Oil firms sucked into EU probe on price fixing

Three of Europe’s biggest oil explorers are among companies being questioned by European antitrust regulators about potential manipulation of prices in the €2.6tn annual global crude market.

Royal Dutch Shell, BP, Statoil, and Platts, the oil-price data collector owned by McGraw Hill Financial, said they are being investigated after the European Commission conducted raids in three countries to seek out evidence of collusion.

Price fixing in energy markets has the potential to inflate production costs and consumer prices for everything from petrol to cosmetics.

An Irish Petroleum Industry Association spokesman said: “The companies mentioned have no presence in Ireland. The market in Ireland is primarily independent Irish owned entities which buy on the open market and have no influence over the prices at which they acquire the product.

“It is possible that those prices are being influenced by speculative activity in the big international markets. The companies operating in Ireland are price takers, not price makers.”

The probe, which extends to undisclosed crude-derived products and biofuels, underscores how pricing in some energy markets lacks the transparency of financial products such as stocks and bonds.

It also marks the third time that global pricing benchmarks have drawn the regulators’ scrutiny in the past year.

Statoil said the suspected violations related to prices published by Platts.

Platts publishes benchmark prices that are used to determine the costs refiners pay for crude oil and distributors pay for diesel and petrol. Traders report transactions to Platts. Those deals, rather than a complete record of all trades, are used to determine the price.

Statoil is taking the investigation “very seriously” and co-operating to the best of its ability, chief executive Helge Lund said yesterday.

It’s “important to underline that this is a suspicion, not a conclusion”, he said.

Total, Europe’s third-biggest oil company, estimates that as much as 80% of all crude and oil product transactions are linked to reference prices such as those published by Platts, while as much as 20% are linked to exchange-traded futures on Nymex and ICE.

Meanwhile, BP and Shell were yesterday warned by Downing St that they must co-operate fully with the Commission investigation into the price-rigging claims.

Downing St described the allegations that companies colluded to manipulate the oil price as “extremely concerning”.