In March, exports of Upper Zakum crude from the United Arab Emirates experienced a sharp decline as ADNOC redirected a larger portion of supply to its own refinery and increased shipments of its lighter Murban oil, as reported by traders, analysts, and shipping data. The strategic shift in oil grades at Abu Dhabi National Oil Company’s (ADNOC) Ruwais refinery has resulted in a tightening of medium-sour crude supply in Asia, constraining the availability of Upper Zakum cargoes during S&P Global’s price assessment process for Middle East crude Dubai and bolstering the benchmark.
ADNOC’s investment in upgrading the Ruwais refinery over the past few years to process heavier grades, such as Upper Zakum, aligns with its goal to optimize revenue generation and comply with production quotas set by the Organization of the Petroleum Exporting Countries (OPEC). The company’s significant investment of $3.5 billion in 2018 enabled the refinery to handle up to 420,000 barrels per day (bpd) of heavier and more sour crude, including Upper Zakum.
Since September, ADNOC has been supplying Upper Zakum crude to its refinery, with volumes ranging from 200,000 to 300,000 bpd in February and March. Data from Kpler indicates that the share of Upper Zakum crude delivered to Ruwais surged to 366,000 bpd in March, comprising 40% of total shipments, up from 152,000 bpd in February. Rystad forecasts a decline in Upper Zakum exports to approximately 650,000 bpd in March, compared to a monthly average of 940,000 bpd in 2023.