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Quantitative Finance · Glossary

What is Oil indexation, destination flexibility?

Also known as: oil indexation · destination flexibility

Definition 4.7 Markets III: Commodities, Energy and Crypto · Chapter 4 — Natural Gas and LNG

Oil indexation prices gas by a formula P=s⋅Poil+kP = s \cdot P_{\mathrm{oil}} + k, a slope ss times an average of past oil prices plus a constant. A contract has destination flexibility when the buyer may take the cargo to any destination rather than to a named terminal.

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