For your info: major crude oil benchmarks and their properties
From day to day you are hearing that oil price went in one or another direction, experienced a downfall or rose significantly. But, in fact, there is no universal oil price, because this energy source varies from one region to another. There are different types of crude oil – some of them are more attractive to consumers than others. For example, sweet crude oil (the one which contains a negligible amount of sulphur) is more valuable for refiners and gasoline producers than highly acidic one (“sour” oil). Light crude oil (with low density) is usually preferred to its high-density homologue. Consumers are also concerned with the location of the oil deposits. The oil extracted in the geopolitically and financially stable region is usually appealing to the customers, especially if it is located near the delivery points suitable for trade.
Because of all these nuances, there are many types of oil, which cost differently. Well, not just many, there are dozens of different types of crude oil with their particular physical characteristics. However, the price of the most of them is pegged to one of the primary benchmarks.
Brent, produced in the North Sea, is one of the most widely used crude oil benchmarks. Roughly 2/3 of all crude contracts around the globe reference Brent blend. The crude is light and sweet that makes it perfect for the refining and diesel fuel, gasoline. In addition, it is water-borne, so, it can be easily transported to distant locations with minimal costs.
Americans prefer to use another benchmark – West Texas Intermediate (WTI). It is extracted from wells in the US and transported from the delivery point – Cushing, located in Oklahoma – by pipeline. It is usually sold in batches of variable size. The WTI is very light and very sweet, but its supplies are land-locked which makes the shipment of this oil to the remote regions relatively expensive.
The next important benchmark is called Dubai/Oman. As it can be seen from the title, it is extracted in the Middle East. It has a slightly lower grade, because it is much heavier than WTI and Brent, and because it has a special sulfur content. This oil is produced mainly for the Asian markets.