Introduction, issue 87

Although the robustness of the oil benchmarks has been the focus of industry discussion for many years, it is only in the last four years that it has become a key focus of government and regulatory scrutiny. This has taken various forms, but two key strands have been for tighter regulation of the derivatives markets, including futures; and closer monitoring of the price reporting agencies (PRAs) whose daily assessments are used in the pricing of billions of dollars of oil and gas, and related derivatives contracts. In the last year, the divergence of the US benchmark West Texas Intermediate from other marker grades has renewed the focus on how well the various benchmarks are performing. Because of declining production volumes, Brent and Dubai have already been subject to such scrutiny. More recently, the price reporting agency Platts made a significant but controversial change to its assessment of Dated Brent that led for calls in some quarters for tighter regulation of the physical market