Current live crude oil prices are listed in the table below. Prices are in US dollars per barrel.
| Oil Benchmark | Price ($US) | Updated |
|---|---|---|
| WTI Crude | 71.36 | March 23, 2023 |
| Brent Crude | 77.15 | March 23, 2023 |
Oil prices given are the price of a barrel of benchmark crude oil. A barrel is 42 US gallons.
There are many types of crude oil. Buyers need an easy way to value crude oil, based on quality and location. These are oil benchmarks.
Major oil benchmarks are West Texas Intermediate (WTI) and Brent Crude.
West Texas Intermediate (WTI) Crude Oil Price Today - Barrel
The price of a barrel of West Texas Intermediate (WTI) crude oil is currently $71.36. The price was last updated at .
WTI is a light, sweet oil. It is light because it has a low density, and sweet because it has a low sulphur content.
It is a high quality crude oil that can easily be refined.
In theory, WTI should be more expensive than Brent Crude (it is lighter and sweeter). However, each crude oil market is subject to unique supply and demand factors.
For example, use of techniques such as fracking in the US have led to significant increases in production of WTI oil. Increased supply leads to lower prices.
Brent Crude Oil Price Today - Barrel
The price of a barrel of Brent Crude oil is currently $77.15. a barrel. The price was last updated at .
Brent Crude is a light (low density), sweet (low sulphur content) oil. However it is not as light or sweet as WTI.
Brent Crude is extracted from the North Sea of the Atlantic Ocean.
The price of Brent Crude is a leading oil benchmark. It is used to set the price of most of the world’s oil supplies.
Types of Oil
There are different types of crude oil. Some are more valuable than others.
The main criteria used to determine the quality of crude oil are density and sulphur content.
It is easier to make gasoline (petrol) and diesel from crude oil with a low density (light) and low sulphur content (sweet). Crude oils with these characteristics command higher prices.
Values for Brent Crude and WTI are shown in the table below. Both types have a low density and low sulphur content. There are many more types of crude oil, but Brent Crude and WTI are the main types used for benchmark pricing.
| Brent Crude | WTI | |
|---|---|---|
| Density (API Gravity) | 38 | 39.6 |
| Sulphur Content | 0.37% | 0.24% |
| Extracted | North Sea, Europe | US oil fields |
Density
Density is one measurement used to classify types of crude oil. The common measurement scale used is American Petroleum Institute Gravity (API Gravity).
API Gravity is a measure of how heavy or light oil is compared to water.
Oil with an API Gravity of more than 10 is lighter than water and will float on water.
Oil with an API Gravity of less than 10 is heavier than water and will sink under water.
API Gravity is an inverse measurement. The denser an oil, the lower its API Gravity will be.
Light oils (lower density, higher API Gravity) are generally the most valuable because they require less processing to convert into valuable fuels.
Crude oils are classified on the basis of their API Gravity as extra heavy, heavy, medium, and light:
| Type | API Gravity |
|---|---|
| Light | Greater than 31.1 |
| Medium | 22.3 to 31.1 |
| Heavy | 10 to 22.3 |
| Extra Heavy | Less than 10 |
Sulphur Content
In addition to density, sulphur content is another factor determining the quality of crude oil.
Crude oil with a sulphur content more than 0.5% is called ‘sour’.
Crude oil with a sulphur content less than 0.5% is called ‘sweet’.
Excess sulphur needs to be removed from crude oils during refining. When sulphur in fuel is combusted it produces sulphur oxides.
Sulphur oxide emissions are a source of air pollution and are regulated in most countries.
The lower the sulphur content, the easier it is to refine to meet required standards. Sweet oils with lower sulphur content command higher prices.
Factors Influencing the Price of Oil
The price of oil is governed by the basic laws of economics; the law of supply and the law of demand. Other factors such as the value of the US dollar, liquidity of the financial markets, and speculation also play an important role.
All other things remaining equal, an increase in the supply of oil will cause the price of oil to fall. A decrease in the supply of oil will cause the price of oil to rise.
An increase in the demand for oil, will cause the price of oil to rise. A decrease in the demand for oil will cause the price of oil to fall.
Oil Supply
Factors such as geopolitical events, OPEC, technology, and capital investment can affect the supply of oil.
Geopolitics
Geopolitical events such as war and sanctions can affect the price of oil. They can cause actual disruptions in supply or create uncertainty.
Much of the world’s supply of crude oil is located in regions that are affected by geopolitical events.
Examples of geopolitical events that have affected the oil price include:
- 2018 – Donald Trump announced that the US was pulling out of the Iran nuclear deal and impose sanctions. Following the news, the price of Brent Crude and WTI increased.
- 1990 – Iraq invaded Kuwait. Both Iraq and Kuwait were OPEC members and significant oil producing countries. The loss of these supplies, plus the threat to oil production in Saudi Arabia, led to a huge increase in the price of oil.
- 1979 – Oil prices increased significantly due to the Iranian Revolution and the subsequent Iran-Iraq War. Strikes and social unrest led to a significant fall in production and a rise in the oil price. The situation worsened in 1980 with the outbreak of the Iran-Iraq War.
