Personal commentary - Crude oil pricing formulas
Almost 21 years ago Pemex introduced spot-related formulas for determining the price of its crude oil exports. Other major players in the international oil market later adopted them and they continue to have a major influence on how oil prices are formed today. This might be a good time to remember...
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| Format: | Journal article |
| Language: | English |
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Oxford Institute for Energy Studies
2006
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| Summary: | Almost 21 years ago Pemex introduced spot-related formulas for determining the price of its crude oil exports. Other major players in the international oil market later adopted them and they continue to have a major influence on how oil prices are formed today. This might be a good time to remember the context in which they were originally developed, the objectives and constraints to which they responded and the role they played as part of the overall package of instruments of its commercial strategy. The recent dramatic structural changes and cyclical fluctuations in the level of prices, in price differentials and refining margins reflect shifting changes in fundamental market conditions and a redistribution of market power. At this juncture a full critical review of this pricing mechanism is warranted and could suggest possible adjustments to the formulas. However, an appraisal of the performance of the Mexican formulas is well beyond the scope of this brief memoir. |
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