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G20 warns of oil price rigging
The Group of 20, G20 biggest economies in the world, has warned that oil prices could be vulnerable to rigging for financial gain.
The G20 in a report today said the current system of oil reporting is "susceptible to manipulation or distortion" by traders.
The daily quoted price of oil which affects the spending power of billions of people worldwide, is compiled by reporting agencies from a voluntary filing, and is purely based on trust.
Traders at various banks voluntarily report the prices they pay for oil contracts to oil price reporting agencies such as Platts, Argus or one of their competitors.
The price reporting agency use a number of trades to decide what the benchmark price, quoted to the outside world, should be.
Journalists working at Platts or Argus are trained to check any figures which appear suspicious or spurious.
However, they do not have powers to challenge or investigate banks or individuals responsible for these submissions.
The G20 says that opens it to being manipulated in much the same way global banks have been manipulating the LIBOR.
LIBOR is the interest rate banks charge each other.
In the meantime, the price of oil rose 1 dollar 33 cents to 88 dollars 43 cents today.
Despite the hike, the price is down 11 percent since the start of the year.