The scandal over manipulation of the London Interbank Offered Rate, or Libor, has reignited pressure to toughen regulation of oil price benchmarks and prompted the EU to suggest European regulators may need to have a larger role in overseeing pricing mechanisms in the oil market.

The multi-billion dollar oil market uses price assessments by an obscure group of industry media to settle billions of dollars worth of trade and help establish oil benchmarks used globally to set oil prices. However, despite their importance in establishing prices on the oil market, these publications aren't subject to third party regulatory oversight. This has sparked unease amongst policy makers since the spike and crash in oil prices seen in 2008 though little has been done to change the status quo.

Just last month, it looked as though the independent agencies responsible for assessing oil benchmarks would be left with relatively soft-touch regulation, after a group of regulators examining the issue on behalf of the G20 dialed back its rhetoric on the need for direct oversight of price reporting publications.

The report by the International Organization of Securities Commissions, or IOSCO, focused on the need for greater emphasis on ensuring the data provided by traders on oil prices are accurate, softening its earlier stance.

But disclosures that U.K. bankers manipulated Libor, the benchmark that helps set interest rates on trillions of dollars of credit products, have refocused regulators' minds on tougher oversight of key financial gauges, prompting European Commission to put forward a proposal Wednesday requiring national governments enshrine criminal sanctions on benchmark manipulation into national law.

The proposal would cover a wide range of benchmarks from blue-chip stock indexes like the U.K.'s FTSE 100 to closely watched commodity prices.

"EU action is needed to put an end to criminal activity in the banking sector and criminal law can serve as a strong deterrent. This is why we are today proposing EU-wide rules to tackle this type of market abuse and close any regulatory loopholes," said Vice President Viviane Reding, the EU's Justice Commissioner in a statement Wednesday.

EU officials also suggested that industry groups could no longer be trusted by themselves to set financial benchmarks and a closer look into the regulation of benchmarks was necessary.

"At the moment, all options are on the table," the EU said in a statement posted on its website.

"Recently, IOSCO has called into question the way in which price reporting agencies establish oil prices. Key issues to be examined are how to ensure the integrity and transparency of the methodologies used when setting benchmarks, including the issue of adequate public oversight," it added.

Oil price reporting agencies have vigorously fought back against comparisons between their role and the generation of Libor indices, with several of the leading publications issuing a joint statement in the aftermath of the scandal, highlighting the differences between the two groups.

In a statement issued to Dow Jones Newswire Thursday one of the most high profile price reporting agencies, Platts, reiterated its position.

"Platts sees no similarities between oil price reporting and the current issues with panel-based pricing mechanisms like LIBOR," the McGraw Hill Co (MHP)-owned company said.

"LIBOR rates are determined by a single source--a financial trade association--reflecting banks' daily estimates of their borrowing costs while [Independent Price Reporting Organizations'] price assessments are developed by independent, competing companies and informed by actual transactional data consisting of completed deals between counterparties or bids and offers that are tested in the marketplace," it added.

Write to Sarah Kent at sarah.kent@dowjones.com