Factbox: S&P Global Platts eyes inclusion of US crude in Dated Brent benchmark

London — S&P Global Platts proposed Dec. 3 including US WTI Midland crude oil in its Dated Brent price assessments, the benchmark for North Sea light sweet crude and reference point for around two-thirds of the world's oil trade.

If implemented, it would be the first time the benchmark has been broadened to include a crude oil grade from beyond the North Sea, adding around 450,000 b/d of liquidity based on recent flows of WTI Midland to Europe, at a time of declining production of some of the traditional North Sea grades.

Prices

Dated Brent is the benchmark for light sweet crude oil produced in the North Sea, and a reference point for trading crude of varying characteristics around the world.

**The Dated Brent benchmark is trusted as a global reference because of the liquidity and transparency of the North Sea market, and the robustness of Platts' methodology, which has adapted over time in consultation with the industry.

**WTI Midland is a light grade with an API gravity of 40-44, meaning its inclusion would tend to lighten the existing basket of crudes, which range around 35-40 API. It has a sulfur content of around 0.2%, broadly in line with the existing grades apart from the more sulfurous Forties.

**Platts has been assessing WTI Midland on a delivered basis in the North Sea since earlier this year. WTI Midland on a FOB Scapa Flow basis was assessed by Platts at $46.50/b on Dec. 2, while Dated Brent was assessed a $47.73/b.

Infrastructure

Platts' proposal is to include WTI Midland crude oil, produced in the Permian basins of West Texas, alongside the five North Sea crude oil grades already included: Brent, Forties, Oseberg, Ekofisk and Troll.

**Originally based solely on the Brent crude blend loaded at Sullom Voe in the UK Shetland Islands, the benchmark has been adapted many times, to include other blends and loading points, with actual production volumes of around 1 million b/d at present. Production can be replenished with the addition of newly developed fields, but some of the biggest recent North Sea developments have produced heavier crude, most notably Norway's Johan Sverdrup.

**The new entry would be assessed on a Free On Board (FOB) Scapa Flow basis, reflecting ship-to-ship loadings of WTI Midland offshore northern Scotland, as well as deliveries at Rotterdam.

Trade Flows

The potential inclusion of WTI Midland reflects both the growth of US shale oil production, but also a landmark decision by the US in 2015 to lift an effective ban on exporting its crude oil.

**Exports of WTI Midland total around 1 million b/d, of which substantial volumes reach Europe, alongside other crudes flowing into the region from West Africa and elsewhere.

**The crude oil grades that contribute to Dated Brent price assessments are used by refiners both in Europe and around the world, and have grown increasingly popular among East Asian refiners in recent years, including in China and South Korea.

**"With robust daily export volumes of over 1 million b/d, its [WTI Midland] inclusion within the Dated Brent basket would provide additional volume and ensure the continued robustness of Dated Brent for the next decade and beyond," Vera Blei, head of oil markets price reporting at S&P Global Platts, said.

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