Brent Crude Oil Trading operations—The Rise and Fall of ‘Clocking’

This chapter explains why the Brent operations are very different from the operations of other oil contracts. The nomination procedure, from seller to the buyer and with a sharp deadline for passing the nominations at five a clock London time, created such pressures on the operators that multiple phone lines and atomic clocks were used to avoid the infamous ‘clocking’, a situation in which a nomination could not be passed on to another buyer and large financial loss was almost guaranteed. With each physical Brent cargo trading many times, the resulting ‘daisy chains’ created headaches for the operators as the full set of documents, issued once the physical cargo has loaded took many months and even years to through the trade chain (including banks) to reach the end receiver. This resulted in extensive use of the letters of indemnity (LOIs), which unfortunately, could lead to lengthy and costly legal actions.