rising output post-OPEC+ easing, this supply setback has reversed some of that trend. The background to the decision lies in ADNOC's broader strategic recalibration. In late May, the company downgraded its projected Murban export capacity from 1.76 mb/d to 1.61 mb/d through May 2026—choosing to retain more crude for refining and domestic consumption. Analysts suggest this could reflect a drive to optimise margins via Ruwais refinery integration, as well as to better balance global market positioning. Market reaction was swift. Murban spot premiums fell to six‑month lows in Asia, even as export levels surged earlier this year in a bid to undercut competing heavier Middle Eastern grades. Yet the supply curtailment prior to July led to retreating premiums and amplified uncertainty among refiners and traders. BP and TotalEnergies, two of the most significant equity partners, have reportedly taken the hardest hit. With pre‑hedged positions now misaligned to actual cargoes, both companies face pressure to unwind derivatives, likely at a loss. Platts estimates suggest losses could total up to $12 per barrel—potentially eroding tens of millions of dollars in trading gains. These developments underscore the evolving risk profile of Murban as a benchmark. Its growing adoption, underscored by record trading volumes on exchanges such as ICE and Platts MoC, has attracted global attention. Yet supply-side control remains firmly in ADNOC's hands—a stark contrast to more decentralized benchmarks like Brent or WTI—raising questions about market predictability. ADVERTISEMENT The scenario highlights divergent strategies among Murban's partners: equity holders dependent on predictable allocations, versus term buyers whose contractual priority provides insulation from short-term supply shifts. It also accentuates the complexities that major oil trading desks face when aligning physical logistics with financial hedging. Analysts are cautioning that such volatility may influence future demand for Murban derivatives. Omar Najia of BB Energy has previously noted that futures liquidity depends heavily on consistent physical volumes; erratic supply cuts could impede long-term development of a robust trading framework. ADNOC, for its part, has yet to publicly comment on the allocation adjustments for July cargoes. The lack of transparency is typical of the company's market posture, rooted in a strategy that increasingly blends output management with integrated downstream optimisation. Market observers are now eyeing two key developments: first, how quickly ADNOC will restore shipments to original estimates; second, how equity partners will recalibrate hedging approaches to accommodate supply-phase volatility. The shock to trading positions could also spark a reassessment of Murban's maturity as a benchmark. While its rise has been meteoric—becoming the cheapest medium-sour crude in key Asian benchmarks earlier this year, prompting record cargo allocations via Platts MoC —the latest contraction exposes vulnerabilities inherent in single-provider control. Equity partners are said to be preparing for tighter cooperation and improved supply forecasting. Speculators suggest that future terms may include contractual safeguards or compensation clauses to protect those hedging against supply deficits. This episode marks a defining moment for Murban's financial architecture. Traders and refiners will be watching closely to see whether this diversion is an isolated incident or the beginning of recurring supply-management interventions. Either way, it signals the growing pains of what aspires to be a global oil benchmark—one still subject to the strategic impulses of its originator.
Bloomberg
a day ago
- Business
- Bloomberg
UAE's Oil Partners Face Trading Losses After Surprise Supply Cut
An unexpected move by the United Arab Emirates to cut volumes of a key oil grade sold to project partners including BP Plc and TotalEnergies SE is set to put a dent in some trading books. The hit stems from a mismatch in positions taken in the derivatives market to hedge against their expected supply of Murban crude for July, according to people familiar with the matter. The discrepancy may have led to losses as high as $12 a barrel for some equity shareholders, which is considered steep given profits can be as little as a few cents for each barrel, they added.
