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Did BP, Shell, Statoil, And Others Fix Oil Prices?

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Screen Shot 2013-05-17 at 01.06.41Did BP, Shell, Statoil, And Others Fix Oil Prices And Behave Anti-Competitively?

By Werner Kranenburg: Oct 30 2013, 13:46

In legal proceedings, which may prove critical for both physical oil traders and traders in oil-related financial instruments, who should take note for their own possible action, the focus of attention has of last week firmly shifted to a federal trial court in Manhattan for now. The European Commission stating that “[e]ven small distortions of assessed prices may have a huge impact on the prices of crude oil…” concerns all involved and, besides governmental authorities, market participants have their role to play as well in ensuring the integrity of benchmarks and fairness of competition such as through the courts.

In August last year, a trading arm of French oil major Total SA (TOT) submitted a letter to the International Organization of Securities Commissions (“IOSCO”) in which it says that “[s]ometimes the criteria imposed by [Price Reporting Agencies] do not assure an accurate representation of the market and consequently deform the real price levels paid at every level of the price chain…” It also speaks of the direct impact “inaccurate pricing” and “erroneous prices” have on the pricing of over-the-counter contracts and beyond. IOSCO, an assembly of financial markets regulators, published the letter in its final report on Principles for Oil Price Reporting Agencies in October 2012.

Then in May this year, it has been widely reported, three oil majors, namely BP PLC (BP), Royal Dutch Shell PLC (RDS.A, RDS.B) and Statoil ASA (STO), and McGraw Hill Financial Inc.’s (MHFI) Platts, which compiles and publishes Brent Crude oil prices, were the subjects of unannounced inspections, more commonly referred to as ‘raids,’ by the respective national competition authorities coordinated by the European Commission.

Disclosure by Werner Kranenburg: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…)

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