This third blog will look at the value of oil price optionality in a non-benchmark contract price formula from the perspective of the larger oil or trading company. It might be expected that, if the smaller non-trading company understands how much its trading counterparty is making, that should go some way to wresting a bigger share of the economic rent accruing to the trader from the option- right?

One fact that the reader should keep front and centre in the mind is that the price of oil at any moment varies with its delivery date. The same barrel of oil can be worth simultaneously many dollars of difference in price depending on whether it is to be delivered next week, next month, or next quarter.

“Everything is complicated; if that were not so, life and poetry and everything else would be a bore,” Wallace Stevens

Liz Bossley and the other guest panelists, Maleecha Bengali and Jose Chalhoub, are discussing the direction of travel in the Asian Oil Markets. Host: Sean Evers.