Business Times
5 days ago
- Business
- Business Times
Asia's reliance on Middle Eastern oil laid bare by Iran attacks
[PARIS] Oil buyers and traders across Asia are watching the escalation of a conflict around Iran with bated breath, as the top importing region braces for the impact of any disruption of exports from the Persian Gulf. Asia buys more than four-fifths of all the crude produced in the Middle East, and 90 per cent of that goes through the Strait of Hormuz, according to data from Kpler. Here are three key concerns for the Asian market as the conflict expands: The Iran-China link China, the world's largest oil refiner, gets about 14 per cent of its crude from Iran, Kpler data show. Actual flows are likely higher, with some imports from the Islamic Republic masked as shipments from not just Malaysia, but also the United Arab Emirates and Oman, in order to circumvent US sanctions. While China's larger state-owned processors seek to avoid breaching the bans, the country does not as a whole recognize unilateral US sanctions. And these discounted flows are vital for a hard-pressed private refining sector. There's growing concern those shipments could be disrupted. That has boosted demand for crude that can load on the Indian Ocean side of the Strait, including Abu Dhabi's Murban and Omani crude. Other grades that may benefit from any threat to Iranian flows are Russian ESPO, which loads from the Far East port of Kozmino, as well as Angolan varieties. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Iran's fuel exports Iran does not just ship crude – it is also a sizable exporter of fuel oil, selling mostly high-sulfur varieties used for shipping or as refinery feedstocks. Much of that supply eventually finds its way into ship-refueling hubs including Fujairah in the UAE, Singapore and Malaysia. The so-called straight-run fuel oil that can replace crude is typically exported to the relatively simple, low-margin processors in China known as teapots. Iran also has a lot of natural gas – sharing one of the world's largest deposits with Qatar. While the Islamic Republic uses most of that domestically, it sells by-products including liquefied petroleum gas and condensates internationally. China's giant plastics sector relies on Iran for almost a quarter of its imports of LPG, which can be used for cooking and heating but also processed into petrochemicals used as plastic building blocks. That relationship has only intensified after flows from the US, traditionally China's largest supplier, collapsed because of trade conflicts earlier this year. 'If there is a complete stoppage of Iranian LPG material or even, say, a halving of the average intake to China, China has few alternatives of substance,' said Samantha Hartke, head of market analysis for the Americas at Vortexa. Iran's influence on key shipping routes The vast majority of Asia's imports come through the Strait of Hormuz, making this waterway a focus for oil merchants. While Iran may choose not to block the conduit, it's also able to threaten the safety of navigation through the Red Sea – the shortest route between Asia and Europe – using proxies such as Yemen's Houthis. About 9 per cent of global seaborne trade normally passes through the Bab el-Mandeb chokepoint, or more than US$2 trillion worth of goods a year. That may affect Asia's supply from Russia, which has turned to markets in the East after being increasingly shunned by the US and traditional buyers in Europe because of its invasion of Ukraine in 2022. Ships carrying those massive volumes – ranging from flagship Urals crude to naphtha – must decide whether they continue to risk the Red Sea route, or face weeks of delays by going around South Africa instead. BLOOMBERG
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Business Standard
5 days ago
- Business
- Business Standard
Asia's oil lifeline at risk as Iran conflict threatens key trade routes
Oil buyers and traders across Asia are watching the escalation of a conflict around Iran with bated breath, as the top importing region braces for the impact of any disruption of exports from the Persian Gulf. Asia buys more than four-fifths of all the crude produced in the Middle East, and 90 per cent of that goes through the Strait of Hormuz, according to data from Kpler SAS. Here are three key concerns for the Asian market as the conflict expands: The Iran-China link China, the world's largest oil refiner, gets about 14 per cent of its crude from Iran, Kpler data show. Actual flows are likely higher, with some imports from the Islamic Republic masked as shipments from not just Malaysia, but also the United Arab Emirates and Oman, in order to circumvent US sanctions. While China's larger state-owned processors seek to avoid breaching the bans, the country doesn't as a whole recognize unilateral US sanctions. And these discounted flows are vital for a hard-pressed private refining sector. There's growing concern those shipments could be disrupted. That has boosted demand for crude that can load on the Indian Ocean side of the Strait, including Abu Dhabi's Murban and Omani crude. Other grades that may benefit from any threat to Iranian flows are Russian ESPO, which loads from the Far East port of Kozmino, as well as Angolan varieties. Iran's fuel exports Much of that supply eventually finds its way into ship-refueling hubs including Fujairah in the UAE, Singapore and Malaysia. The so-called straight-run fuel oil that can replace crude is typically exported to the relatively simple, low-margin processors in China known as teapots. Iran also has a lot of natural gas — sharing one of the world's largest deposits with Qatar. While the Islamic Republic uses most of that domestically, it sells by-products including liquefied petroleum gas and condensates internationally. China's giant plastics sector relies on Iran for almost a quarter of its imports of LPG, which can be used for cooking and heating but also processed into petrochemicals used as plastic building blocks. That relationship has only intensified after flows from the US, traditionally China's largest supplier, collapsed because of trade conflicts earlier this year. 'If there is a complete stoppage of Iranian LPG material or even, say, a halving of the average intake to China, China has few alternatives of substance,' said Samantha Hartke, head of market analysis for the Americas at Vortexa Ltd. Iran's influence on key shipping routes The vast majority of Asia's imports come through the Strait of Hormuz, making this waterway a focus for oil merchants. While Iran may choose not to block the conduit, it's also able to threaten the safety of navigation through the Red Sea — the shortest route between Asia and Europe — using proxies such as Yemen's Houthis. About 9 per cent of global seaborne trade normally passes through the Bab el-Mandeb chokepoint, or more than $2 trillion worth of goods a year. That may affect Asia's supply from Russia, which has turned to markets in the East after being increasingly shunned by the US and traditional buyers in Europe because of its invasion of Ukraine in 2022. Ships carrying those massive volumes — ranging from flagship Urals crude to naphtha — must decide whether they continue to risk the Red Sea route, or face weeks of delays by going around South Africa instead.
