U.S. WTI crude price influence grows in Europe

U.S. Midland crude oil from the Permian basin looks set to play a bigger role on the global stage following a recent announcement by S&P Global Platts that they are considering its inclusion in the Dated Brent pricing mechanism.¹ Such a move is positive for the WTI crude oil benchmark and potentially brings it into the North Sea market on a more formalized basis.

Crude flows have been changing over the past several years following the lifting of the crude oil export ban in 2015. The U.S. produced around 12 million barrels per day in 2021, around 20% more than Saudi Arabia or Russia.² The U.S. is a major source of freely tradable crude oil and exportable globally by function of the Brent-WTI spread. Refiners from Europe to Asia are processing greater quantities of U.S. crude oil, which is supportive to the further growth of the WTI crude benchmark.

In 2021, U.S. crude exports to Europe continued to outpace the total supply of the North Sea crude streams that underpin the Brent futures contract. The key crude streams that fulfil this role are Brent, Forties, Oseberg, Ekofisk, and Troll, referred to as BFOET. In 2021, total exports of WTI linked crude from the U.S. to Europe reached 1.2 million barrels per day compared to just over 750,000 barrels per day for BFOET. The 2021 volumes were broadly flat on 2020 but showed a 10% increase on 2019 levels. As U.S. crude exports gain deeper penetration in global oil markets, WTI has extended its leadership as a key price-setting indicator on the global stage.