S&P Global Platts proposes inclusion of WTI crude in Dated Brent benchmark

London — S&P Global Platts has formally proposed that the US' main export grade crude WTI Midland be included in its Dated Brent benchmark, the world's biggest benchmark for light sweet crudes, from March 2022.

Under the proposal, Platts would include WTI Midland FOB basis Scapa Flow in the Dated Brent basket, alongside the existing Brent Ninian Blend, Forties, Oseberg, Ekofisk, and Troll grades.

Related podcast: Platts proposes WTI Midland's inclusion into Dated Brent

Platts, which publishes the daily Dated Brent assessment that underpins the majority of the world's oil trades, first asked for industry feedback in late 2018 on possible additions to the Dated Brent CIF Rotterdam assessment of a number of new crudes.

WTI Midland, which has emerged as a key non-North Sea grade for European refiners, was one of six crude grades shortlisted for possible inclusion into Dated Brent as part of the ongoing efforts to maintain the liquidity of the benchmark. Norway's Statfjord and Gullfaks crude, Kazakh-Russian CPC Blend, and Nigeria's Forcados and Qua Iboe crudes were also seen as potential candidates.

"The grade is a close fit to the existing North Sea basket in terms of quality, pricing and consumption. The addition of the grade to the basket would provide additional volume and would further ensure the continued robustness of the Dated Brent FOB benchmark," Platts said in a statement.

WTI Midland is a light, sweet crude oil with a typical average monthly export volume of 1.08 million b/d during 2020, of which around 443,000 b/d arrived in Europe. WTI Midland is typically sold into Europe on a delivered basis.

Existing grades

Platts earlier this year launched an assessment of WTI Midland FOB at Scapa Flow off Scotland, one of the main locations in Europe for ship-to-ship transfers of crude and products.

Crude output from the UK's offshore Brent oil field has dropped significantly since its peak at around 520,000 b/d in 1984. Subsequent declines in wider North Sea oil output have prompted Platts to include alternative grades to increase the liquidity of the assessment.

At the same time, US crude exports have surged six-fold to 2.8 million b/d from 2015 to 2019. West Texas Intermediate, or WTI, is the flagship US grade of oil produced in the Permian Basin of West Texas and transported by pipeline, rail and truck to refiners around the world.

From October last year, Platts included qualifying North Sea crudes -- Brent, Forties, Oseberg, Ekofisk and Troll -- on an adjusted cost, insurance and freight (CIF) basis Rotterdam into in its FOB (free on board) Dated Brent benchmark. The move marked the first time Platts assessed crude being offered on a delivered basis to determine the value of its main FOB Dated Brent assessment, which currently includes falling volumes of crude traded at North Sea terminals.

The five existing BFOE grades amounted to about 1 million b/d in production terms in 2019.

Platts said it is inviting feedback on its proposal by Feb. 5, 2021 with a potential implementation for March 2022.