Time of India
5 days ago
- Business
- Time of India
From crude to LPG: How the Iran conflict could choke Asia's energy lifelines
Oil buyers and traders across Asia are watching the escalation of a conflict around Iran with bated breath, as the top importing region braces for the impact of any disruption of exports from the Persian Gulf. Asia buys more than four-fifths of all the crude produced in the Middle East, and 90% of that goes through the Strait of Hormuz , according to data from Kpler SAS. Here are three key concerns for the Asian market as the conflict expands: The Iran-China Link China, the world's largest oil refiner, gets about 14% of its crude from Iran, Kpler data show. Actual flows are likely higher, with some imports from the Islamic Republic masked as shipments from not just Malaysia, but also the United Arab Emirates and Oman, in order to circumvent US sanctions. While China's larger state-owned processors seek to avoid breaching the bans, the country doesn't as a whole recognize unilateral US sanctions. And these discounted flows are vital for a hard-pressed private refining sector. Live Events Bloomberg There's growing concern those shipments could be disrupted. That has boosted demand for crude that can load on the Indian Ocean side of the Strait, including Abu Dhabi's Murban and Omani crude. Other grades that may benefit from any threat to Iranian flows are Russian ESPO, which loads from the Far East port of Kozmino, as well as Angolan varieties. Iran's Fuel Exports Iran doesn't just ship crude — it is also a sizable exporter of fuel oil, selling mostly high-sulfur varieties used for shipping or as refinery feedstocks. Much of that supply eventually finds its way into ship-refueling hubs including Fujairah in the UAE, Singapore and Malaysia. The so-called straight-run fuel oil that can replace crude is typically exported to the relatively simple, low-margin processors in China known as teapots. Iran also has a lot of natural gas — sharing one of the world's largest deposits with Qatar. While the Islamic Republic uses most of that domestically, it sells by-products including liquefied petroleum gas and condensates internationally. Bloomberg China's giant plastics sector relies on Iran for almost a quarter of its imports of LPG, which can be used for cooking and heating but also processed into petrochemicals used as plastic building blocks. That relationship has only intensified after flows from the US, traditionally China's largest supplier, collapsed because of trade conflicts earlier this year. 'If there is a complete stoppage of Iranian LPG material or even, say, a halving of the average intake to China, China has few alternatives of substance,' said Samantha Hartke, head of market analysis for the Americas at Vortexa Ltd. Iran's Influence on Key Shipping Routes The vast majority of Asia's imports come through the Strait of Hormuz, making this waterway a focus for oil merchants. While Iran may choose not to block the conduit, it's also able to threaten the safety of navigation through the Red Sea — the shortest route between Asia and Europe — using proxies such as Yemen's Houthis. About 9% of global seaborne trade normally passes through the Bab el-Mandeb chokepoint, or more than $2 trillion worth of goods a year. That may affect Asia's supply from Russia, which has turned to markets in the East after being increasingly shunned by the US and traditional buyers in Europe because of its invasion of Ukraine in 2022. Ships carrying those massive volumes — ranging from flagship Urals crude to naphtha — must decide whether they continue to risk the Red Sea route, or face weeks of delays by going around South Africa instead.
