The Governed Price of Oil

"This timely and important book reveals how one of the world's most important prices—the Brent Crude oil price benchmark—is made. Seddon and Imsirovic provide a sophisticated and empirically rich account of the actors, institutions, and conflicts that make up the 'pay-to-play' governance system of the Brent price benchmark. Their book deserves to be widely read." — William Boyd , Michael J. Klein Chair in Law, UCLA "The Governed Price of Oil is a lighthouse for understanding prices, the heart of markets and the organizing force of contemporary economies. It shows us that prices are not set but made, governed, and contested. A must-read for understanding economies revolving around the sun of prices." — Koray Çaliskan , The New School, author of Market Threads "'Prices are made, not found'—that's the key argument of this fascinating study. Combining insider interviews, econometric modelling and political-economy insights, Seddon and Imsirovic take us behind the scenes of the setting of benchmark oil prices that are of huge economic and geopolitical significance." — Donald MacKenzie , University of Edinburgh, author of An Engine, Not a Camera The price of oil is not discovered—it is made. Benchmarks like Brent crude are produced for profit, from information supplied by the very firms with an interest in shaping them. How can such a price be trusted, and who governs it? This book argues that benchmark authority rests on a “pay-to-play” bargain: firms bear the costs of price making because access confers influence, information, and trading advantage, while governors such as Platts and ICE set the rules. Those rules must channel traders’ opportunism, not eliminate it—too little latitude and participation withers; too much and the system curdles into manipulation. Comparing Brent with rival benchmarks, enduring and failed, and combining quantitative analysis, archival research, and insider interviews, this book reveals how the price that moves the world economy is actually made.