(July 13): Abu Dhabi National Oil Co is broadening the options for long-term customers to take offshore oil from outside the Strait of Hormuz, stepping up efforts that enable buyers to circumvent the chokepoint.
The United Arab Emirates’ largest oil company will sell the crude for collection outside the waterway next month via ship-to-ship transfer at Fujairah, with prices that are indexed to the Middle East’s regional Dubai benchmark, according to a price sheet from the producer seen by Bloomberg.
Upper Zakum and Das can be bought at an 80-cents-a-barrel premium while Umm Lulu will be priced at a US$1-a-barrel premium, the sheet showed. The grades come from within the Persian Gulf and ordinarily require buyers to arrange shipping to collect the crude from those sites. While that option still stands, the new arrangement offers an alternative that avoids Hormuz.
The UAE 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. Despite the ongoing conflict, the country boosted oil production to an all-time high last month, according to the International Energy Agency.
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.
The company has already been selling Upper Zakum, Das and Umm Lulu on a spot basis from Fujairah in a series of tenders, meaning they’re available to any buyer on an ad-hoc basis. The latest change applies only to refiner customers who have long-term contracts with the producer.
See also: Asian oil refiners scoop up US crude as Iran war intensifies
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 its flagship Murban grade was set at US$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.
The Strait of Hormuz connects the Persian Gulf to global markets, and the UAE has coastlines both within the gulf and outside. Control remains contested between the US and Iran, with a flare-up in fighting between the two sides in recent days and conflicting declarations over whether the waterway was open.
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