The European Union's proposals to formalise the control of benchmark rates could impose huge liabilities on oil price reporting agencies, according to a Reuters report.

The agencies are currently under renewed scrutiny after the offices of oil majors Shell, BP and Norway's Statoil and lead price publisher Platts had been raided by the European Commission as part of its investigation into alleged rigging of oil prices in Europe going back more than a decade. The rates of petrol and other oil and biofuel-related products are calculated based on a number of benchmarks such as Brent crude.

Under the proposals drawn up by Brussels to boost the "integrity" of critical benchmarks following the Libor scandal, the administration of the key rates would come under the European Securities and Markets Authority (ESMA), based in Paris.

The commission recommends moving direct supervision of Libor, Euribor and benchmarks for oil and gold from London to Paris. The proposal is due to be presented in summer.

"This is heavy-handed regulation, and if it's applied as written, it will make oil price reporting unworkable," Reuters quoted "a senior oil industry source" as saying.

"These rules were designed for Libor and have nothing to do with open markets."

Reporting agencies including Platts, a unit of McGraw Hill and smaller rivals Argus Media and Reed Elsevier unit ICIS provide oil price assessments to clients, which are used as benchmarks to settle physical and derivative deals worth billions in a $2.5tn (£1.60tn) market.

Some of the agencies noted that the new proposals could discourage participants from price reporting. They argued that commodities markets are very different from the financial rates market and should be exempt from external oversight and new regulations.

"We are wary of any measures that could discourage participation in the price reporting process, inadvertently reversing the progress made in recent years in promoting transparency of pricing in energy and other commodity markets," a Platts spokeswoman told Retuers.

In addition, the new proposals have a provision for energy companies to sue a reporting agency if it has made a mistake in its assessment. The agencies were concerned about the provision and noted that the prices are provided "for information purposes" and the market has to use them at its own risk.

In its proposals, the EU also underlines the need for a legal agreement between data suppliers and benchmark providers, which the agencies think would make the oil companies reluctant to supply any data to them.

At the same time, oil companies may also find the proposed rules unfeasible as they are unlikely to sign any binding agreement regarding how they submit data, the industry sources told Reuters.

The agencies also suggested that the EU has to adopt proposals regarding practices of rate setting put forward by the International Organisation of Securities Commissions.