|Courtesy Sergio Russo & Flickr|
Despite popular misconceptions, not all crude oil is created equal. There are over 160 different types of oil on the market all varying in terms of geography, API gravity, sulfur content and more.
When discussing oil, it is important to have a grasp on these varying characteristics, the first being viscosity. Viscosity relates to oil’s inability to flow. Oil with a high viscosity is harder to pump and thus makes extraction and refining processes more difficult.
Volatility refers to how fast oil evaporates. Oil with a high volatility rate must be handled with extra care so as to prevent loss of oil. Regulation of temperature and sealing procedures are often utilized.
Toxicity describes how dangerous particular oil is to humans and local wildlife. In the case of a spill, cleanup processes differ depending on the type of oil.
As previously mentioned, oil can vary from being very light to being very thick. The four primary categories of oil are: Very Light Oils/ Light Distillates, Light Oils/Middle Distillates, Medium Oils, and Heavy Fuel Oils. They are further described below.
|Courtesy Tom Russel & Flickr|
Light Oils/Middle Distillates include Grade 1 and 2 Fuel Oils and Diesel Fuel. They evaporate less quickly than Very Light Oils and are thus slightly more toxic to the environment.
Medium Oils are the most common crude oil on the market. Possessing a much lower volatility rate than the above two categories, their clean- up in the case of a spill can be quite complex.
Heavy Fuel Oils account for Grade 3,4,5, and 6 Fuel Oils and Heavy/Intermediate Marine Fuels.
Out of the 160 different types of oil traded on the market, the most talked about are West Texas Intermediate, Brent Blend, and OPEC Basket. Their variations in weight and sulfur content impact their value and price per barrel, although prices can be impacted by other factors as well, including political and logistical.
1. West Texas Intermediate (WTI)
Perhaps the highest quality Crude Oil on the market is West Texas Intermediate or WTI, the U.S. benchmark for crude oil. It is mainly refined in the Midwest and Gulf Coast regions, which is perfect for the largest gasoline-consuming country in the world. WTI is considered a "light" crude oil due to its API gravity of 39.6 degrees. API gravity is defined as the "American Petroleum Institute Gravity" which measures how light or heavy a crude oil is compared to water. An API gravity that is greater is lighter than water and thus, would float. An API gravity that is less than 10 is heavier than water and would sink.
WTI is also considered to be a "sweet" crude oil due to its low sulfur content of 0.24 percent. The lower the sulfur content, the sweeter the oil. The higher the sulfur content, the more "sour" the oil.
2. Brent Blend
This type of Crude Oil is actually a blend from 15 different oil fields located in the North Sea's Scottish Brent and Ninian systems and serves as a benchmark for 2/3 of crude oils traded internationally. It includes Brent Blend, Forties Blend, Oseberg, and Ekofisk crudes. It originally was produced from the Brent oil field and the name "Brent" came from a naming policy that labeled all of its fields after birds, in this case, the Brent Goose. Brent is also an acronym for the oil field's formation layers: BroomoseBerg, Rannoch, Etive, Ness, and Tarbert. It is excellent for making gasoline and is consumed largely in Northwest Europe, where it is mostly refined. While it is very high-quality oil, it has an API of 38.3 degrees which still makes it a "light" crude oil but not as light as WTI. Brent Blend also contains 0.37 percent sulfur which defines it as a "sweet" crude oil, but not as sweet as WTI. Still, it is often priced at $4 above the OPEC Basket price.
3. OPEC Basket
This oil comes from a collective of twelve different oil types from Algeria, Saudi Arabia, Indonesia, Nigeria, Dubai, Venezuela, and the Mexican Isthmus. These include: Saharan Blend (from Algeria), Ecuador, Iran Heavy (from Islamic Republic of Iran), Basra Light (from Iraq), Kuwait Export (from Kuwait), Es Sider (from Libya), Bonny Light (from Nigeria), Qatar Marine (from Qatar), Arab Light (from Saudi Arabia), Murban (from UAE), BCF 17 (from Venezuela), and Girassol (from Angola).
OPEC stands for Organization of Petroleum- Exporting Countries, formed in 1960 to help regulate policy for the production and sale of oil in its domain.
OPEC Oil tends to have a much greater amount of sulfur within its unrefined state, and is largely considered to be sour. It also is much heavier than WTI or Brent Blend. These factors make OPEC Basket Oil much lower in value compared to WTI or Brent Blend.