Crude oil consists of hydrocarbon deposits and organic material and is a natural source of petroleum. It is further refined into other products like diesel, gasoline, and other petrochemical products.
The two main benchmark prices for the purchases of crude oil internationally and worldwide are WTI and Brent. Both have distinct features.
Key Takeaways
- WTI (West Texas Intermediate) is a benchmark for US oil prices, while Brent Crude represents European and global oil prices.
- WTI has a lower sulfur content, resulting in a sweeter and lighter crude oil than Brent.
- Brent Crude is more widely used in international markets due to its diverse sources from the North Sea.
WTI vs Brent
The difference between WTI and Brent is that Brent contains lower sulfur content which is about 0.24% while Brent contains higher sulfur content which is about 0.37%. The API gravity of WTI is lower while the API gravity of Brent crude is slightly higher.
WTI implies West Texas Intermediate. WTI oil grade is considered as one of the highest quality of oil and the oil can be easily refined due to its superior quality.
The grade is also regarded as light crude oil as it is of low density. The sourcing of WTI is mainly from the United States and caters as a benchmark for North America.
On the other hand, Brent crude belongs to the Brent complex. The oil was first extracted from the North Sea. About two-thirds of the oil of the world is priced according to Brent crude.
Brent can also signify the price of the ICE Brent crude oil for the contract itself or the future contract.
Comparison Table
| Parameters of Comparison | WTI | Brent |
|---|---|---|
| Source | The source of WTI crude is from US oil fields | The source of Brent crude is from the North Sea which is between Norway and the Shetland Islands |
| Sulphur content | 0.24% | 0.37% |
| Transportation costs | Significantly higher | Lower |
| Total Production rate | Higher | Comparatively Lower |
| Geopolitical trouble | WTI is not affected by any geopolitical trouble as it is produced in landlocked areas | Brent crude is affected by the geopolitical crisis as it is produced near the sea and causes surges from political uncertainty |
What is WTI?
WTI stands for West Texas Intermediate. It refers to a mix or a grade of crude oil, spot price, assessed price, or even the future price. The price of the New York Merchantile Exchange or NYMEX is referred to by WTI.
The oil grade of WTI is also called Texas light sweet. It is considered as one of the highest quality of oil and the oil can be easily refined due to its superior quality.
The spot and futures prices provided in WTI can act as a benchmark in oil pricing. The grade is also regarded as light crude oil as it is of low density and sweet due to its low sulfur content.
The price of WTI is published in various public sources like news, magazine, and other reports. WTI is comparatively lighter, sweeter, and contains less sulfur than Brent, Oman, or Dubai crude.
Oil from any location can meet WTI consideration if it has the required qualifications. The sourcing of WTI is mainly from the United States and caters as a benchmark for North America.
The production of oil is in Texas which is traveled in the pipelines and refined in the gulf and the Midwest of Mexico.
The primary delivery point for price settlement and physical exchange of WTI are in Cushing, located in Oklahoma. The delivery system in the hub of Cushing consists of about 35 pipelines. Out of the 35 pipelines, 15 are outbound and 20 are inbound.
There are 16 storage terminals also. The total storage capacity of the Cushing hub is 90 million barrels. The place is also commonly known as the “Pipeline Crossroads of the World”.
What is Brent?
Brent crude belongs from the Brent complex which includes financially and physically traded oil market in the North Sea of Northwest Europe.
Brent can also signify the price of the ICE Brent crude oil for the contract itself or the future contract. The oil market in Brent crude is termed as Brent blend, Brent petroleum, and also London Brent.
Brent crude is a sweet light crude oil. The oil was first extracted from the North Sea in the Brent oil field in the year 1976. Later other oil fields were added to the crude oil blends.
The present Brent consists of manufacturers from Brent, Oseberg, the Forties, Troll, Ekofisk, and various others. The sulfur content in Brent is about 0.37%.
The quality of the Brent blend is light because of the low density relatively. It is also sweet because it has a low sulfur content. Brent is one of the leading global crude oils and sets a benchmark for the Atlantic basin oils.
It can also set the price of internationally traded oil supplies. The price fluctuations depend on the Brent forward market.
About two-thirds of the oil of the world is priced according to Brent crude. The transportation costs of Brent crude are significantly lower as the production is near the sea.
Brent crude can be easily refined into gasoline due to its characteristics. The general characteristics of Brent crude are that it is less light and sweeter than WTI.
Main Differences Between WTI and Brent
- WTI crude oil does not associate with any specific crude oil type while Brent crude associates with a particular crude oil produced from a specific oil field.
- The production of WTI is in landlocked areas while the production of Brent crude is near the sea.
- WTI is slightly lighter and sweeter than Brent.
- The pricing of WTI is lower while the pricing of Brent is comparatively higher.
- The API gravity of WTI is lower while the API gravity of Brent crude is slightly higher.
- https://www.iaee.org/en/publications/ejarticle.aspx?id=2541
- https://www.sciencedirect.com/science/article/pii/S0140988318301646
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