World Leading Commercial Banks in Crude Oil Derivatives Market

DOI: 10.20542/0131-2227-2015-9-69-79

A. Maslennikov, Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation (

Abstract. The article examines recent developments in the global market for crude oil futures contracts. Amid persistently high trading volume of futures contracts for Brent and WTI global oil benchmarks structure of the market has recently changed profoundly. Share of non-commercial investors who are not directly linked to physical oil operations and are often considered speculators in the trade turnover of futures contracts for WTI at the NYMEX exchange has exceeded 50%. Financial investors play a prominent role in price discovery process for crude oil. However, world leading commercial banks that used to be the major participants in crude oil futures market and were also actively engaged into physical oil trading operations presently are forced to adjust their strategies responding to the regulatory reforms unleashed in the USA and European Union after the global financial crisis of 2008/2009. Provisions of Dodd-Frank Act in the USA and similar regulations in the European Union member countries aim to limit banks’ involvement in commodity derivatives market exclusively to hedging activities referred to swap transactions between banks and their clients. New tighter regulation substantially increases costs of commodity derivatives’ business for commercial banks. Also, the current US legislation prohibits banks from proprietary trading with derivatives instruments. These legislative innovations could substantially reduce banks’ profits. The largest global commercial banks have already reduced their physical commodity trading activities. The author concludes that while it is still unclear how significant the retreat of banks from crude oil derivatives market will be, the established mechanism of oil price setting is unlikely to change dramatically as new players from the financial sector are entering the market, replacing commercial banks.

Keywords: banks, oil derivatives, speculation, regulation, Dodd–Frank Act, CFTC, WTI, Brent

Registered in System SCIENCE INDEX

For citation:
Maslennikov A. World Leading Commercial Banks in Crude Oil Derivatives Market. World Eonomy and International Relations, 2015, no. 9, pp. 69-79.

Comments (0)

No comments

Add comment






Dear authors! Please note that in the VAK List of peer-reviewed scientific journals, in which the main scientific results of dissertations for the degree of candidate and doctor of sciences should be published for the “MEMO Journal” the following specialties are recorded:
economic sciences:
5.2.5. World Economy.
5.2.1. Economic Theory
5.2.3. Regional and Branch Economics
political sciences:
5.5.4. International Relations
5.5.1. History and Theory of Politics
5.5.2. Political Institutions, Processes, Technologies


Current Issue
2024, vol. 68, No. 7
Topical Themes of the Issue:
  • The Supporting Structure of Global Security
  • Institutional Features of the Fourth Energy Transition
  • The Evolution of Modern German Christian Democracy
  • The Monarchies of the Persian Gulf and Central Asia
Submit an Article
The Editorial Board invites authors to write analytical articles on the following topics:
  • changes in the processes of globalization in modern conditions
  • formation of the new world order
  • shifts in civilization at the stage of transition to a digital society

The editors are also interested in publishing synthesis articles / scientific reviews revealing the main trends in the development of certain regions of the world - Latin America, Africa, South Asia, etc.