BP and Shell face oil price-fixing allegations in a new lawsuit filed by four US oil traders. The US suit also accuses Morgan Stanley, Vitol Group, and Trafigura of being involved in the shady trading dealings. The five companies have allegedly fixed the prices of Brent crude oil several times in the past decade. None of the accused groups have commented publicly on the claims.
The suit was filed in Manhattan on October 4. According Salon , the case claims that BP and Shell fixed oil prices, along with others, when Brent crude oil trades over and undersold the industry benchmark . Brent crude oil prices are an important benchmark in North Sea oil production, directly affecting the business dealings of the groups and firms involved.
As The Guardian reports, some industry insiders say these kinds of things could happen naturally within the market. Others have said the suit is foolhardy and just “four traders trying their luck.”
Energy trading has become the focus of increased scrutiny in recent times. An unconnected case arose in the UK last year, claiming that energy companies had intentionally altered market and trade prices. While the allegations have yet to fade, some companies in the UK have already come out to admit their role in the shady practices. These revelations have shown that prices were raised by as much as 10 percent. Some believe the US suit against BP and Shell over oil price-fixing claims may have been inspired by the findings in the UK.
As The Guardian reports, the attorney representing the trades in the new suit, David Kovel, says Brent crude oil trading is “a very obscure market.” Those on the inside have special knowledge and access to the field that others don’t have, and this enables them to secretly alter prices and manipulate the market, explains Kovel. His clients believe this has been abused and resulted in BP and Shell illegally fixing oil prices.
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