The Great Debate UK

Don’t just blame oil traders for the manipulation of oil prices


–Kathleen Brooks is research director at The opinions expressed are her own.–

The oil market is about to face one of the largest probes in years, following the EU announcing that it is investigating some major players like Shell and BP for price fixing. The probe concerns the way that large oil companies submit prices to Platts, the independent oil pricing service, which publishes prices for oil benchmarks like Brent.

The concern is that oil traders have been reporting prices that are higher than what they are actually selling oil for, in order to push up the price and cream the profits. This might all sound similar to those who followed the Libor fixing scandal that saw the end of Bob Diamond’s career at Barclays and global condemnation of bankers who set benchmark interest rates at levels that suited them, rather than the consumer.

So could this be a case of greedy traders pushing up prices that we, the consumer, have to pay at the pump? Could it be the actions of a few crude desks around the globe that may have pushed up UK inflation, which then limited the amount of stimulus the Bank of England has been willing to feed into the UK economy?