Shell requires harder regulation of Dubai oil benchmark: FT

© Reuters. Shell’s company logo is pictured at a gas station in Zurich

(Reuters) – The Anglo-Dutch oil group Royal Dutch Shell PLC (L:) has called for tougher regulation of the Middle East’s most important oil-pricing mechanism that has resulted in pushing the region’s prices up relative to other grades, the Financial Times reported.

“There need to be safeguards to prevent the risk of distortion and to ensure the Dubai benchmark price mirrors true market supply and demand fundamentals,” the FT quoted Mike Muller, a top trading executive at Shell, as saying. (http://on.ft.com/1k5b8JR)

In August, Chinese state-owned oil company Chinaoil, the trading arm of PetroChina Co , snapped up a record 36 million barrels of oil, pushing up Middle East crude prices for Asia, even as other grades remained under pressure due to a global glut.

Shell’s Muller said manipulation of physical crude prices in other regions was “under the jurisdiction of a regulator with powers to review and take any necessary action against wrongdoers,” whereas the Dubai market falls under no such regulatory body to keep a check on price manipulators.

The volumes bought by Chinaoil and sold by Unipec were so high that pricing agency Platts said in August it was considering whether to allow more crude into a pool of supplies it uses to assess its daily Asian benchmark, the Dubai crude price.

However, Platt’s global head of oil content Dave Ernsberger said that the price-reporting agency is “not responsible for policing who buys and sells in the markets”, the paper reported.

Chinaoil and Unipec could not immediately be reached for comment outside regular business hours.

Platts previously held talks with customers in 2011 over the addition of Qatar Marine to the Dubai basket due to worries about Oman supply disruptions, but nothing was implemented.

Platts, part of McGraw Hill Financial Inc (N:), competes with Thomson Reuters in providing news and information to the energy markets.

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Shell requires harder regulation of Dubai oil benchmark: FT