The Brent Oil Benchmark Is About To Change Forever
- West Texas Intermediate Midland crude will be added to the Brent benchmark in June.
- This is the first time a non-North Sea crude has been added to the benchmark basket.
- S&P Global: WTI Midland is the best candidate for this because it already has a fairly similar refining slate to most of the North Sea grades.
West Texas Intermediate Midland crude is about to be added to the Brent benchmark contract this June. This would be the first time a non-North Sea crude has been added to the benchmark basket. And it will change the oil market forever.
First, however, why is WTI being added to the Brent basket? It’s really simple. There has been more U.S. crude oil going into Europe since Russia’s invasion of Ukraine. At the same time, the output of the grades making up the Brent basket has been falling consistently, and so has trade in these grades.
“We’re really basing the world’s biggest and most important oil benchmark off a very small pool of market activity,” James Gooder, Argus vice president, told Reuters.
The latter cites data from its Refinitiv service as showing the production of Brent, Ekofisk, Troll, Forties, and Oseberg—the original basket members—had fallen to less than 700,000 bpd from some 850,000 bpd in late 2020.
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