BP and Royal Dutch/Shell Group, Europe's biggest oil rivals, have a new disagreement: how to prevent manipulation of a market that helps set the price for two thirds of the world's crude.
The reason is the Brent field in the North Sea, operated by Shell, is running out of oil after producing more than a billion barrels in the past quarter century. The network pumps about 320,000 barrels a day, a third of its peak and just 0.4 percent of the world's daily output, making the market easier to corner.
That is a concern because Brent futures on the International Petroleum Exchange help determine prices in the $2 billion a day world crude oil market and influence the costs of products from gasoline to asphalt. A failure to settle the matter may divide the market, making it easier to hoard supplies and drive up prices, analysts said.
“BP and Shell dominate the North Sea market,” said Bruce Evers, an analyst at Investec Henderson Crosthwaite. “They are hugely competitive with each other and they don't want to concede an inch.”
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