Oil Swap

An oil swaps contract is a financial agreement that obligates the contracted parties to exchange the cash difference between the contract price and the market price of oil at contract expiration. Oil swaps differ from oil futures in oil derivatives in that contracts are all cash settled, and the index is settled and published daily to a PRA assessment. Oil swaps are mostly voice-brokered rather than traded directly on the exchange, which is another difference from an oil future. Oil swaps are also sometimes called Block Futures.