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ICE to run parallel contracts after Platts Brent benchmark change

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Julia Payne
·2 min read
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By Julia Payne

LONDON, March 3 (Reuters) - The Intercontinental Exchange (ICE) is looking to run two types of Dated Brent contracts after June 2022 following pricing agency Platts' announced major change to its global oil benchmark, a circular from the exchange showed.

The move will allow the market to decide which contract to use.

S&P Global Platts last week announced the inclusion of U.S. crude West Texas Intermediate (WTI) Midland in its dated Brent oil price assessment, the first crude from outside the North Sea to be added to the global benchmark.

ICE had previously warned Platts that the move was too fast for the exchange and the market to adopt.

More than half the world's physical crude is priced off the Platts dated Brent benchmark, currently based on the value of five North Sea crude grades - Forties, Brent, Oseberg, Ekofisk and Troll.

Brent futures are also linked to dated Brent.

"For maturities after June 2022, the Exchange is considering listing successor contracts referencing the new Dated Brent assessment basis," an ICE circular dated Feb. 26 said.

"One referencing the continuing Platts FOB assessment, and a new one using the new CIF-based assessment."

One contract will reflect the new Dated Brent assessment that includes WTI and the North Sea grades exclusively priced on a delivered basis including cost, insurance and freight (CIF) to Rotterdam.

The other will be based on a netback price from the new CIF benchmark, removing the cost of freight known as being on a free-on-board basis (FOB).

Historically, the benchmark was assessed exclusively with FOB cargoes before CIF cargoes were introduced to the mix in 2019.

Platts said it will publish both prices once the change is implemented next year. (Reporting by Julia Payne, additional reporting by Dmitry Zhdannikov; Editing by Hugh Lawson)