BRENT CRUDE OIL

GENERAL CHARACTERISTICS OF BRENT CRUDE OIL

Brent crude oil, originating from the North Sea, is characterized by its light sweet nature, with an API gravity typically between 38-39 and a higher sulfur content compared to West Texas Intermediate (WTI) crude. It serves as a global benchmark for crude oil prices, particularly in Europe and other regions. While primarily refined in Northwest Europe, a significant portion is exported to the US Gulf and East Coasts, as well as parts of the Mediterranean.

CATEGORIES OF BRENT CRUDE OIL

West Texas Intermediate (WTI) crude oil, known for its high quality, boasts an API gravity of 39.6 degrees and a low sulfur content, making it a premium “light” and “sweet” crude oil. WTI is typically priced at a premium to the OPEC Basket price and Brent, reflecting its superior quality.

CRUDE OIL UNITS (AVERAGE GRAVITY)

• 1 US barrel = 42 US gallons.
• 1 US barrel = 158.98 litres.
• 1 tonne = 7.33 barrels
• 1 short ton = 6.65 barrels
• Note: barrels per tonne vary from origin to origin.

GLOBAL SCENARIO OF OIL CONSUMPTION

Oil comprises 40% of the world’s total energy demand, with global consumption reaching approximately 76 million barrels per day (bbl/day). The United States leads in oil consumption with 20 million bbl/day, followed by China and Japan. OPEC, controlling nearly 40% of the world’s crude oil, holds about 75% of proven oil reserves and accounts for 55% of international oil exports.

INDIAN SCENARIO OF OIL CONSUMPTION

India ranks among the top 10 oil-consuming countries, with oil constituting 30% of its total energy consumption. The country imports around 70% of its oil consumption, facing a significant supply deficit due to limited domestic production. India’s oil reserves primarily exist in regions such as Mumbai High, Upper Assam, and the Krishna-Godavari basin. The country has been liberalizing its oil exploration and pricing mechanisms, allowing for foreign participation and aligning prices with international markets.

MARKET INFLUENCING FACTORS

Various factors influence crude oil markets, including OPEC output, geopolitical events causing supply disruptions, global demand fluctuations, currency fluctuations, imports, and stocks data, refinery incidents, and speculative trading activities.

EXCHANGES DEALING IN CRUDE FUTURES

Major exchanges dealing in crude futures include the New York Mercantile Exchange (NYMEX), the International Petroleum Exchange of London (IPE), and the Tokyo Commodity Exchange (TOCOM). These exchanges play a crucial role in price discovery and hedging activities for market participants.

INTERNATIONAL OIL PRICE VARIATION

MAXIMUM PRICE VARIATION