Place of extraction
The Brent crude oil is a mix of four different crude oils, which are Brent, Forties, Ekofisk, and Osberg. It is extracted from the lands of the North Sea, which makes it easier to transport overseas.
The WTI is extracted from the American field in North Dakota, Texas, and Louisiana. For this process, the company uses a technique that allows extracting the product from shale rock.
Although the point of extraction for Brent crude oil is close to the shore and reduces the prices of shipment, the extraction of West Texas Intermediate through shale rocks is cheaper, making it more interesting for the countries that purchase oil supply.
Composition of the product
Prices on different oils can vary depending on their content, such as the levels of sulfur and the API gravity. Less sulfur means that it is easier to refine, and the levels of gravity reflex the density of the product.
Both WTI and Brent crude oil have low density, the Brent being less dense than the WTI oil. On the other hand, West Texas Intermediate oil has fewer levels of sulfur in its content that the Brent crude oil.
The demand for crude oil is strongly connected to the geopolitical situation in the countries that have oil as their main exporting product. Fourteen of the most important oil countries such as Saudi Arabia, Iraq, and Venezuela, among others, are joined together as the OPEC (Organization of the Petroleum Exporting Countries). This organization intends to keep a stable price for oil globally.
Whenever there is a geopolitical conflict in one of these oil countries, the prices of oil may increase or decrease according to the situation. These changes also affect the costs of the WTI and Brent crude oil directly. However, West Texas Intermediate is comparatively less affected than Brent because of its extraction location.
As mentioned before, both Brent crude oil and WTI prices are used as the measure price for the rest of the crude oil companies. OPEC and most of the countries around the world base the price of oil according to Brent crude oil. The US, however, uses the cost of WIT oil as the benchmark price.
This choice from the US radicate on the premise that WTI oil is cheaper than Brent crude oil since they started to extract oil from shale rocks. Before it happened, West Texas Intermediate used to sell at a higher price than the Brent crude oil.
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