ICE to launch IFAD and Murban crude oil-based future contracts

By Rahul Vaimal, Associate Editor
  • Follow author on
Intercontinental Exchange Incorporation (ICE)

US-based Intercontinental Exchange Incorporation (ICE), a leading global exchange and clearinghouse operator and supplier of mortgage technology, data and listing services, has revealed its plans to launch ICE Futures Abu Dhabi (IFAD) and the world’s first Murban crude oil-based futures contracts.

Last year, the Abu Dhabi National Oil Company (ADNOC) announced that its flagship Murban crude will be traded on a new local exchange, IFAD, owned by Abu Dhabi, multiple oil companies and ICE, the home of Brent crude trading.

ICE said in a statement, “ICE Murban Futures will be a physically delivered contract with delivery at Fujairah in the United Arab Emirates (UAE) on a free on board (FOB) basis”.

The contract “will be complemented with a range of cash-settled derivatives which IFAD plan to launch for day one of trading,” it further added.

The new contract would create an alternative benchmark run by the Dubai Mercantile Exchange (DME) and traded on CME’s electronic platform to the most widely used Middle East standard, Dubai / Oman benchmark.

ICE had said, it wanted to launch the new IFAD exchange to host the Murban grade in the first half of 2020, but in the face of current unpredictable market conditions, the proposal was postponed pending regulatory and clearance approvals.

Along with the most relevant global oil benchmarks such as ICE Brent, ICE WTI, ICE (Platts) Dubai and ICE Low Sulphur Gasoil, contracts exchanged at IFAD will be cleared at ICE Clear Europe, a leading energy clearinghouse, enabling customers to benefit from related margin offsets and offer substantial capital efficiencies.

BP, Total, Inpex, Vitol, Shell, Petrochina, Korea’s GS Caltex, Japan’s JXTG and Thailand’s PTT were companies that agreed to be partners in the exchange.

The production of light crude from Murban is approximately 1.6 million to 1.7 million barrels per day (bpd). Traditionally, the UAE has sold oil directly to customers, especially in Asia, based on retroactive pricing rather than forward pricing used by Saudi Arabia, Kuwait and Iraqi oil producers.

The UAE, the third-largest oil producer behind Saudi Arabia and Iraq in the Organization of Petroleum Exporting Countries, pumps approximately 2.5 million to 3 million bpd, mainly provided by ADNOC.