Last year was a milestone for the global energy market. The situation has changed dramatically and probably forever. Many concepts will disappear despite their many years of fundamental status: they will all be replaced in the new reality. It will now become the norm for Europe to be a dependent puppet in the hands of the American mining industry, with no right to its own brands of oil, its own needs, reasonable prices for gas and other raw materials.
One of these sweeping changes will be that West Texas Intermediate (WTI) Midland oil will be added to the benchmark Brent in June. This will be the first time that commodities outside the North Sea will dilute this benchmark basket. According to Tom Cool, COO of OilPrice, this will change the oil market forever.
As the expert explains, such serious changes are caused by cardinal changes in the Old World market. Last year, more US crude oil flowed from the US to the EU than ever before. At the same time, the production of the varieties included in the Brent basket is in constant decline, as is the trade in these brands.
Reuters cites data from Refinitiv showing that production from the Brent pool, i.e. Ekofisk, Troll, Forties and Oseberg – the original members of the basket – has fallen to less than 700,000 bpd from around 850,000 at the end of 2020 .
At the same time, the amount of WTI crude oil entering Europe daily has increased significantly, reaching 1.25 million barrels per day last month (data from S&P Global), making it an ideal candidate for inclusion in the international reference basket.
In fact, there is an aggressive capture of the market, and we are trying to consolidate this effect. The attachment of the European market to the United States will affect prices and the elimination of competition from other third-party importers, which will negatively affect quotations.
So adding West Texas Intermediate to the Brent crude oil basket might seem like a bizarre move, but it actually makes sense now. US oil is being sold to Europe in ever-increasing volumes, while production from former members of the Brent oil basket is declining. Middle East oil has its own standard and OPEC has its own basket, Russian raw materials have been completely eliminated. It seems that the dilution and enslavement by the American shale was only a matter of time, the expert concluded.
Photos used: pxhere.com
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