What is the difference between “Brent crude” oil and “WTI Brent” oil benchmark?

 

Crude oil is the biggest medium to keep all kinds of production activities going on all over the world. Around 924 million barrels of crude oil are consumed daily worldwide. India consumes about 3.5 million barrels of crude oil every day and India imports 83% of it. The crude oil that is imported into India is Brent crude, as India imports oil mainly from Gulf countries where Brent is the benchmark of crude oil. Before proceeding, it is necessary to know what this crude oil is.

 

What is crude oil?

 

The history of crude oil is about 300 million years old. The crude oil found naturally is called crude oil. Crude oil is a dark coloured liquid, that is, it is a kind of dark hydrocarbon substance that is found in the world, inside the land and the sea. This crude oil is extruded and machined, which contains petrol, diesel, kerosene, natural gas, lubricant and Vaseline etc. At least 20 gallons of gasoline is cultivated to make one barrel of oil. Crude oil is measured in 'barrels' and a barrel contains 159 litres of oil.

 

What is an oil Benchmark?

 

Actually, there are two main types of crude oil extracted in the world, one from land and the other from the sea. It also happens that the quality of crude oil extracted from each region is different. Some contain more sulfur and some are more flammable. Apart from this, the oil trader also guesses from which region it will be easy to import oil and also get cheaper? The oil which is extracted from the sea can be sold easily with the help of ship and the one which is extracted from the land like in the US, it is sent with the help of pipelines or trucks which is quite expensive. Taking into account the quality, quantity, transport of all these factories, the oil's benchmark price is fixed. Therefore, the person or country importing oil decides on the basis of these benchmarks before purchasing oil from where the oil should be imported?

 

There are mainly 3 crude oil benchmarks worldwide.

 

1. "Brent Crude" oil Benchmark

 

This oil is extracted from the North Sea near Norway and the United Kingdom. This oil is high in sulfur and a good quantity of diesel is made from it. Two-thirds of the world's crude contracts are set in this Brent crude oil benchmark.

 

2. What is a "WTI Brent" Benchmark?

 

WTI Brent Oil with this benchmark is extracted from American oil wells. It is transported through a pipeline. There is a state in America, Oklahoma, this oil is stored at this place. It is used to make low-sulfur gasoline and low-sulfur diesel. It is lighter due to its lower API gravity and sweeter due to lower sulfur.

 

3. Dubai and Oman Benchmark

 

Oil extracted from Arab and Middle East countries are sold by referencing this benchmark.

 

What is the difference between Brent crude oil and WTI Brent both benchmarks?

 

1. Brent crude oil is extracted from the North Sea near Norway and the United Kingdom while WTI Brent oil is extracted from American oil wells.

 

2. The price of Brent crude is the international benchmark price used by the Organization of Petroleum Exporting Countries (OPEC), while the WTI Brent price is a benchmark for US oil prices.

 

3. Brent crude oil futures are mainly traded on the Intercontinental Exchange (ICE) in London, while WTI Brent futures are traded on the New York Mercantile Exchange (NYMEX).

 

4. Two-thirds of the world's crude contracts are set in this Brent crude oil benchmark, while WTI Brent is traded primarily in the US only. That is, the market of Brent crude oil is much larger than that of WTI Brent.

 

5. Brent crude has a lower shipping cost as it is sourced directly from the sea from where ships are easily loaded and shipped to various sailing points while WTI Brent's shipping cost is higher because it is supported by a pipeline with Cushing, Stores are made in places like Oklahoma and traders have to import from there which is quite expensive.