What is Brent Oil?
Brent Oil is a sweet, light crude oil (LCO) that is used for benchmarking the prices of nearly 60% of the crude oils traded worldwide.
Petroleum suppliers from Europe, Africa and the Middle East selling oil to the West will often price their oil as per the Brent Crude’s value on the ICE exchange.
The physical commodity known as the Brent Blend is made up of four main grades of crude oil: Brent Blend, Forties Blend, Oseberg and Esofisk crudes (collectively known as the BFOE). The Brent blend makes up nearly half of the world’s internationally traded supply of oil.
The Brent complex has about 0.37% of sulfur content by weight, hence it is more sour than the West Texas Intermediate (WTI) crude, which has sulfur content of 0.24%. Brent’s API gravity is 39, which also makes it heavier than WTI crude. Since it is a crude oil, it is best for producing petroleum and middle distillates.
Nearly all crude oil that flows into North America from Europe, Middle East and Africa (EMEA) is priced relative to the Brent Oil Complex. In fact, in recent years, Brent has emerged as the world’s most commonly referenced benchmark for crude oils.
In Malaysia, Indonesia, Vietnam and Australia, Brent is often used as a preferred price marker and as a result, new Asian product spreads to Brent have emerged.
One of them, the Brent/Dubai spread, is growing fast in trading volume.
One of the most well known and traded spreads is the Brent / WTI spread, which is the difference in price of WTI minus Brent. While Brent has historically traded lower to WTI, its recent performance has been remarkable. Brent has outperformed WTI since 2011 and is currently trading at a premium.