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Reassessing the Brent Benchmark for Crude Oil
There is reason to believe that the Brent benchmark for global crude oil prices is being manipulated. This has serious implications for oil import dependent countries like India. The opaqueness of the price setting process makes it diffi cult to establish rigging, but it is in the interests of India and other large developing countries to bring out the real picture.
Corrigendum
In the article “Reassessing the Brent Benchmark for Crude Oil” published on 21 December 2013,
(i) It was written that “On 14 May, the European Commission surprised the energy markets by announcing that it had launched investigations against several unnamed oil companies and price reporting agencies on the suspicion that they were manipulating the crude oil pricing benchmarks (European Commission 2013).’’ The factual position is that the European Commission memo of 14 May 2013, stated “The European Commission can confirm that, on 14 May 2013, Commission offi cials carried out unannounced inspections at the premises of several companies active in and providing services to the crude oil, refi ned oil products and biofuels sectors.” The memo also said “The Commission has concerns that the companies may have colluded in reporting distorted prices to a Price Reporting Agency to manipulate the published prices for a number of oil and biofuel products.” The European Commission note did not state that any price reporting agency was under investigation.
(ii) It is stated or implied throughout that there are only two major price reporting agencies in the world that assess crude oil price bench marks, Platts and Argus Media, leading readers to conclude that Argus Media is also under investigation. The article also stated, “The other is Argus, a privately-held London-based firm, currently also under the scanner”. Argus Media informs EPW that it has never been investigated by the European Commission for price manipulation or any other matter.
(iii) There is a reference to the PRA Principles issued in a report by the IOSCO led group and it is stated that adoption of the Principles has been “uneven and ambiguous.’’ Argus Media states that this is an inaccurate statement and that it was the fi rst price reporting agency to successfully complete an independent external assurance review (conducted by Pricewaterhouse Coopers) as required by IOSCO’s PRA Principles. Furthermore in its most recent comment on the PRA Principles (on 18 September 2013) IOSCO said: “PRAs had made significant efforts to implement the Principles”.
EPW regrets these errors and apologises for them – Editor
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