BP levels sharpest criticism yet of London’s Brent crude oil market

BP levels sharpest criticism yet of London’s Brent crude oil market

BP said the world’s most important oil benchmark was experiencing ‘regular dislocations,’ in the harshest criticism ever by an oil major about how the price of Brent crude is calculated.

The British oil major — itself one of the world’s largest energy traders — warned of trouble for both Dated Brent, the gauge for physical transactions, and Brent futures, a multi-billion financial market used to hedge physical transactions but also to speculate.

“We are seeing increasingly regular ‘dislocations’ in the value of both benchmarks,” BP said in response to an industry consultation about the future of the benchmark. The dislocations, BP added, are “as a result of insufficient liquidity in underlying grades, and expiry changes which have resulted in increased futures volumes being taken to expiry by market participants.”