Story Credit: Bloomberg – By Bill Lehane| According to the Renaissance Energy Advisors consultancy, American crude grade WTI Midland has replaced West African oil as the swing supplier for markets between the Atlantic Basin and Asia.
According to estimates from the consultancy, the grade’s exports have swelled by as much as 3.5 million barrels a day since the US lifted a ban on crude exports in 2015. About 47% of last year’s flows went to Europe, while 43% went to Asia.
“As US crude exports have grown, WTI Midland – a light sweet crude – has emerged as the world’s largest freely-traded grade by output and volume,” the London-based consultancy said in a note to clients seen by Bloomberg News.
West Africa was previously the key swing supplier between Europe and Asia, offering a regular source of spot barrels that can be traded east or west depending on demand in each region.
Soaring supplies of American crude have shifted that role to WTI Midland, and Africa’s underperforming upstream sector has reinforced this trend. The consultancy said that the startup of the African Dangote mega-refinery in Nigeria also means more barrels are processed locally, and the giant plant is also importing WTI Midland.
The dislocation in global crude flows stemming from the European Union’s embargo on Russian crude has also caused WTI Midland to effectively replace Urals as the baseload grade for northwest Europe’s refiners.
The note said WTI Midland’s inclusion in the grades allowed to determine the price of Dated Brent—an important oil benchmark—has also elevated the US Gulf Coast’s position as a key center for oil pricing.
The consultancy expects US crude exports to grow further by 2030, with flows set to reach almost 6 million barrels a day by then.
Story Credit: Bloomberg – By Bill Lehane
UNDERSTANDING WTI-MIDLAND CRUDE:
WTI-Midland crude is a specific grade of crude oil in the West Texas Intermediate (WTI) category, one of the main benchmarks for oil pricing in the United States and globally. Here are the key aspects of WTI-Midland crude:
◉Origin: WTI-Midland crude originates from the Midland region of Texas, part of the larger Permian Basin, one of the most prolific oil-producing areas in the United States.
◉Quality: It is known for its high quality, characterized by low sulfur content (sweet crude) and relatively low density (light crude). These properties make it desirable for refining into gasoline, diesel, and other high-value products.
◉Pricing Benchmark: WTI-Midland crude often serves as a regional pricing benchmark for other crude oils produced in the Permian Basin. It is used to set prices for physical oil trades and futures contracts.
◉Market Dynamics: The price of WTI-Midland can be influenced by various factors, including production levels in the Permian Basin, infrastructure constraints (such as pipeline capacity), and overall supply and demand dynamics in the oil market.
◉Transportation and Delivery: WTI-Midland is typically transported via pipelines to refineries along the Gulf Coast or to storage and trading hubs like Cushing, Oklahoma, which is a major storage and pricing point for WTI crude oil futures traded on the New York Mercantile Exchange (NYMEX).
◉Strategic Importance: Due to its high quality and the significant volume of production in the Midland area, WTI-Midland crude plays a crucial role in the U.S. oil market and has implications for global oil pricing and trading strategies.
