S&P Global Platts to reflect US’ WTI Midland crude in Dated Brent from July 2022
S&P Global Platts is to include US WTI Midland crude in its Dated Brent benchmark — the world’s biggest crude oil benchmark — to ensure its assessments properly reflect changes in the European crude market, starting July 2022, it said Feb. 22.
In a statement, Platts also said the entire price assessment process, encompassing five North Sea grades plus WTI Midland, would switch to a CIF Rotterdam basis, rather than including loadings at terminals around the region.
Platts, which publishes the daily Dated Brent assessment that underpins the majority of the world’s oil trade, first asked for feedback in 2018 on possible additions to the benchmark.
The inclusion of a non-North Sea crude is the latest in a series of changes over the years intended to ensure the benchmark remains reflective of the market, in the face of production decline at stalwarts such as the Brent field as well as changing trade flows.
“These changes provide significant additional volume and will ensure the continued robustness of the Brent complex for the next decade and beyond,” Platts’ head of oil markets price reporting, Vera Blei, said.
Following consultations with market participants, “Platts has found widespread support for the inclusion of WTI Midland in Dated Brent, Cash BFOE and all related assessments,” Platts said.
Together with the existing benchmark crude grades — Brent/Ninian, Forties, Oseberg, Ekofisk, and Troll — “the combined flow of light sweet crude including WTI Midland into the Northwest European market routinely exceeds 1.3 million b/d, a healthy volume of fungible crude oil grades for a robust benchmark.”
“Platts has also received feedback supporting simplified assessments that will more effectively and efficiently reflect these flows into Northwest Europe,” it said, referring to the decision to switch all assessments to a CIF Rotterdam basis.
“Both the inclusion of WTI Midland and a move to a fully-delivered benchmark will better reflect the modern fundamentals of the European crude oil market,” Platts added.
The last new grade to be included in the benchmark was Norway’s Troll crude, in 2018, reflecting Norway’s rise as Europe’s largest oil producer at a time when UK production has generally waned.
However, the US shale boom of the last decade and the end of curbs on US crude exports in 2016 have made US crude a growing presence in Europe, sought-after by refiners, and having similar qualities to conventional North Sea grades.
Platts said it would review any quality adjustment relating to WTI Midland after its inclusion in the benchmark.