What is the International Petroleum Exchange (IPE)?
In 2001 the Intercontinental Exchange acquired the exchange, renaming it ICE Futures. The exchange has since enlarged its portfolio to offer other energy products, including natural gas, electricity and ECX carbon financial instruments.
IPE was founded after the energy industry suffered in the 1970s. Political instability in energy-exporting countries, such as the 1973 oil crisis amid the Yom Kippur War in the Middle East and the 1979 energy crisis in the wake of the Iranian revolution, sent petroleum prices soaring.
What does the international petroleum exchange do?
Often sold on commodity exchanges, energy products can be subject to speculative price swings. Political uncertainty can impose further risks for energy prices, as happened in the 1970s.
As one of the biggest commodity futures exchanges in the world at the time, IPE allowed market players to hedge against price volatility.
A futures contract is an agreement to buy an asset at a fixed price for delivery on a later date. It can protect producers and consumers from price turbulence.
For example, businesses that rely heavily on oil, can buy futures contracts at a rate that offers protection from price surges.