Brent crude oil is a popular energy resource and is one of the most traded commodities across the globe. It's also one of the many available to trade with Tradu.
View our real-time Brent crude oil price charts and begin trading with Tradu today. Or, read on to learn about its unique properties, what makes it so popular, and how to trade this in-demand commodity.
Brent crude is an oil classification within trading and is a major benchmark for oil prices across the globe. It's regarded as a high-quality oil and features a low sulphur content. It's also classed as a light and sweet oil, meaning it’s relatively easy to process into other products like diesel.
Although Brent crude oil is used in pricing up to two-thirds of the world's oil, there are various other classifications including Shanghai crude, Dubai crude and West Texas Intermediate (WTI).
Brent crude consists of a variety of blends of oil from the North Sea fields of Brent, Forties, Oseberg, Ekofisk and Troll.
WTI crude is also used as a major benchmark in oil pricing, but, although classed as a lighter and sweeter oil than Brent crude, it's more expensive to transport due to its landlocked position in Texas, North America.
Brent crude oil is extracted from the North Sea, between the Shetland Islands and Norway, and is transported via an underwater pipeline to the Sullom Voe oil terminal. From here, it's shipped by tanker across the world.
The properties of the oils differ slightly, with WTI being composed of slightly less sulphur and having a marginally higher gravity than Brent crude.
Discover more in our guide on how to trade WTI oil.
Brent crude oil was first discovered in the North Sea in the mid-19th century, but extraction didn't begin until the 1970s with the construction of the initial pipeline. The area is referred to as the Brent oil and gas field, owned and operated by Shell and Esso Exploration and Production UK. Throughout operations, the Brent field has produced approximately three billion barrels of oil equivalent.
However, the decommissioning of this field is underway, with almost all reserves having been extracted. This process is likely to take around 10 years to complete.
Because this type of oil is easily refined, it's commonly used to produce diesel and petrol. The Brent crude blend is exported across the world, with the Netherlands being the largest importer from the UK.
This oil is one of the most popular commodities in the global market with both private traders and retailers for two main reasons:
Commodities like Brent crude oil often hold their value, even during economic uncertainty, and they're commonly used by traders to hedge against inflation. However, as with any market, traders can still find themselves exposed to high degrees of risk and volatility.
The popular commodity is traded via futures on the New York Mercantile Exchange (NYMEX) in the US and on the Intercontinental Exchange (ICE) in Europe. The value is priced in US dollars and one contract is equivalent to 1,000 barrels of oil. Please note you cannot trade futures or options with Tradu; their inclusion here is for informational purposes only.
The Brent Index is used to calculate the cash settlement value using the average trading prices of 600,000 barrels.
There are several different ways to trade this commodity, depending on your preference and level of experience. The most used methods for trading Brent crude oil involve derivatives and speculating on the future price of the asset.
Contracts for difference (CFDs) can be used to speculate on the market price of Brent crude oil. You decide whether you think the price will increase or decrease and either buy or sell a CFD, which tracks the underlying price.
If the price point moves in your predicted direction, you'll make a profit. But if it moves in the opposite direction, you'll make a loss.
CFDs allow you to use leverage, so you can open a position with a fraction of the trade value. This can increase your potential profit but can also magnify any losses.
Trading is also possible via company stocks. This is an example of how you might invest in Brent crude oil over a longer period rather than executing short-term trades.
However, this doesn’t allow you to speculate on falling markets. You will also need to be aware of other factors that could affect the company you invest in.
The price of Brent crude oil has fluctuated, sometimes rather dramatically, in the past few decades due to a variety of factors. In January 2023, the average yearly price of Brent crude oil was $82.50 per barrel. However, in 2022, the average price hit $100.93 due to the Russia-Ukraine conflict. High demand and threatened supply were key reasons for this huge rise.
As with any market, the two major factors that influence the price of this commodity are supply and demand.
Because Brent crude oil is a fossil fuel with limited reserves, the global supply is set to decline. According to recent data, the UK's production of crude oil is set to fall from 37.3 million metric tons to 12.6 million by 2040. Demand, therefore, is projected to outweigh supply by almost five times.
But these are not the only aspects that can affect the price of Brent crude oil:
Trading of Brent crude oil can take place between 11pm Sunday to 10pm Friday, UK time. The market trading times for other crude oils, such as WTI, are likely to differ due to the time difference on the NYMEX.
Like any commodity, there are advantages and disadvantages to trading Brent crude oil. Some of the pros include:
However, it's important to also be aware of the potential disadvantages when trading this commodity:
Ready to begin trading this popular commodity? It's easy with Tradu.
Discover more with our commodities resources: