ADNOC, the national oil company of Abu Dhabi, has cut the official selling price for July for its flagship Murban crude to $101.48 per barrel, down from $104.44 a barrel for June, amid weakening international and Middle Eastern benchmark oil prices.
ADNOC’s recent pricing list for July, reported by Economy Middle East, reflects softening market conditions following the tentative reopening of the Strait of Hormuz.
ADNOC has priced its other grades, Umm Lulu, Das, and Upper Zakum, at par with Murban at $101.48 per barrel for July.
Prices of both Brent Crude and the Middle Eastern benchmarks – the Dubai, Murban, and Oman futures – have sunk over the past week after the U.S. and Iran announced a memorandum of understanding to launch peace talks and reopen the Strait of Hormuz, and the U.S. lifted its blockade in the Gulf of Oman that targeted to stop Iran’s oil exports.
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The slide in Murban prices and the other key Middle Eastern crudes comes as market concerns about the tight supply eased.
The benchmark crude grades of the Middle East slumped last week as the U.S.-Iran deal raised hopes that supply from the top oil-exporting region would begin to recover soon.
As a result of the eased concerns about prompt crude supply from the region, the key benchmark crudes, Dubai and Murban, saw their futures curve structure flip to contango last week, for the first time since the war began on February 28.
The contango structure, in which prices for contracts dated further out in time are higher than the prompt contracts, suggests that concerns about the immediate lack of crude supply have eased significantly.
The crashing prices of Middle East’s key benchmark crudes in the wake of the U.S.-Iran deal have opened arbitrage for shipping oil from the Middle East to the United States and Europe.
By Charles Kennedy for Oilprice.com
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