Oil giants BP and Royal Dutch Shell are accused by traders of manipulating the Brent crude oil price for more than a decade. The North Sea oil benchmark is used as the basis for trades across the global commodity markets, affecting the price of thousands of consumer products from petrol to food.
By Emily Gosden: 11:15AM GMT 06 Nov 2013
BP and Royal Dutch Shell have been accused of manipulating the Brent crude oil price for more than a decade, in allegations filed in a lawsuit New York.
The North Sea oil benchmark is used as the basis for trades across the global commodity markets, affecting the price of thousands of consumer products from petrol to food.
The class action claim, brought by four traders, was lodged last month in the wake of the European Commission in May launching an investigation into alleged price rigging by the companies.
The court filing alleges that the companies – along with Norway’s Statoil, Morgan Stanley, Trafigura, Vitol and others – “monopolized the Brent Crude Oil market and entered into an unlawful combination, agreement, and conspiracy to fix and restrain trade in, and intentionally manipulate Brent Crude Oil prices and the prices of Brent Crude oil futures contracts”.
It alleges the rigging took place through the companies “deliberately reported inaccurate, misleading, and false information regarding Brent Crude Oil prices and transactions to Platts”, one of the key price-reporting agencies.
“By providing false or inaccurate information and engaging in false or sham trading, defendants undermined the entire pricing structure for the Brent Crude Oil physical and futures markets,” it alleges.
The lawsuit does not name Platts as a defendant but alleges that the method by which Platts collects data to set the price “can be easily gamed by market participants that make false, inaccurate or misleading trades”.
It warns: “Crude oil is one of the most vital commodities in the world, serving as the essential product for modern end-use applications varying from household plastics to transportation…Brent Crude Oil is in high demand and serves as a benchmark for two-thirds of the world‘s internationally-traded crude oil supplies.”
In May the EC raided the offices of companies including BP, Shell and Statoil. It warned that “even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers”.
The US Federal Trade Commission in June launched its own investigation into the allegations. It is understood the US regulators asked Shell to provide them with the same information it had provided to European authorities, but that the Anglo-Dutch giant referred them back to Brussels.
BP and Shell both declined to comment.
Shell’s chief executive, Peter Voser, has previously declared that the company has “nothing to hide”.
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