Venezuela Oil Min: Reviewing Move Away From WTI Oil Pricing

By Dan Molinski and Brian Baskin Of DOW JONES NEWSWIRES PORLAMAR, Venezuela -(Dow Jones)- Venezuela's oil minister applauded Saudi Arabia's decision to move away from West Texas Intermediate crude benchmark pricing for oil sold in the U.S., and said his country may do something similar. "We support (Saudi Arabia) in its decision ... a very important decision," Rafael Ramirez said on the sidelines of an oil conference. Argus Media said last week that Saudi Aramco, the state-owned oil company, would in January switch to using its Argus Sour Crude Index as a pricing benchmark for oil sold in the U.S., instead of West Texas Intermediate. The abandonment of WTI, the longtime standard, for Argus's five-month-old index by the world's biggest oil exporter instantly sparked speculation that other major producers would follow. Asked whether Venezuela may adopt the Argus pricing as well, Ramirez said that "I don't have information right now, but let's just say we are actively reviewing it." Venezuela was the third-biggest exporter of oil to the U.S. in August, sending 1 million barrels a day, according to the U.S. Energy Information Administration. Saudi Arabia was fifth, sending 745,000 barrels a day. Combined, the two countries supplied about 9% of U.S. oil demand that month. CME Group Inc. (CME) and IntercontinentalExchange Inc. (ICE) have said that they will launch futures contracts tied to the Argus index. The exchange operators are hoping to hold onto trading volume that could leave the WTI-based futures contracts if Argus begins to chip away at the established derivatives' dominant role in setting oil prices. Both Saudi Arabia and Venezuela mainly send sour, or lower-quality oil to the U.S., making their exporters a closer match to the Argus Sour Crude Index than WTI, which is made up of sweet oil that has fewer impurities. Producers and their customers have also expressed concern in the past that WTI's delivery point at Cushing, Okla. is too isolated from the international oil market to always reflect the global supply situation. Aramco was previously using an assessment of WTI by Platts, an Argus competitor owned by The McGraw-Hill Companies Inc. (MHP). -By Dan Molinski and Brian Baskin, Dow Jones Newswires; dan.molinski@dowjones.com;