Platts could potentially include US crude in Dated Brent if the price assessment agency adds more grades to the oil reference to counter expected declining production from the North Sea.
Platts, the oil price assessment agency owned by New York-based McGraw-Hill, is in early consultations with the market about adding new crudes to Dated Brent, which is made up of four North Sea oil grades and is used to price about two-thirds of the world's physical oil.
“We have described to the market … four or five different grades in the North Sea that could potentially play a role in that basket that are currently being produced and are slated to being produced in the next couple of years,” said Dave Ernsberger, the global editorial director for oil at Platts.
“There is no silver bullet in the North Sea crude market, which is why potentially the conversation could turn to delivered crude, which may include crudes coming from West Africa and Central Asia and maybe even the US Gulf coast if the US begins to export more crude.”
The North Sea crude streams used to set the benchmark are Brent, Forties, Oseberg and Ekofisk, also known as BFOE. Brent and Forties are produced in UK waters and Oseberg and Ekofisk in Norway.
The US in January resumed exporting crude, after a 40-year-old ban on oil exports was lifted. The ban was slapped following the 1973-74 oil embargo imposed by Arab members of Opec, which increased US dependence on oil imports.
North Sea production could drop in the future as investments in the offshore region decline.
Oil and natural gas producers in the UK’s North Sea are expected to spend 22 per cent less this year than last year, Oil & Gas UK, a lobby group, said in February.
The near-60 per cent drop in oil prices since mid-2014 to about US$45 per barrel has not helped the oil industry, where companies are slashing investments and shedding jobs. “The best solution to a North Sea challenge is a North Sea solution,” said Mr Ernsberger.
“But if the investment climate in the North Sea remains challenging … and if production does not increase from anywhere, then the main benefits of West Africa and Central Asia and others would simply be that they are there and that they are there to be delivered.”
Platts continuously looks at improving its price assessments and this year added grades to its Middle East benchmark to meet demand for deliverable cargoes.
The Dubai assessment is the main benchmark used to price Middle Eastern crude shipped to Asia, the main consumer of oil from the region.
dalsaadi@thenational.ae
Follow The National's Business section on Twitter
