[News Terms] Soaring Oil Prices... What Are the Differences Between Brent, WTI, and Dubai Oil?

There are about 200 types of crude oil produced worldwide. Among them, Brent crude, West Texas Intermediate (WTI), and Dubai crude are considered the three major crude oils globally and frequently appear in international oil price news. What are the classification criteria for these three major crude oil types?

First, the names of each crude oil type are closely related to their production regions. Brent crude is produced in the North Sea near the United Kingdom. Its production volume reaches about 750,000 barrels per day and it is known as a benchmark for international oil prices. WTI is produced in the western Texas and Oklahoma areas of the United States. It is mainly traded within the U.S. but is widely used as a leading price indicator for international oil prices. Dubai crude, familiar to us, is produced in the Middle East, specifically the United Arab Emirates, and serves as the standard for pricing Middle Eastern crude oil. Since South Korea imports more than 70% of its crude oil from the Middle East, the price of Dubai crude has a significant impact on the domestic economy and inflation.

The three major crude oils also differ in composition. When crude oil is extracted, it contains various impurities such as sulfur in addition to pure crude oil, and the quality of crude oil is determined by its sulfur content. The less sulfur it contains, the fewer pollutants it emits, making it a better quality crude oil. Based on this criterion, WTI, with a sulfur content of 0.24%, is considered the highest quality. Brent crude also has a sulfur content of 0.37%, classifying it as a low-sulfur light crude oil like WTI. On the other hand, Dubai crude has a sulfur content of 2.04%, making it a high-sulfur heavy crude oil with the lowest quality among the three major types. This is why Dubai crude is priced lower than Brent crude or WTI.

The trading methods also differ slightly. Brent crude and WTI are traded both as futures and spot contracts, whereas Dubai crude is traded only as spot contracts. Futures are contracts to trade at a predetermined price at a set time, while spot trading involves immediate transactions in the market. Brent crude and WTI are traded on the London Futures Exchange and the New York Mercantile Exchange, respectively. Dubai crude trading takes place in the Middle Eastern region and the Singapore spot market.