Almost all countries that are engaged in oil production, supply one or more of its varieties 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 the varieties of crude oil were created. For Russia, Urals and Siberian Light are characteristic, for England - Brent oil, for the USA - Light Sweet.
It sometimes happens that a country produces two varieties, for example, in Russia it is a heavy Urals and a light Siberian Light.
The name Brent low-sulfur oil is composed of the first letters of the words denoting the horizons: Broom, Rannoch, Etieve, Ness and Tarbat. It has a density of 38 ° API - a standard defined by the American Petroleum Institute. The sulfur content in it is 0.2-1%.
Brent oil, as a reference brand, 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, is the deposit of the same name, discovered in nineteen seventy.
By its composition, properties and quality, Brent crude oil belongs to these standards, because its components are considered to be the most optimal in order to produce petroleum products, including gasoline and medium distillers. In the oil fields of Saudi Arabia, the USA and Southeast Asia, a product is being extracted that meets the Brent standard under consideration.
But in total there are more than 10 brands of oil. Of these, the most popular on the world market are Brent and WTI (West Texas Middle). Brent is especially listed on the London IPE. The New York Stock Exchange NYMEX is more appreciated West Texas brand.
What determines the cost of the product
Brent oil produced in different fields, of course, will have certain differences from the reference brand. And it is from these differences, from how significant they are, and its cost 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 variety of raw materials is carried out in the north-west of Europe. If the pricing environment is favorable, then it can be delivered for processing to the Mediterranean countries or to the United States of America.
The price of Brent oil is set in the course of exchange trading at current (spot) prices and contracts focused on future deliveries (futures). The bulk of transactions on this grade are made at futures prices.
It should be noted that futures contracts are beneficial both to the seller and the buyer. Moreover, each of them insures itself against a possible change in the price of raw materials. In the oil industry, at first, when futures contracts were just put into practice, they were skeptical, and sometimes even hostile. But gradually this practice began to be widely used, and today almost all oil companies and countries involved in oil export have joined this process.
But in general, on the world market, many different factors influence the formation of prices. Of course, the main is the ratio of supply and demand. The state of the world economy, all kinds of risks, including geopolitical, also play a significant role.
