Brent vs. WTI Crude Oil: Key Differences and Why WTI Trades Lower

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WTI vs. Brent compares the two benchmark prices used to value most of the world’s crude oil. Brent is the international benchmark, priced from waterborne crude loaded in the North Sea. West Texas Intermediate (WTI) is the U.S. benchmark, priced at an inland storage hub in Cushing, Oklahoma. The two oils are chemically similar. Both are light and sweet, and WTI is actually slightly lighter and sweeter. WTI still usually trades below Brent because of where it is delivered, not what it is. A barrel sitting in landlocked Oklahoma has to be piped to the coast before it can reach a global buyer, and that transport cost and congestion risk is subtracted from its price.

What Brent crude is

“Brent” originally referred to a single oil field east of the Shetland Islands in the UK North Sea. Shell named its fields there after seabirds, and Brent is a type of goose. As output from the original field declined, the benchmark was broadened into a basket of North Sea grades (Brent, Forties, Oseberg, Ekofisk and Troll) so that enough physical cargoes changed hands each day to produce a reliable price. In 2023 the basket was expanded again to include WTI Midland, a U.S. crude from the Permian Basin in Texas that is shipped across the Atlantic. Today a U.S.-produced oil can set the Brent price on a given day.

The physical benchmark, known as Dated Brent, is assessed daily by S&P Global from actual cargo transactions for shipments loading 10 to 30 days ahead. That link to real deals, rather than purely financial trading, is a large part of why Brent became the main reference price for global oil. Brent futures trade mainly on the Intercontinental Exchange (ICE) and are cash-settled rather than delivered.

Because Brent is produced offshore and loaded straight onto tankers, it can reach refineries in Europe, Asia or Africa without crossing a continent first. That seaborne access is the core of its pricing advantage.

What WTI crude is

West Texas Intermediate is a light, sweet crude blend produced in U.S. fields, historically in Texas and surrounding states. It is the standard benchmark for U.S. oil, and when an American news report or brokerage screen quotes “crude oil” without naming a grade, it usually means WTI.

WTI futures trade on NYMEX, with each contract covering 1,000 barrels. Unlike Brent futures, they settle by physical delivery at Cushing, Oklahoma, a pipeline junction with a large concentration of storage tanks. Anyone still holding a contract at expiry must take or make delivery of real oil in Cushing. As a result, how full the tanks are there feeds directly into the futures price.

For four decades WTI was almost entirely a domestic price. U.S. law banned most crude exports until December 2015. Once the ban was lifted, U.S. crude began moving to overseas buyers, and WTI’s role as an international price signal has grown since. The shale boom of the 2010s added to its weight, although Brent still prices a larger share of global crude trade.

Brent vs. WTI at a glance

Why WTI trades lower than Brent

Refiners generally pay more for lighter, lower-sulfur crude because it is easier and cheaper to turn into gasoline, diesel and jet fuel. Heavier, higher-sulfur oils such as Venezuelan crude or Canadian oil sands bitumen need more processing. On quality alone, WTI should be worth at least as much as Brent. Several other factors pull its price down.

Transportation cost. WTI is priced inland. To sell it on the world market, the oil has to travel by pipeline from Cushing to the Gulf Coast and then by tanker. Brent is already at sea. The extra leg is a real cost, and buyers comparing the two barrels deduct it.

Storage and pipeline bottlenecks. Because WTI futures deliver into Cushing, a shortage of pipeline capacity out of the hub can trap oil there. When supply backs up, local prices fall relative to coastal benchmarks. This happened in mid-2018, when pipeline constraints pushed the spread above $6 per barrel.

The shale supply surge. Horizontal drilling and hydraulic fracturing sharply raised U.S. output in the 2010s. Much of that new oil arrived in the middle of the country faster than infrastructure could move it, which added to the glut at Cushing. Shale growth also helped drive the broader oil price collapse from above $100 to below $50 per barrel between 2014 and 2015.

Historical export limits. While the export ban was in place, U.S. producers could not freely sell into the global market, so domestic crude had to clear at domestic prices. The ban has since ended, but the pipeline-and-tanker route remains.

The discount is not a law of the market. Before the shale era, WTI often traded at a premium to Brent, and the current pattern is a reversal of that older relationship. Brent has generally held the premium since 2016.

How to read the spread

The Brent-WTI spread is simple to calculate:

Spread = Brent price − WTI price

Hypothetical example: if Brent trades at $82.00 per barrel and WTI at $78.50, the spread is $3.50. A positive number means Brent is at a premium. A rising spread means Brent is gaining relative to WTI (or WTI is weakening relative to Brent). A negative spread means WTI has moved above Brent.

When comparing the two, use the same contract month for both. Futures for different delivery months can differ meaningfully, and comparing a near-month WTI contract with a later Brent contract mixes the location spread with a timing spread.

When the benchmarks diverge

Most of the time Brent and WTI move in the same direction, because both respond to global demand, OPEC+ production decisions and the economic cycle. The spread captures the divergence between them: the part of crude price movement driven by local supply, transport and storage conditions rather than by the oil market as a whole.

Geopolitical shocks

Conflicts and supply threats in oil-exporting regions tend to hit seaborne crude first, so Brent usually reacts faster and more strongly than WTI. WTI is produced inland, away from shipping chokepoints, which insulates it to a degree. During crises the spread therefore tends to widen.

Russia’s invasion of Ukraine in February 2022 sent both benchmarks above $100 per barrel for the first time since 2014, and Brent reached $139.13 on March 7, 2022. The spread widened as European buyers looked for replacements for Russian crude and bid up seaborne supplies.

The April 2020 negative price

The most extreme divergence came during the pandemic. On April 20, 2020, the expiring WTI futures contract settled at −$37.63 per barrel, the first negative settlement on record. With demand collapsing and Cushing storage nearly full, holders of contracts close to expiry had nowhere to put physical oil and paid others to take it. Brent fell sharply too but closed at $19.33. