© Reuters. FILE PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019. REUTERS/Angus Mordant/File Photo
By Alex Lawler
LONDON (Reuters) – Oil pricing agency S&P Global (NYSE:) Platts said on Wednesday that discussions with industry show opinion is focused on two possible additions to the dated benchmark – Johan Sverdrup crude, and West Texas Intermediate () Midland crude.
Platts said in a statement that it and Intercontinental Exchange (ICE (NYSE:)), the home of Brent futures trading, had been holding discussions on the issue separately, and had published the results in a joint paper and plan to hold more consultations.
The Brent benchmark is crucial to the global oil system as it is used to price more than half the world’s physical crude trades. Currently, the benchmark is based on the value of five North Sea crude – Forties, Brent, Oseberg, Ekofisk and Troll, but supply of these is in long-term decline.
Platts said industry opinion was focused on adding Johan Sverdrup, another North Sea crude, as a deliverable option under the forward Brent contract on a free on board, or FOB, basis, while WTI Midland could be included as a deliverable grade on an FOB USGC (U.S. Gulf Coast) basis.
This would adjust an earlier plan for the reform, announced in February, when Platts said it would add WTI and change the basis of the benchmark to a delivered, CIF basis, where cargoes include the cost of insurance and freight, rather than FOB.
A month later, Platts said it would defer the changes after industry pressure.
In the Platts statement on Wednesday, Platts and ICE both said they would hold further consultations. The deadline for comments is Sept. 30 2021.
Reuters competes with Platts in the provision of news and pricing information about the oil market.
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