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S&P Global Platts to reform key Dated Brent crude oil benchmark

London — S&P Global Platts plans reforms to its Dated Brent crude oil price assessment as part of ongoing moves to boost the liquidity of the benchmark used as a basis for pricing the majority of the world's traded oil, it said Monday.

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From November 2019, Platts plans to include qualifying North Sea crudes on an adjusted cost, insurance and freight (CIF) basis Rotterdam into in its FOB (free on board) Dated Brent benchmark.

Related subscriber note: Platts proposes to reflect CIF Rotterdam offers in Dated Brent from November 2019 loadings

The move marked the first time Platts will assess crude being offered on a delivered basis to determine the value of its main FOB Dated Brent assessment, which currently includes falling volumes of crude traded at North Sea terminals.

"With FOB supply in the North Sea gradually falling, this proposal will ensure ample liquidity of grades in the Dated Brent basket for the foreseeable future," Platts global director of oil market reporting, Vera Blei, said in a statement.

Under the changes, Platts said it will reflect in the FOB benchmark competitive offers of the five North Sea crude grades that make up the Dated Brent assessment -- Brent/Ninian Blend, Forties, Oseberg, Ekofisk, and Troll, or BFOE -- after adjusting for freight and sailing time.

The changes will not affect the methodology used by Platts for assessing the BFOE Brent crude markets, the company said.

LIQUIDITY BOOST

Crude output from the UK's offshore Brent oil field has dropped significantly since its peak at around 520,000 b/d in 1984.

Subsequent declines in wider North Sea oil output have prompted Platts to include alternative grades to increase the liquidity of the assessment.

Platts began consulting with the industry on the proposed changes to its Dated Brent benchmark in September.

As part of the consultation, Platts also said it was considering adding new streams of sweet crude oil to the price assessment.

Industry feedback was requested on the possible inclusion into the Dated Brent CIF Rotterdam assessment of Norway's Statfjord and Gullfaks crude, Kazakh-Russian CPC Blend, US WTI Midland, and Nigeria's Forcados and Qua Iboe crudes.

"On this element of the proposal, S&P Global Platts will continue to observe market developments in other grades within and outside the North Sea, and consult with stakeholders," the company said.

Platts said it was open to feedback on the Dated Brent plans, including on the timing of the measure and the freight adjustment factor, by February 14.

--Robert Perkins, robert.perkins@spglobal.com

--Edited by Dan Lalor, newsdesk@spglobal.com