In a “perilous position,” the Platts Dubai benchmark, which used to price around 18 million barrels per day, nearly a fifth of global supply, is now severely strained by the halt in exports through the Strait of Hormuz. According to Reuters, with most cargoes having been unable to move safely through the chokepoint, the system is grappling with a fundamental question of how to price oil that cannot be loaded.
The situation remains largely unchanged as of today, despite Washington’s announcement that the Strait is officially open for business again.
The Platts Dubai benchmark depends on crude produced in the UAE, Oman, and Qatar, much of it loaded within the Strait. But since the outbreak of conflict, tanker traffic has slowed dramatically, leaving the benchmark disconnected from physical reality. Platts has responded by cutting deliverable grades from five to two--Murban and Oman--reducing supply in the pricing basket by roughly 40%.
Market participants have told Reuters the benchmark is “effectively broken,” with some stepping back from trading Dubai-linked cargoes or derivatives altogether. Others are shifting activity toward exchange-based mechanisms, particularly Murban Futures on IFAD, where pricing continues to function even as physical-linked benchmarks come under strain.
Oman crude has not been able to replace the missing barrels, leaving Murban to carry most of the load. Oman exports can bypass the Strait, and the DME Oman futures contract was built to provide a transparent, exchange-based pricing mechanism, but liquidity remains thin, and participation is limited. Within the Platts Dubai system, Oman remains tied to the same stressed setup, so it is not solving the pricing problem.
In practice, the deliverable basket has narrowed to Murban and Oman, with Murban increasingly shouldering the burden of price formation. Against that backdrop, price discovery is beginning to migrate away from the Platts window toward Murban Futures on ICE Futures Abu Dhabi (IFAD), which provide continuous, exchange-based pricing that is not confined to a short assessment window and is less exposed to a small number of transactions when liquidity thins.
The energy crisis has also exposed how vulnerable the Middle East benchmark is to concentrated trading.
Platts Dubai pricing is built on its Market on Close process, where partial cargo trades are combined into full deliveries. With fewer participants and thinner liquidity, influence is becoming concentrated. Trade data shows that TotalEnergies’s trading arm spent around $4 billion on Dubai partials in March, taking delivery of 77 out of 82 cargoes and effectively dominating the process, adding upward pressure on prices. This does not break any rules, but it points to a potential problem.
When a benchmark is driven by a small number of transactions within a narrow pricing window, a single player can end up shaping the price and eroding competitiveness (an issue that becomes more pronounced as liquidity thins). By contrast, exchange-based pricing mechanisms such as Murban Futures on IFAD distribute price formation across a broader set of participants and time horizons.
New Pricing Mechanism
The more immediate question is not just how the Dubai benchmark adapts, but whether price discovery is already shifting elsewhere. As the deliverable pool contracts and liquidity inside the Platts window deteriorate, Murban Futures on IFAD are increasingly serving as a parallel venue for price formation, offering continuous trading and greater transparency at a time when traditional benchmarks are under stress.
The growing role of Murban futures is a phenomenon that dates back to well before the Iran war, but it is just one way one way the blend is altering Middle East oil. An arguably even more consequential shift has been how Murban has been changing pricing behavior inside the benchmarks themselves, particularly in Asia, as supply discipline and refinery economics upend long-standing relationships between sweet and sour grades. One clear sign of this shift is how Murban trades inside the Dubai benchmark. Murban is no longer just one of the grades that can be delivered into the basket: during periods when medium and heavy sour supplies are tight, Murban has often been the most available crude, and prices have tended to settle around it. In some cases, that has left Murban trading below sour grades that would normally be priced at a discount.
Just a decade ago, this inversion would have been difficult to imagine. The Dubai benchmark was built around medium sour crudes flowing into Asia, where refineries were set up to run heavier barrels. Light sweet grades like Murban typically traded at a premium because they were easier to process and produced more high-value products. As supply patterns have shifted and refinery economics have changed, that relationship has narrowed and, even sometimes reversed.
A major driver has been supply management rather than demand. OPEC+ production cuts disproportionately constrained medium and heavy sour grades, tightening the availability of crudes such as Upper Zakum, Oman, Al Shaheen, and Dubai Fateh. Murban, by contrast, has remained relatively abundant and freely tradable. As a result, during periods of tight sour supply, Murban has often become the cheapest deliverable crude in the Dubai basket, effectively capping the benchmark’s value.
At the same time, refinery economics in Asia have evolved. Over the past decade, refiners, particularly in China, have invested heavily in complex upgrading capacity that allows them to process heavier, cheaper crudes while still maximizing output of light products such as gasoline, naphtha, and jet fuel. That investment has reduced the structural advantage once enjoyed by light sweet crudes and made refiners more willing to substitute across grades based on availability rather than quality alone.
Last year, medium sour grades in the Dubai basket occasionally traded above Murban. The shift was not about quality; rather, it reflected supply dynamics. OPEC+ cuts tightened the availability of heavier sour barrels, while Murban continued to flow more freely. That left Murban as the (sometimes) lowest-priced deliverable crude in the basket, setting the effective floor for the benchmark. This evolving reality forced benchmark administrators to change their strategies.
Platts changed its Dubai benchmark in January to give Murban a much larger role, allowing it to trade freely within the basket instead of being held above Dubai. The old premium system was replaced with a Murban Quality Adjustment that can move both ways, meaning Murban can be priced above or below other grades based on market conditions, with the adjustment calculated off recent price differences with Oman. That system also allows negative adjustments, where a seller would effectively compensate a buyer if Murban prices are below the rest of the basket. But in March, as the Iran war disrupted flows, Platts reversed part of that change and suspended negative adjustments, putting a floor back under Murban to keep barrels flowing into the system when it was one of the few grades still available.
The result of all of this is a market in transition. While Platts Dubai remains a key reference point, its pricing power is increasingly constrained by structural and geopolitical pressures. In contrast, Murban’s role is expanding not just as a deliverable crude, but potentially as a foundation of a more resilient, exchange-based pricing system centered on IFAD.
By Alex Kimani for Oilprice.com
