Mercuria Chief: Blockchain Could Cut Oil Market Costs By 30%

The chief executive of Mercuria, one of the world’s largest commodities traders, is bullish on blockchain.

The head of the Swiss-based firm appeared earlier this week during an event hosted by Thomson Reuters. In remarks, Mercuria chief executive officer Marco Dunand revealed that he had been engaging with stakeholders on the technology and that, in his belief, it could have a major impact on how commodities are traded and exchanged.

According to Reuters, Dunand told attendees:

Dunand’s comments are the first from the oil trading giant, which earned as much as $300m in oil trading profits during 2015, according to Bloomberg.

During the event, Dunand speculated that blockchain-based payments could help significantly cut costs.

"[Brent, Forties, Oseberg, Ekofisk] for instance is a market that has a limited amount of participants, that requires a reasonably solid balance sheet. You could see this type of market going to blockchain payments within the next 12 months," Dunand said. "We think this could reduce costs, certainly on payments, by 30 percent."

At the same time, adoption won't happen quickly unless more firms come together to collaborate on the development of any future blockchain networks tied to the oil market.

"We could adapt it fast, but you need a certain amount of participants in the industry to get it going," he told attendees.

Commodities exchanges worldwide have already begun looking at how they can apply blockchain to their own operations. Organizations like the CME Group and Dubai Multi Commodities Centre, for example, have spent much of the past year testing the technology in a bid to cut costs and improve how their markets work.

Image via FT/YouTube