Benchmarks
A benchmark is a widely traded reference crude whose price is published and used to value many other grades. Three dominate global trade:
- Brent — the main reference for crude traded into Europe, Africa and parts of Asia; linked to futures traded on ICE.
- WTI (West Texas Intermediate) — the key North American reference; linked to futures traded on CME/NYMEX.
- Dubai and Oman — the principal references for medium sour grades heading to Asia.
Quality and location differentials
A specific grade rarely has the same value as the benchmark. Two adjustments bridge the gap: a quality differential (lighter, sweeter crude usually commands a premium; heavier, more sour crude a discount) and a location or freight differential reflecting the cost of moving the cargo to the buyer.
Official selling prices and formulas
Several national oil sellers set a monthly official selling price for each export grade, expressed as a benchmark plus a formula differential rather than a fixed figure. Because the benchmark moves daily, the cargo price is typically fixed over an agreed pricing period, for example the average of the benchmark around the bill of lading date. See what a bill of lading is.
Indicative prices are not offers
Any price shown on a website or market report is indicative and for information only. A binding price is established only in a signed contract after compliance review. 3FB Energy & Trade can discuss indications on request through the trading desk.
Sources & references
This article paraphrases widely established facts from the organisations below. It does not reproduce their text. Always confirm current figures against the primary source.
- U.S. Energy Information Administration (EIA) — benchmark price data
- Intercontinental Exchange (ICE) — Brent futures
- CME Group / NYMEX — WTI futures