'International Oil Price Benchmark' Brent Oil Price Calculation Considering Inclusion of US Crude Oil

"If a conclusion is reached by February next year, it is likely to be applied from March 2022"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Wall Street Journal (WSJ) reported on the 3rd (local time) that a plan to include U.S. crude oil in the pricing of Brent crude oil, the international benchmark for crude oil prices, is being considered.

According to the report, S&P Global Platts, the crude oil price reporting agency, is discussing with market participants the possibility of including West Texas Intermediate (WTI) crude oil when determining the price of "Dated Brent," which is the price of Brent crude oil with a specified spot delivery date.

Dated Brent is a type of price benchmark used in the international crude oil market, similar to LIBOR (London Interbank Offered Rate) or the 10-year U.S. Treasury yield in financial markets. Platts is expected to reach a conclusion by around February next year after gathering opinions from market participants. WSJ reported that the new pricing method could be applied starting around March 2022.

WSJ pointed out that the Dated Brent price has faced issues in recent years because the Brent oil field in the East Shetland Basin of the North Sea, which is the subject of the price calculation, is rapidly depleting. Platts has reflected crude oil drilled from other areas in the North Sea in the pricing, but those areas are also experiencing depletion.

WSJ explained that due to these factors, the consideration to include West Texas Intermediate crude oil in the price calculation has arisen, describing it as "an example showing the rise of the U.S. in the international crude oil market." Since lifting the ban on domestic crude oil exports in 2015, the U.S. has emerged as a major crude oil exporter. According to Platts, as of this year, an average of 443,000 barrels per day of West Texas Intermediate crude oil has been exported to Europe.

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