Brent Crude latest benchmark to come under scrutiny

08 Nov, 2013

Yesterday (7th Nov)it was alleged that a number of multinational oil companies have colluded with Morgan Stanley to manipulate the price of Brent Crude, a benchmark for billions of dollars of transactions globally.

 

The allegations emerged following a lawsuit filed in the United States by four energy traders. The newspapers allege that BP, Shell and other oil companies, including Statoil and energy trader Vitol Group, colluded with Morgan Stanley by conspiring to manipulate prices in such a way that would distort the London-based Brent Crude benchmark rate. It is understood that the allegations cover a period of more than 10 years.

 

UK lawyers who are already actively involved in reviewing potential losses resulting from LIBOR manipulation commented on the potential ramifications.

 

Stephen Critchley (pictured), Head of Competition at UK law firm, Collyer Bristow, commented: “If these latest allegations are proven, the potential for damages could be astronomical when you consider the size of the global oil market and values traded every day around the world.”

 

He adds: “As with LIBOR, Brent Crude is used as the principal benchmark for a vast range of complex futures and derivative contracts used by businesses, producing products from plastics to food stuffs, to help protect themselves from adverse oil price movements. If businesses can demonstrate a financial loss stemming from manipulation, they could have grounds to seek financial redress through the courts.”

 

Today’s Brent Crude developments come on the back of reports on Tuesday that the EU Competition Commission may be about to impose multi-million Euro fines on six banks suspected of manipulating EURIBOR, another major interbank lending benchmark.

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