- 1973 – The Organisation of Arab Petroleum Exporting Countries (OAPEC) introduced significant production cuts and an oil embargo against the US and other countries that supported Israel in the 1973 Arab-Israeli War. This resulted in a significant rise in the price of oil. Fuel shortages led to rationing in the US and some other countries.
A fall in oil prices can also cause political upheaval. In many countries oil revenues account for a large proportion of government income. In such countries, a fall in the oil price often leads to reduced government spending on welfare and the military. This can lead to anti-government sentiment and civil unrest.
OPEC
The Organization of Petroleum Exporting Countries (OPEC) was set up in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
As of 2020, its members are Alegria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of the Congo, Saudi Arabia, the United Arab Emirates, and Venezuela.
Its stated mission is “to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.”
OPEC members produce almost half of the world’s oil and control more than three quarters of the world’s oil reserves.
OPEC has considerable influence over oil prices. When OPEC cuts production (supply), the oil price increases.
In recent years the influence of OPEC over the oil price has declined due to the emergence of the US as the world’s leading oil producer.
Technology
Advances in technology can lead to increases in the supply of oil and a reduction in the oil price.
One example is the widespread adoption of hydraulic fracturing (fracking) in the US. Use of this technology, together with horizontal drilling, has opened up oil supplies trapped in shale in Texas and elsewhere.
The shale boom has meant that the US is now the world’s leading producer of oil. This significant increase in supply has contributed to lower prices. It has also lessened the ability of OPEC to influence oil prices.
Capital Investment
Capital investment on exploration and production facilities affects future oil supplies.
Higher oil prices will lead to more spending on exploration and production facilities. This, in the long term, will lead to more supply and a reduction in the oil price.
Capital investment projects are long-term projects so the effects of changes in oil prices are delayed.
Demand for Oil
Factors such as economic cycles, GDP growth, population growth, and the development of alternative sources of energy and transportation can affect the demand for oil.
Forecasts, such as those by BP, predict that demand for oil will fall over the coming decades.
Economic Cycles
Demand for oil rises during periods of economic growth and falls during recessions.
The Global Financial Crisis (2007 -2008) triggered the Great Recession (2007 – 2009), the most severe economic depression since the Great Depression of the 1930s. The slowdown in industry lowered the demand for oil. The price of Brent Crude fell from around $130 in July 2008 to around $40 in December 2008.
In 2020 the COVID-19 Pandemic had a negative impact on the economies of most countries. Reduced demand led to a massive fall in the price of oil.
GDP Growth
As countries develop and increase their GDPs, their demand for oil and other sources of energy increases.
In recent years, the growing economies of countries such as China and India, have led to increased demand for oil.
The COVID-19 Pandemic had a detrimental effect on GDP growth in most countries. In September 2020 the OECD forecast that GDP would fall in all G20 countries with the exception of China.
GDP is expected to recover in 2021 but is still forecast to be below levels at the end of 2019. It will be well below what was projected before the outbreak of the disease.
Population Growth
The current population of the world is around 7.8 billion. The United Nations (UN) forecasts that the world population will be around 9.7 billion in 2050. More than half the growth is expected to occur in Africa.
All other things remaining equal, an increase in population, will lead to increased demand for oil.
Alternative Energy Sources and Transportation
Increased use of alternative energy such as solar and wind power will dampen the demand for oil.
Prices for renewable sources of energy are becoming more competitive with those for oil, gas, and coal. Recent years have seen massive investments in new wind and solar capacity.
In 2019, renewables met over 40% of the rising demand for energy around the world; the biggest of any source.
New solar and wind power sources accounted for almost 70% of new generating capacity added in 2019.
One of the driving forces behind this is the declining cost of solar equipment. The technology is now affordable, and widely available, for homes, businesses, and power grids.
Bhadla Solar Park, in India, is the world’s largest solar park. It has a capacity of 2.2 GW. The Mohammed bin Rashid Al Maktoum Solar Park in Dubai has a planned capacity of 5 GW once fully complete.
Massive wind farms are being built around the world. The Gansu Wind Farm, an onshore wind farm in China, has a planned capacity of 20 GW. Dogger Bank Wind Farm (capacity 3.6 GW) in the UK is expected to be the world’s largest offshore windfarm. In 2020 Boris Johnson pledged that offshore wind farms would power every home in the UK within a decade.
Gasoline consumption by cars is one of the primary drivers of oil demand. In recent years, petrol and diesel cars have become more fuel efficient, helping to reduce the demand for oil.
Although, only a small proportion of the cars around the world now are electric, the proportion is expected to increase significantly over the coming years. Many countries around the world have already set deadlines to outlaw the sale of new petrol and diesel vehicles. Electric vehicles will be increasingly powered by electricity generated by renewable sources of energy.
Efficient and reliable public transport systems reduce the demand for car travel and oil.
Examples in Dubai include the Dubai Metro (opened 2009) and Dubai Tram (opened 2014). In 2006 journeys made using public and shared transport was 6% of the total number of trips. By 2018 the proportion of journeys made using public and shared transport had risen to 17.5%.
