Brent Crude vs. WTI Crude: 5 Key Distinctions

Brent crude and WTI crude are oil benchmarks that function as reference prices for buyers and sellers of crude and crude-related securities. Benchmarks for crude oil are essentially reference baskets for global financial markets—they help set up a price for the crude oil sold under term contracts, allowing buyers and sellers to make decisions.

While there are dozens of benchmarks worldwide, we will discuss two primary and highly liquid references investors monitor—WTI and Brent Blend, to help you better understand the key distinctions between them.

1. Extraction Locations

Brent crude oil is produced in the North Sea region of the Atlantic Ocean and blended together from dozens of locations. The Brent oil fields are situated in the European areas between Norway and Shetlands. The energy commodity is then shipped through the Saloomwoo terminal for export purposes.

WTI crude oil is extracted in the United States, mainly from the Permian Basin (west Texas and southeastern New Mexico). The produced crude is then shipped to the Midwest and the Gulf of Mexico to be refined.

2. Content & Composition

Brent crude oil is light and sweet. It possesses an American Petroleum Institute (API) gravity—a measurement of the weight of petroleum liquids in comparison to water—of 39.8 percent. Brent also maintains a sulfur composition of 0.37 percent (the lower the sulfur content, the easier it is to refine, which, in today's environment, is an appealing option).

WTI crude oil is also a light and sweet crude that has an API gravity of 39.6 percent. Its sulfur content ranges between 0.24 and 0.34 percent—anything below 0.5 percent is identified as sweet crude.

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3. Geopolitical Influences

The geopolitical issues surrounding both oil contracts are enormous and complicated, particularly at a time when economic challenges, war, and political tensions are ubiquitous.

Now that the United States exports nearly three million barrels per day to more than 100 countries, WTI crude oil can influence geopolitics much more today than in the past.

Brent crude oil can also affect the international community and global financial markets, which has been more pronounced during the military conflict in Eastern Europe.

Overall, globalization and the advancing interests of developing markets have led to a fragile energy sector, with plenty of risks relating to supply shocks.

4. Trading Exchange

Brent crude oil is the international benchmark for oil prices listed on London's Intercontinental Exchange (ICE) futures exchange.

WTI crude oil is another global benchmark for light sweet crude that assesses the spot price for US oil on the New York Mercantile Exchange, also known as the NYMEX.

5. Pricing & Benchmarks

Both Brent crude and WTI crude oil are denominated in US dollars. This means that foreign buyers of Brent and WTI oil will need to make their purchases in the greenback.

Today, 80 percent of all crude transactions are made in dollars, although this is gradually changing now that more countries are considering relying on other currencies and assets to complete their transactions.

Ghana, for example, recently announced that it will be buying oil products in gold. Or, in another instance, Saudi Arabia and China are discussing the possibility of settling their contracts in the Chinese yuan.

Some new investors might be wondering why Brent is usually more expensive than US crude—the main reason is that Brent is more of an international benchmark covering a wider geography. Moreover, US crude oil production levels can be another fundamental driver of the contract spreads.

Key Distinctions: Brent Crude vs. WTI Benchmarks

Although both Brent crude oil and WTI crude oil are trading in the energy commodity, there are plenty of differences when assessing the Brent crude vs. WTI benchmarks.

• WTI is sourced from the US and Brent is produced in Europe.
• WTI is a benchmark that trades on the New York Mercantile Exchange and Brent is a global benchmark that trades on London's ICE Futures exchange.
• Both oil products are light and sweet, but WTI enjoys lower sulfur content.
• WTI and Brent are priced in US dollars.