Saudi Arabia on October 28 decided to drop the widely used West Texas Intermediate (WTI) oil contract as the benchmark for pricing its oil, dealing a set back to the New York Mercantile Exchange. Reports noted that the decision by the world’s biggest oil exporter could encourage other producers to abandon the WTI benchmark and could threaten the dominance of the world’s most heavily traded oil futures contract.

From January 2010, Saudi Arabia will base the price of oil for its US customers on a new index developed by Argus, the London-based oil pricing company. Argus stated that the change in policy reflected the “increased importance of the US Gulf Coast sour crude market, in which both production and trading activity was rising sharply.”1

• 1. “Saudis drop WTI oil contract,” Financial Times, October 28, 2009 at http://www.ft.com/cms/s/0/8cda145a-c3fe-11de-8de6-00144feab49a.html?ncli...