When it comes to crude oil trading, there are different types of crude oil grades traded around the world such as North Sea’s Brent Crude oil and United States’ West Texas Intermediate (WTI), Dubai Crude, and etc.
The most popular traded crude oil grades are Brent Crude and West Texas Intermediate (WTI). Both Brent Crude and WTI prices are considered as benchmarks for most of the oil traded around the world.
A benchmark crude or marker crude is a crude oil that serves as a reference price for buyers and sellers of crude oil. There are three primary benchmarks, West Texas Intermediate (WTI), Brent Blend, and Dubai Crude.
What is the Difference between WTI and Brent Crude Oil?
Here is an overview of the differences between both benchmarks; Brent Crude and WTI crude oil.
WTI vs Brent Crude, Source: FocusEconomics
Brent Crude Oil
Originally Brent referred to oil extracted from the Brent oilfield located in the North Sea off the coast of the UK, however, for various reasons Brent now refers to four different crude oil grades extracted from various wells in the North Sea – Brent blend, Forties blend, Osberg, and Ekofisk (together also known as BFOE). This mixing of the four oil grades actually made Brent a heavier oil, although it is still considered to be relatively light and low in sulfur.
The fact that Brent Crude is waterborne from oil fields near to the coast of the UK and Norway makes it all the more attractive crude oil due to easier and less cost of transportation from extraction sites. The relative ease of transportation and its high quality makes Brent an attractive investment and plays a major part in the pricing of crude oil as well as in the adoption of Brent as the major oil benchmark price globally.
WTI Crude Oil
WTI or West Texas Intermediate is the second major global benchmark oil for price setting. WTI is better than Brent in terms of quality as it is lighter and sweeter than Brent Crude. WTI is extracted from wells in the United States, primarily from oil fields in Texas, Louisiana, and North Dakota.
Although WTI is a sweeter and lighter crude than Brent, a major drawback is that it is landlocked meaning that transportation is more expensive and more involved than it is for a waterborne crude oil such as Brent. WTI is extracted across the U.S. and sent via pipeline to Cushing, Oklahoma where it is stored.
