ADNOC cuts May crude OSPs, sets Murban at a discount to Upper Zakum

Singapore — Abu Dhabi National Oil Co has made deep cuts to the official selling prices of its crude oil loading in May and also set the price of flagship Murban crude at a discount to medium, sour Upper Zakum for the first time.

ADNOC said Wednesday the May OSP for Murban was a discount of $6.95/b to Platts Dubai crude assessments for the month. It set the Upper Zakum at a premium of 10 cents/b to the Murban OSP, the Das Blend OSP at a discount of 35 cents/b to Murban and Umm Lulu at parity with Murban.

For April, the Murban OSP was at a $2.75/b discount to Platts Dubai crude assessments. April Upper Zakum was at a 30 cents/b discount to Murban, Das Blend at a 25 cents/b discount to Murban and Umm Lulu at a 10 cents/b premium to Murban OSP.

Cuts in line with expectations

The cuts received approval from a range of market participants in Asia, being seen as fairly competitive to Saudi Aramco's price cuts issued earlier this week.

"All in all, ADNOC OSPs are in line with Aramco, so not bad," one crude trader said.

"They are fair considering deals done last month," a second trader said. "They could and should have gone lower given what Saudi did, but I do not think there will be many complaints at all."

Traders had said that ADNOC had little choice but to reduce Murban's premium over Upper Zakum. "Murban is too rich in naphtha and not a good buy for now," a China-based trading source said.

Support for spot trading

ADNOC's May OSPs could lend support to spot market values quoted for its crude grades in the current June spot market in Asia, traders said.

Additionally, Japanese crude trader Mitsui was said to be bidding for June-loading cargoes of Murban and Das Blend at discounts of $1.30 and $1.50/b, respectively, to the June OSPs for the grades.

However, the OSP cuts would not be sufficient to support spot market prices, traders said.

"ADNOC lowered OSPs for May below what the cargo levels traded in the market last month, so in that sense the OSP looks low. But now the market is far lower than those levels and the OSP levels can be considered high compared to the June market," a buy-side source said.

The OSP differential for May Murban assessed by S&P Global Platts averaged minus $3/b over March, while Das Blend averaged minus $3.50/b.

ADNOC's cuts followed on the heels of Saudi Aramco, which cut the OSPs of its May-loading crude to Asian customers earlier this week after discussions between OPEC+ countries concluded with an agreed 9.7 million b/d in production cuts through May and June.

Market participants polled by S&P Global Platts earlier this week had said other Middle East producers would have little choice but to follow in Aramco's footsteps with similar price cuts to their respective grades for May.

ADNOC OSP DIFFERENTIALS TO DUBAI ($/b):