After a period of market feedback, S&P Global Platts will amend the volume guidelines for its Dated Brent cost, insurance and freight (CIF) Rotterdam and free on board (FOB) ship-to-ship (STS) Scapa Flow crude oil assessments, effective April 21, 2021.
The proposal is in line with its current formal consultation regarding the inclusion of WTI Midland crude in its Dated Brent benchmark, and all related assessments.
A proposal note was published Jan. 28, which is available here:
As a result of the decision, Platts will remove the 'mother/daughter' vessel restrictions on FOB STS and CIF Rotterdam cargo offers in its Dated Brent Market on Close assessment process.
Instead, Platts will reflect a minimum volume that could be offered in the Platts MOC.
In practice, this will extend the number of cargoes that can be offered to 'granddaughter' vessels and beyond, provided the cargoes on offer meet the minimum volume requirements and continue to reflect standard cargo quality.
Platts currently publishes 600,000 barrel CIF Rotterdam and STS BFOET cargo offers in the MOC, with an operational tolerance plus or minus 1%.
Under this proposal, Platts would continue to reflect 600,000 barrel cargoes in its assessments, but would publish CIF Rotterdam and STS offers for smaller cargoes.
These offers may be subject to normalization for the purposes of the assessment. Platts is proposing to reflect cargoes with a minimum stated volume of 580,000 barrels with an operational tolerance plus/minus 1%.
The original FOB cargo would be expected to have loaded 600,000 barrels plus/minus 1% at one of the five terminals supplying physical BFOET crude oil, and the quality of the supplied crude oil must be congruent with the quality recorded at the time of its original FOB loading.
This proposal follows market feedback indicating that end-user volume flexibility is greater than 1% around 600,000 barrels, and that standard market practices already exist in order to settle volume losses beyond previously-agreed limits.
WTI Midland volumes
Platts reiterates that its WTI Midland delivered assessments into Rotterdam and Augusta continue to reflect cargoes of between 500,000 and 700,000 barrels.
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