The Brent Crude benchmark is about to undergo a historic change by having the first crude oil from outside the North Sea added to its basket.
Brent Crude is regarded as an important global benchmark. In the early days of North Sea production, companies like ExxonMobil and BP, the makers of the Mobil and Castrol lubricant and grease ranges, were producing vast volumes of oil from the North Sea. In recent years, however, volumes of the crudes underpinning the benchmark have declined to around 700,000 barrels per day. James Gooder of Argus, a market intelligence firm, spoke to Reuters about this:
“We’re really basing the world’s biggest and most important oil benchmark off a very small pool of market activity. When I started covering this market nearly 20 years ago, we would have dozens of trades every week. And now, if we’re lucky, we have about two trades of all those different crudes.”
Platts, which indexes the benchmark, is therefore going to start including the US WTI Midland crude in its basket for deliveries from June this year. This light sweet crude is similar in many respects to those in the Brent basket, and it was even preferred over Johan Sverdrup crude, because while that does come from the North Sea, it is heavier and more sulphurous than the traditional North Sea crudes. Imports of WTI Midlands to Europe have also increased substantially since sanctions were placed on Russian crude oil following the invasion of Ukraine.
The move follows more than two years of research and market engagement.