Brent - high quality

Almost all the countries which are engaged in oil production on the world market put one or more varieties. They differ in chemical composition, and in order to streamline their systematics, as well as to simplify the export of "black gold", was created by a special standard grades of crude oil. Russia is characterised Urals and Siberian Light, for England – Brent crude oil for the United States – Light Sweet.

Sometimes it so happens that the country produces two varieties, for example, in Russia it is heavy Urals and Siberian Light easy.

The Name of low-sulphur Brent crude oil is made of the first letters of the words denoting 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 equal to 0,2-1%.

Brent crude as the reference mark is produced between the coasts of England and the European countries of Norway and Denmark in the North sea. Here, on the edge of the Viking Graben, is the same name field opened in nineteen seventies.

According to its composition, properties and quality Brent belongs to these standards, because its components are considered to be the most optimal in order to produce petroleum products, including gasoline and medium-sized distillers. In the oil fields of Saudi Arabia, the USA and South-East Asia, extraction of the product corresponding to the considered benchmark Brent.

And there are more than 10 brands of oil. Of them on the world market the most popular are Brent and WTI (West Texas intermediate). Brent especially is listed on the London stock exchange IPE. On the new York stock exchange NYMEX is more valued in West Texas brand.

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What determines the value of the product

Brent crude, produced in different fields, of course, will have certain differences from the reference brand. And it is from these differences, how they are significant, and depends on its cost. And the more the extracted raw materials is different from the standard, what is worse, the lower will be its price.

The Main processing of this variety of raw materials is carried out in the North-West of Europe. If the pricing environment is favorable, it may for the processing be delivered to the Mediterranean countries or in the United States of America.

The Price of Brent crude oil established in the process of trading at the current (spot) prices and contracts, focused on delivery in the future (futures). The majority of transactions for this class is done on futures quotations.

It Should be noted that futures contracts are beneficial to both the seller and the buyer. Each of them insures against possible changes in the prices of raw materials. In the oil industry at first, when futures contracts were introduced only in practice, they were skeptical and sometimes even hostile. But gradually this practice became widely used, and today almost all the oil companies and countries exporting oil involved in this process.

As a whole in the world market price formation is affected by many different factors. Of course, the key is the ratio of supply and demand. Also essential is the state of the global economy, all kinds of risks, including geopolitical.