Brent Crude is a globally recognized concept and a major international benchmark for pricing crude oil, often referred to as the Brent Blend or London Brent. It is a trading classification for a type of petroleum that is considered "light" due to its low density and "sweet" because of its low sulfur content (around 0.37%), making it easier to refine into products like gasoline and diesel.
The concept originated from the Brent oilfield in the North Sea, located between the United Kingdom and Norway, where oil production began in 1976. The need for a reliable, market-driven price reference emerged after the 1973 oil crisis, shifting away from fixed pricing controlled by major companies. Brent's location in a stable area and its waterborne nature made it easy to transport and trade internationally, solving the problem of needing a transparent and accessible pricing mechanism.
Brent Crude works as a financial pricing reference through futures contracts, which are traded on the Intercontinental Exchange (ICE) under the symbol B. The price of the Brent futures contract is used to set the price for approximately two-thirds to 80% of the world's traded crude oil supplies, especially for oil in the Atlantic basin, Europe, Africa, and parts of Asia. Other crude oils are priced at a premium or discount relative to the Brent price.
The benchmark has changed recently: with the end of production in the original Brent field, the classification was expanded to include a blend of crudes from the Forties, Oseberg, Ekofisk, and Troll oil fields, collectively known as the BFOET Quotation. In 2023, crude from Midland, Texas, was also added to the blend. Brent Crude is closely connected to other major benchmarks like West Texas Intermediate (WTI), which is primarily used in the US, and Dubai Crude, used for Middle Eastern and Asian oil pricing. Geopolitical events, such as tensions affecting the Strait of Hormuz, directly impact the price of Brent Crude due to its role as a global reference point.