Almost all countries that produce oil supply one or more of its grades to the world market. They differ in chemical composition, and in order to streamline their systematics, as well as to simplify the export of "black gold", special standards for grades of petroleum feedstock were created. Urals and Siberian Light are typical for Russia, Brent oil for England, Light Sweet for the USA.
Sometimes it happens that two varieties are produced in the country, for example, in the Russian Federation it is heavy Urals and light Siberian Light.
The name of Brent low-sulphur oil is made up of the first letters of the words for horizons: Broom, Rannoch, Etieve, Ness and Tarbat. It has an API gravity of 38°, a standard defined by the American Petroleum Institute. The sulfur content in it is 0.2-1%.
Brent oil, as a reference grade, is produced between the coasts of England and the European countries of Norway and Denmark in the North Sea. Here, on the outskirts of the Viking graben, there is a deposit of the same name,opened in 1970.
In terms of its composition, properties and quality, Brent oil is one of the real standards, because its components are considered to be the most optimal in order to produce petroleum products, including gasoline and medium distillers. The oil fields of Saudi Arabia, the United States and Southeast Asia are producing a product that meets the Brent benchmark in question.
And there are more than 10 grades of oil in total. Of these, the most popular on the world market are Brent and WTI (West Texas Medium). Brent crude is highly listed on the London IPE. The West Texas mark is more valued on the NYMEX.
What determines the cost of the product
Brent oil produced in different fields, of course, will have certain differences from the reference grade. And it is from these differences, from how significant they are, that its value depends. And the more the extracted raw material differs from the standard, the worse it is, the lower its price will be.
The main processing of this type of raw material is carried out in the north-west of Europe. If the price situation is favorable, then it can be delivered to the Mediterranean countries or to the United States of America for processing.
The price of Brent oil is set in the process of exchange trading at current (spot) prices and contracts oriented to deliveries in the future (futures). The main part of transactions on this grade is made on futures quotes.
It should be noted that futures contracts are beneficial for both the seller and the buyer. At the same time, each of them insures itself against a possible change in the price of raw materials. In the oil industry, when futures contracts were first introduced, they were viewed with skepticism and sometimes even hostility. But gradually this practice began to be widely used, and today almost all oil companies and countries involved in oil exports have joined this process.
And in general, prices on the world market are influenced by many different factors. Of course, the main thing is the ratio of supply and demand. The state of the world economy, all kinds of risks, including geopolitical ones, also play a significant role.
