S&P Global Platts recently announced a change to the methodology used to calculate the Platts UK Diesel quotation.
The changes have been made in order to reflect the removal of Russian cargoes from the assessment, and take effect from Wednesday 1st June 2022.
At the same time, Platts will also launch a new assessment for ULSD cargoes CIF Northwest Europe, reflecting all origins.
Here’s some short FAQs to help our customers understand what the changes mean for their business
Is the pricing mechanism changing?
No. For the UK Diesel quotation, this is methodology change – meaning a change to the way that Platts calculates its existing assessment, rather than any change to pricing formula itself. Any gas oil or diesel contracts linked to this Platts quotation are unaffected, and remain in force on existing contractual terms. The new Platts assessment for ULSD cargoes of all origin is new and is being introduced to the market in June 2022.
Why is this change happening now? Is Russian product being supplied now?
Platts is making this methodology change to reflect the significant move away from Russian-origin material in the spot market over the past few months. European oil traders have been reducing their purchases of Russian refined product, especially diesel, since February. However, the downstream oil industry has been concerned that non-Russian origin oil price assessments were at a premium to the existing Platts products which are often legally embedded in supply contracts. This change therefore represents a fairer reflection of the current position of the supply market.
Updated: 30 May 2022