Brent oil is a type of crude that is extracted from the North Sea. The Brent barrel is the reference, in terms of price, in the European oil market.
Worldwide there are 161 different types of oil which belong to the number of oil areas in the world. The difference between one and the other is their density, in addition to other characteristics such as the proportion of sulfur they contain.
What are crude references?
In the oil market There are two must-have crude references:
- The WTI (Western Texas Intermediate) that is extracted from oil fields or wells in the United States, specifically from North Dakota, Louisiana and Texas.
- The Brent barrel, and although the two types of oil are priced in dollars, they have differences.
Crude references provide detailed information about each variety to investing companies. This information includes the area from which the oil is extracted, since its value is different depending on the soil from which it is extracted, since they vary in technology and costs for processing, as well as uses and ease of transport.
The Brent barrel is the most managed reference and its “sweet” and light characteristics make it simpler to refine it to produce gasoline and diesel. Because it is extracted from the sea, it is easier to transport, so has become a high-demand variety.
Besides viscosity, oil has other properties, such as toxicity and volatility.
Toxicity It is the mixture of chemical compounds that make it more or less harmful to the environment, both in the refining process and in the use of final products such as gasoline or diesel.
The volatility, it is related to how easily it evaporates in the air.
Differences between WTI oil and Brent barrel
The WIT oil has 0.25% sulfur content, and a Brent barrel has 0.37 sulfur content; the less sulfur in the petroleum mixture, the more “sweet” it is and the easier it is to refine. Both oils are classified as “sweet” oils.
Regarding density, tAll crude oils are classified on an API gravity scale ranging from 10 to 70. The API degrees, acronyms that come from the American Petroleum Institute, is the measure of density that, if it is related to water at equal temperatures, determines whether the Oil is light or heavy.
Indices above 10 mean they are lighter than water and consequently would float on water, and if the API is below 10, the oil will sink. Both crude, Brent and WTI are light blends. That is, crude with a low concentration of waxes. This classification of light and heavy oil is not very accurate to find, as it is due to practical reasons.
Heavy crude oil is more viscous, therefore its extraction, transport and pumping is more complicated, while less viscous or light oil is more practical in its exploitation process.
Why the name of Brent oil?
Brent is not the name of the barrel, but from the oil contained in the barrel of crude from the North Sea. That name does not come from some place or surname of some person, but from a goose, the Branta bernicla, or black goose, which in English is called Brent goose.
This goose is typical of the North Sea area, right where that oil reserve was discovered in the 1970s. The Exxon and Shell companies, taking over their exploitation, chose to give that name to the crude they would commercialize, due to the black color of the goose’s head and neck, similar to the color of oil.
In English the Brent barrel is called Brent Blend, and it is the result of the final mixture of several different types of oil extracted from the North Sea. This sea is called marginal because it is on the margins of different jurisdictions, such as the coasts of Denmark and Norway, those of the British Isles and those of Germany, Belgium, the Netherlands and France.
The Brent barrel it is the one that determines the reference in the European markets, hence it is very familiar to hear his name when talking about oil, crude oil, extraction, oil market, etc. Each barrel equals 159 liters or 42 US gallons, and is priced in dollars on the international market.
The Brent barrel that is used as an indicator in Europe is really a basket of 20 different crude oils and due to its “sweetness” and lightness, it has been calculated with a difference of five dollars above the WTI and is trading at the Intercontinental Exchange (ICE) in London.
In the world oil market, the most demanded crude is precisely light light, since its refining and transportation process is of lower cost, hence it is the most expensive in the market. The same occurs with the so-called “sweet” oils, with less sulfur content, which are intended for the production of gasoline. While those classified as “sour”, they have more sulfur and are used to produce diesel, better known as diesel, another hydrocarbon made from the process of distilling oil that is used as fuel in heating systems or diesel engines.
There is a third reference in the oil market, and is that of the Organization of Petroleum Exporting Countries (OPEC), created in 1960 and which produces approximately 40% of the world’s crude. It is made up of what they call a basket of 12 varieties of oil, one for each partner country of that organization, such as Angola, Saudi Arabia, Algeria, Qatar, Ecuador, United Arab Emirates, Iraq, Iran, Kuwait, Libya, Nigeria and Venezuela.
Data to take into account
When investing oil traders, they are always aware of geopolitical tensions in the Middle East, one of the largest producers of crude oil in the world. This latent tension causes crude prices to fluctuate and tilt upward, in the face of a possible shortage in the market, which makes the market speculative.