Platts consults market on impact of EU ETS inclusion in shipping, oil benchmarks

Following Worldscale Association's notice on July 8, 2024 that it will include European Union Emission Trading System (EU ETS) carbon costs in its flat rates for 2025, Platts, part of S&P Global Commodity Insights, seeks market feedback on the future of its shipping assessments and its oil assessments that have a freight component, such as Platts Dated Brent.

Platts is inviting feedback on, but not limited to the below:

• Aframax 70,000 mt USGC-UKC Worldscale (TDUCG00) and $/mt (TDUCF00) –Specifically, the potential impact to prevailing open interest with carbon costs being included and whether there is a need for a corresponding carbon-exclusive rate published through 2025.
• Aframax 80,000 mt UKC-UKC Worldscale (PFAKD10) and $/mt (TDACD00) – Specifically, the potential impact to Platts Dated Brent with carbon cost being included in the flat rate and whether there is a need for a corresponding carbon-exclusive rate published through 2025.
• European oil price assessments relying on freight rates, particularly those which are calculated as netbacks or netforwards from spot oil assessments – Specifically, the potential impact on carbon cost being included in the flat rates underpinning these assessments.

In markets where freight is traded on a Worldscale basis, Platts publishes freight assessments in "points", which reflect a percentage of the prevailing Worldscale annual flat rate.

From time to time, the Worldscale Association publishes revisions to these flat rates and other costs in its circulars. Platts reviews these changes with the industry for possible inclusion into Platts freight calculations. Platts will update the market of any such changes through published subscriber notes.

Impact on Dated Brent

The 10-day rolling average of the Aframax 80kt UKC-UKC assessment [TDUUW00] is used in the calculation of the six Freight Adjustment Factors that are used in Dated Brent to netback CIF Rotterdam indications to FOB North Sea equivalent values.

The spot assessment [PFAKD10] is also referenced in section 6.3 of the Stasco BFOETM 2022 v1.2 General Terms and Conditions.

Please send all feedback and comments by the close of business Aug. 26, 2024 to tankers@spglobal.com , pricegroup@spglobal.com , Europe_products@spglobal.com and Europe_crude@spglobal.com

Platts will consider all comments received and it will make comments not marked as confidential available to the public upon request.