Two days ago, officials of the European Commission (EC), the executive arm of the European Union, raided the offices of Royal Dutch Shell PLC (NYSE: RDS-A), BP PLC (NYSE: BP), Statoil ASA (NYSE: STO),and energy pricing agency Platts, owned by McGraw-Hill Financial Inc. (NYSE: MHFI), to collect information related to charges of crude oil price-fixing in European market. Italian oil major Eni SpA (NYSE: E) also was asked to provide information but apparently was not included in the raids.

Today Finland’s Neste Oil Oyj, the country’s only refiner, also was asked to provide information to the investigators.

At issue is the manner in which oil prices are reported to Platts and the way Platts then calculates the spot price of crude. The process is very similar to the way that Libor rates were generated: oil traders report price data on physical transactions to Platts, from which the pricing energy whips up a spot price. As with Libor rate setting, reporting is voluntary and it is easy for traders to hide the actual prices paid for crude. Platts could reject a price that it believes is false.

This is a big deal because the crude market trades about $3.4 trillion in oil every year. The companies that already have been asked for information are likely just the tip of the iceberg. Every oil market participant deals with every other participant, and it is very likely to lead to a much wider investigation as the EC trolls through the documents it has gathered already.

The lack of transparency in setting the spot price of crude could be repaired by requiring traders to report actual transaction data in the same way equities traders now do. Oil traders have resisted any such effort in the past, most recently last September.

But this latest probe, because it seeks information from more companies, could stiffen the spines of regulators that have been reluctant to face down the big oil traders.

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