Index

An index is a published benchmark price used as a reference point for valuing physical trades, settling derivatives, or assessing market conditions. In energy markets, indices are central to pricing transparency and risk management.

Indices can be exchange-traded prices, such as futures settlements, or assessed prices published by price reporting agencies. They represent a standardized view of market value for a specific commodity, location, and delivery period.

Energy indices enable market participants to compare prices across regions and timeframes. They also allow physical market exposure to be hedged using financial instruments tied to the same index.

Example: Brent crude serves as an index for a large share of global oil trade. Physical cargoes are priced relative to Brent, while derivatives based on Brent are used for hedging. Even markets that do not physically trade Brent barrels rely on the index for valuation. Without indices, energy markets would be fragmented, opaque, and far harder to hedge efficiently.