August 29th - Since the 1950s, the Middle East has remained one of the world's most important oil-producing regions, typically accounting for one-third of global production. The oil crises of 1973-74 and 1978-80 drove Middle Eastern oil production growth and accelerated the shift in market control from multinational corporations to OPEC national oil companies. However, the region remained predominantly focused on crude oil exports with limited refining capacity at that time. This situation has fundamentally changed in recent years, with the Gulf region expanding its refining capacity by one-third since 2017, reaching 10.5 million barrels per day, as GCC countries seek to capture more added value from their fossil fuel resources. This transformation has increased the region's gasoline production from 1.7 million barrels per day to 2.4 million barrels per day, while doubling gasoline exports to 654,000 barrels per day. OEXN believes this shift has not only enhanced the region's value chain but also altered the global gasoline market's supply and demand structure.

The significantly increased refining capacity has simultaneously created pricing challenges, as Middle Eastern petroleum products now enter markets with a much broader scope than before. Previously, the Gulf region typically used Singapore market prices as a baseline, adjusting for freight costs, which was reasonable when Singapore was the primary buyer. However, Singapore now accounts for only 7% of the region's gasoline exports, while Pakistan, the United States, Australia, the Red Sea region, and East Africa have become major buyers. This has compelled Gulf countries to adopt new pricing mechanisms that better align with regional market fundamentals. This mechanism is called "MEBOB," echoing Europe's EBOB and America's RBOB. EBOB serves as a key price assessment indicator for the Northwest European gasoline market, widely used in contracts, financial products, and futures trading, while RBOB is the core gasoline benchmark in the US NYMEX futures market. OEXN indicates this means the Gulf region is aligning with mature European and American markets, gradually establishing global influence.

Simultaneously, various GCC countries are exploring diversified ways to utilize hydrocarbon resources. Four years ago, the UAE launched international trading of Murban crude oil to challenge the dominance of Brent and WTI. Abu Dhabi introduced Murban futures through the ICE Futures Abu Dhabi (IFAD) exchange, attracting participation from international energy giants including BP, PetroChina, Total, Eneos, Vitol, Inpex, PTT, and GS Caltex. Murban is a light, low-sulfur crude oil transported through ADNOC's pipeline to Fujairah, thereby bypassing the Strait of Hormuz. ADNOC is also constructing the world's largest underground oil storage facility in Fujairah, capable of holding 42 million barrels with an investment of $1.2 billion. OEXN believes this not only strengthens the UAE's energy export security but also provides solid support for regional energy financialization.

Murban futures experienced unprecedented trading activity in 2024, with second-quarter trading volume reaching 1.5 billion barrels, double that of early year levels. June saw a peak single-day volume of 57.3 million barrels, demonstrating Murban's rapid transition from regional crude to global benchmark. Murban's spot price even exceeded Brent ($70.72/barrel versus $67.75/barrel), trailing only a few OPEC grades, including Arab Light, Nigeria's Bonny Light, and Angola's Girassol. OEXN believes the premium behind Murban reflects market recognition of its supply stability and quality, indicating that the Gulf region will occupy a more central position in the future global energy pricing system.