What is Brent crude?
Brent crude is the name by which goes the type of crude oil coming from nineteen oil fields in the North Sea region. This blend comprises half of the world’s oil market. It is used as one of the three main benchmarks for crude oil pricing internationally – the other two being North America’s West Texas Intermediate (WTI) and Dubai Crude from the Persian Gulf.
History of Brent blend
Initially, oil was discovered in the North Sea back in 1859. However, commercial exploration of the fields began in the mid-1960s, getting more intensive in the decade to follow. Ironically, this took place before the infamous OPEC oil crisis.
The new oil blend proved to be of high quality. Under the circumstances of the oil crisis mentioned above and the overall regional stability, production costs were beneficial.
What is Brent Crude Oil Used For?
Brent blend is considered light and sweet. In the oil industry, this means that it’s not too dense and is low on sulfur.
These qualities make the blend a perfect choice for diesel fuel and gasoline production. This is a highly influential oil blend that affects international oil pricing and is nearly half of the world’s traded crude oil, which is even more than West Texas Intermediate (WTI).
What is the Difference Between Brent and WTI?
Brent crude is used as a benchmark for several regions worldwide, including Europe, Africa and the Middle East. The American-made WTI blend is the US light oil market benchmark only. Other countries use both blends to value their crude oil.
However, WTI is cheaper due to technology nuances. Finally, Brent is considered more vulnerable than WTI, which is less affected by geopolitical uncertainties.
Investors use the Brent index for blend-related commodity trading. It represents the average price of trading 600k barrels on the 25-day BFOE market. The index is calculated using the following elements:
- the weighted average of the BFOE market cargo trades for the first month;
- the weighted average of the BFOE market cargo trades for the second month with the addition or subtraction of a straight, non-weighted average of the spread between cargo trades of the first and the second months.
- an officially published straight, non-weighted average of ‘designated assessments’.
Brent news reports affect heavily international oil pricing since it is one of the world’s most significant crude oil blends. However, at the same time, the blend is vulnerable to political crises and seems to lose its dominance little by little, as the North Sea reserves are depleting and the US crude oil output is increasing.
2022-06-06 • Updated