The number a market settles on
The Baltic Exchange, 282 years old and sometimes called the Dow Jones of shipping, publishes daily assessments of freight rates for moving commodities by sea. One of them, TD3C, is an oil-tanker freight benchmark: an assessment of the rate for carrying 270,000 tonnes of crude from Ras Tanura to Ningbo, a voyage that passes through the Strait of Hormuz. It is not the price of the oil, nor a single concluded deal. It is an expert assessment of a standard voyage, compiled from a panel of shipbrokers. Freight derivatives worth billions of dollars are priced and settled against Baltic indices, including TD3C. If an assessment no longer represents the market it is meant to measure, the consequence is not just a reporting problem. It is a pricing problem for the market built on top of it.
What is actually being claimed
After the US and Israeli strikes on Iran began on 28 February, traffic through Hormuz fell sharply. The Baltic continued publishing TD3C. Mercuria says it should have suspended the benchmark or set it by reference to economically comparable routes.
Early reports put Mercuria's alleged losses in the hundreds of millions of dollars. Its amended claim now seeks declarations, not damages: that the Baltic breached its contractual and statutory duties, and that TD3C determinations over the disrupted period should not stand. If the court grants that relief, trades settled against those rates could be affected. The Baltic's lawyers have warned that the consequences would be chaotic for the market. It denies breach. The merits remain to be decided.
What the rules actually require
The thinness was real. Signal, a shipping-data firm, recorded 354 reported tanker fixtures across Yanbu and the wider Arabian Gulf between 2 March and 29 May. Just one was from Ras Tanura, the TD3C load port. That is a count of reported spot fixtures, not total exports: most crude from Ras Tanura moves under long-term contracts and does not appear in reported spot-fixture data. Even so, the drop in visible bookings was stark.
The legal question is not whether TD3C was based on a trade concluded that morning. Under the UK Benchmarks Regulation, transaction data is used where available and appropriate, but estimates, quotes and other non-transaction data may be used when transaction data is insufficient or inappropriate. Those inputs must still represent the relevant market accurately and reliably, and the methodology must be robust, with arrangements for periods when input data falls below the required standard. The question is whether TD3C's inputs and the Baltic's use of expert judgement met those requirements during the disruption. The Baltic says they did. Mercuria says the resulting rates no longer represented the market.
The industry was also responding to the disruption. Platts suspended certain nominations, bids and offers for assessments involving oil grades or products requiring passage through Hormuz, while continuing other assessments. These were different products and assessment processes, so the comparison is limited. It shows that other assessment providers also had to respond to the disruption.
What is really on trial
We keep returning to the same difficulty. A market can go quiet because nothing is wrong or because little is happening, and from outside the two can look alike. Here, that distinction has commercial consequences: contracts are priced and settled against the number.
The Baltic has since introduced a separate benchmark, TD34, for crude loading at Mina Al Fahal in the Gulf of Oman, outside the Middle East Gulf, giving the market another reference while Hormuz is disrupted. The Baltic says TD34 was intended as an additional route, not a replacement for TD3C. Its introduction does not answer Mercuria's claim. The court must decide whether the Baltic met its legal duties and whether Mercuria is entitled to the declarations it seeks. Mr Justice Butcher expedited the trial, citing a wider market concern about the benchmark. It is listed to begin on Monday.