The pricing scandal implicating Platts and oil majors BP, Shell and Statoil highlights a problem of too much influence by too few, according to a leading industry analyst.
Jeffrey C. Kerr, managing analyst covering the downstream oil and gas market for research and consulting firm GlobalData, says that a widely-used benchmark may need to be modified in order to be more representative of a changing marketplace.
“Oil companies are relatively used to being investigated about price fixing and collusion, as governments regularly start investigations into how prices are set under the guise of potential damages to consumers. Collusive behavior is rarely found, and companies are commonly cleared of any wrongdoing.
“This time may be different, however, as French major Total, which is not under investigation, appears to be the party that alerted the European Commission to improprieties in the Brent market settlement process. Total has reportedly provided materials and examples of collusive practices that led to this week’s raids.”
His comments come as European Commission (EC) investigators raided the trading offices of BP, Shell and Staoil along with the London office of price reporting agency Platts last week amid complaints about price-fixing and collusion in the global crude oil, refined products and biofuels markets.
The investigation will be watched very closely by the oil markets, since it will likely have a major impact upon the way trades are reported, prices are discovered, and futures, swaps and options are settled in the oil markets in the coming years, no matter how the investigation ends.