Price Reporting Agencies and Assessed Prices
Most physical commodities don't trade on a transparent exchange — their prices are "assessed" daily by agencies like Platts and Argus, who survey real trades and quotes and publish a benchmark the whole industry then prices contracts against.
Crude oil grades, jet fuel, and thousands of other physical commodities rarely trade on a central exchange the way stocks do. Instead, private firms called price reporting agencies (PRAs) — Platts, Argus, and ICIS being the best known — survey market participants each day, collect bids, offers, and completed trades, and publish an assessed price: their best judgment of where a standard-sized deal would have cleared at a specific time window. Most physical supply contracts, and many derivatives, are written to settle against these assessments rather than against any single trade.
An assessed price isn't a single observed trade — it's an editorial judgment by an agency, built from a window of bids, offers, and deals, which is exactly why PRA methodology, and even a handful of price-fixing scandals over the decades, gets so much scrutiny: whoever controls the assessment window has some ability to influence billions of dollars of contracts that reference it.
Worked example
A refiner sells a cargo of jet fuel under a contract priced at "Platts jet CIF NWE minus $5/barrel." No exchange price exists for that specific grade and delivery point, so both sides simply wait for that day's Platts assessment window to close, take the published number, and subtract $5 — the assessed price, not a negotiated spot trade, is what actually settles the deal.
This matters well beyond the two counterparties involved, because thousands of unrelated contracts around the world reference the same daily assessment. A small methodology change — widening the time window, adding a new grade, changing the minimum deal size counted — can shift the published number and, with it, the settlement value of contracts nobody involved in that day's survey ever knew about.
Practice in interviews
Further reading
- S&P Global Platts, Methodology and Specifications Guide