WHAT IS Brent Blend
Brent blend is the name of one of two internationally-recognized types of crude oil that are used as benchmarks for prices of crude oil. Brent Blend comes from the North Sea and is considered a light, sweet crude oil. Brent blend is more than half of the crude oil traded internationally, so it is a logical choice to be the benchmark for crude oil pricing.
Brent blend is also called Brent oil, Brent Crude and London Brent.
BREAKING DOWN Brent Blend
Brent blend is a blend of crude oil extracted from oilfields in the North Sea between the United Kingdom and Norway. It is an industry standard because it is "light," meaning not overly dense, and "sweet," meaning it's low in sulphur content. It is used as a benchmark for pricing crude oil, along with West Texas Intermediate (WTI) crude oil. Brent blend is the benchmark for most of the crude oil from the Atlantic basin, and is the benchmark used to price two-thirds of the crude oil traded internationally.
Brent blend originally came from the Brent Oilfield off the coast of Scotland. At the time, the naming standards for the UK oil industry were to name oilfields in order of development, alphabetically, after birds. Brent Oilfield was the second developed, so it was named after a bird that began with the second letter of the alphabet, the brent goose.
Brent blend and WTI are the two main benchmark crude oils. Brent is less light and less sweet than is WTI. Brent makes up the majority of the crude oil traded internationally, so it is more commonly used as a benchmark than is WTI.
The Brent Index is the average price of trading 600,000 barrels on the 25-day Brent Blend, Forties, Oseberg, Ekofisk (BFOE) market. The index is calculated as the average of:
1) The weighted average of first-month cargo trades in the BFOE market.
2) The weighted average of second-month cargo trades in the BFOE market plus or minus a straight, non-weighted average of the spread between the first and second month cargo trades.
3) A straight, non-weighted average of "designated assessments" as published officially in the media.
The Brent Index expresses the cash settlement price for the Brent Future on the ICE exchange.