What is 'Sour Crude'

Sour crude refers to a specific type of crude oil that is marked by a higher amount of sulfur. Sulfur is an impurity in crude oils. Barrels of such crude earn the designation if the total sulfur level of the oil is greater than 0.5 percent. Sour crude may also refer to oil that doesn't meet content requirements related to hydrogen sulfide and carbon dioxide levels.

It contrasts to light, sweet crude oil, which is defined by the New York Mercantile Exchange as petroleum with sulfur levels lower than 0.42 percent.


Sour crude is produced largely in Venezuela, Colombia, Ecuador, the Canadian province of Alberta, the Gulf of Mexico, Alaska, Saudi Arabia and other parts of the Middle East. In the United States, environmental regulations limit the amount of sulfur content in diesel and gasoline fuels. According to the Energy Information Administration (EIA), the two most essential factors in grading crude oil are the sulfur content and the density. EIA  is responsible for objectively collecting energy data, conducting analysis and making forecasts. 

Sulfur is an impurity which before refining, must be removed. This need increases the costs associated with processing. Often, sour crude oil is processed into heavy oil like diesel and fuel oil, rather than gasoline, to decrease processing expenses. For safety reasons, stabilization of sour crude oil must happen before being transported by oil tankers. Stabilization requires the removal of the hydrogen sulfide gas.

Crude oil contains many different hydrocarbon compounds. An oil refinery must crack, or separate, the dozens of hydrocarbon compounds into separate chemical units, eliminate the contaminants and transform the chemical units into gas and other products. Refiners generally prefer sweet crude oils due to the low sulfur content and relatively high yields of high-value products including gasoline, diesel fuel, heating oil and jet fuel.

Futures in Sour Crude

The first sour crude oil futures began trading in June 1990 on the Singapore International Monetary Exchange. Many sour crude products have been launched and terminated due to lack of investor interest. Light sweet crude oil futures and options, on the other hand, are the most actively traded energy products in the world.

West Texas Intermediate (WTI) crude is the underlying commodity of oil futures contracts on the New York Mercantile Exchange (NYMEX). WTI helps manage risk in the energy sector because the contract has the most liquidity, highest number of customers, and excellent transparency.

The Sweet Side of Sour Crude

An April 2018 Reuters report put the past two decades of oil refinement and commodities trading into perspective. The reporter found smaller U.S. refineries were gaining acceptance in the market thanks to the ready availability of sweet crude and the high cost of sour. "Over the last 20 years, the nation’s biggest refiners spent billions to build units capable of turning heavy, sour crude into products. But the U.S. shale revolution has boosted crude production . . . upending the global oil market by adding millions of barrels of very light crude to the supply mix."

Most of that production, she pointed out, is sweet West Texas crude, which requires much less processing to make premium fuel. This supply pipeline has opened the door for small and independent refineries.

  1. Cracking

    Cracking is a process to convert large hydrocarbon molecules ...
  2. Oil Refinery

    An oil refinery is an industrial plant that refines crude oil ...
  3. Crude Oil

    Crude oil is a naturally occurring, unrefined petroleum product ...
  4. OPEC Basket

    The OPEC basket is a weighted average of oil prices collected ...
  5. Excess Crude Account

    A Nigerian government account used to save oil revenues above ...
  6. Crude Stockpiles

    Crude oil stockpiles are reserves of unrefined petroleum, measured ...
Related Articles
  1. Investing

    Ending The Limits On U.S. Crude Oil Exports

    As US storage capacity reaches its limit, industry participants and their lobby groups in Washington are calling for an end to the crude oil exports ban.
  2. Investing

    The Reasons for the Mexican-U.S. Oil Swap

    The U.S. government is getting close to a historic deal to allow U.S. producers to swap the light, sweet crude oil that is in too much supply with Mexico, in return for heavy crude.
  3. Financial Advisor

    Learn how to trade crude oil in 5 steps

    Crude oil and energy markets are specialized venues. Here are five steps to take to build consistent profits.
  4. Investing

    Long Term Oil ETFs

    Investors with a longer term view of things may want to check out an Oil ETF for their portfolio.
  5. Investing

    (USO, OIL, UWTI) 3 Bond ETFs in the Oil Sector

    Find out more about exchange-traded funds (ETFs) that track the oil sector, such as the United States Oil Fund and the iPath S&P GSCI Crude Oil TR ETN.
  6. Investing

    4 Reasons Why the Price of Crude Oil Dropped

    Understand what drives the oil industry and how the price of crude oil is affected. Learn about five reasons why the price of crude oil has declined.
  7. Investing

    Uncovering Oil And Gas Futures

    Find out how to stay on top of data reports that could cause volatility in oil and gas markets.
  8. Investing

    How Low Can Oil Prices Go?

    Record low oil prices are a welcome development for consumers, but oil companies are struggling with choosing market share over profitability.
  9. Investing

    Want To Start Trading Oil? Understand The Basics First

    The overall economics of oil extraction is that there is money in it - both for extraction companies and their investors.
  1. What is a heavy oil differential and how does it affect oil producers?

    Learn what the phrase "heavy oil differential" refers to and the significance of heavy oil differentials for oil production ... Read Answer >>
  2. How can I hedge against rising diesel prices?

    In early 2007, the New York Mercantile Exchange announced that traders would be able to buy or sell futures contracts on ... Read Answer >>
  3. What percentage of the global economy is comprised of the oil & gas drilling sector?

    Read about a rising industry that already composes as much as one-twentieth of total global economic output: the oil & gas ... Read Answer >>
  4. Why did oil prices drop so much in 2014?

    Learn the roles that decreased global demand, new supply sources in North America, and actions taken by Saudi Arabia played ... Read Answer >>
Hot Definitions
  1. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  2. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  3. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  4. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  5. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  6. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
Trading Center