Sun, May 19, 2013 - Page 13 News List

European oil price probe widens

CONNECTED:A senator urged the US Department of Justice to join the probe, saying manipulation of European oil indices may have impacted US consumers and businesses


A European probe into possible oil price manipulation expanded with the investigation of a small niche trading house in the Netherlands, while a key US senator on Friday called for the US Department of Justice to join the investigation.

Dutch trading house Argos Energies, a mid-sized trading company that deals in physical oil products and owns storage facilities, was visited by inspectors from the European Commission on Tuesday, a source familiar with the investigation said on Friday.

The visit occurred on the same day that authorities raided the London bureau of pricing agency Platts, and the offices of Statoil, Royal Dutch Shell and BP in the biggest cross-border action since the probe into rigging of the London interbank offered rate (LIBOR) benchmark interest rates.

In Washington, the chairman of the Senate’s energy committee asked the Justice Department to investigate whether alleged price manipulation has boosted fuel prices for US consumers.

“Efforts to manipulate the European oil indices, if proven, may have already impacted US consumers and businesses, because of the interrelationships among world oil markets and hedging practices,” US Senator Ron Wyden, the chairman of the Senate Energy and Natural Resources Committee, wrote in a letter to US Attorney General Eric Holder.

The US Commodity Futures Trading Commission and Federal Trade Commission have both declined to comment on any role or coordination with EU authorities in the probe. US politicians including Wyden often call for inquiries into issues that affect gasoline prices, although regulators are not obligated to take action.

A spokesman for the Justice Department would not comment on whether the agency would undertake a probe, but said it was reviewing Wyden’s letter.

Authorities have sharpened scrutiny of financial benchmarks around the world since slapping large fines on some of the world’s biggest banks for rigging interest rate benchmarks.

Over the past year many observers have noted the resemblance between the LIBOR self-reported benchmark and the journalist assessment-based methodology used to set most of the world’s oil prices, but this week’s investigation is the first indication that EU authorities are taking a harder look at the system.

Platts said trading in the oil market has not been significantly affected by the investigation.

“Market participation and liquidity are unchanged,” Platts editorial director Dan Tanz said.

Meanwhile Neste Oil, a Finnish refinery, said it had received a request from the European Commission to provide information, although it said it was not under inspection.

“We will naturally cooperate with this request and provide the information requested to assist the European Commission in its investigation,” Oil Products and Renewables executive vice president Matti Lehmus said in a statement.

Hungary’s Pannonia Ethanol, a recent entrant to Europe’s market, was the first company to identify itself as having complained to Brussels over access to the Platts market-on-close (MOC) system — a daily half-hour “window” of trading during which the agency determines prices through a series of bids, offers and trades.

European oil major Total, which last year wrote to regulators to question the way oil prices were determined, said it was not involved with the current investigation and has not been visited.

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