EU oil price investigation puts Platts in spotlight.
Authorities carried out a surprise inspection at Platts' London bureau as well as the offices of Royal Dutch Shell, BP and Statoil. Officials were searching for evidence that the firms had distorted prices reported to Platts in an attempt to influence the cost of oil.
The move follows more scrutiny of financial benchmarks by authorities since the London Interbank Offered Rate (Libor) rigging scandal. Statoil said the suspected violations were related to the Platts price assessment process and may have been going on since 2002, when oil traded at just $20 a barrel, a fifth of its price today.
For more than a century Platts, a unit of McGraw-Hill, has provided clients with price benchmarks set by reporters for opaque energy markets. As the undisputed lead price reporter, its assessments are used to close physical and derivative deals worth billions in a $2.5 trillion market. "Platts is the main price reference for the physical oil market," said Olivier Jakob, oil consultant at Petromatrix in Zug, Switzerland. "So if you were to close Platts tomorrow, you would have a very big problem." Now the methodology designed by Platts to assess the value of oil is under scrutiny.
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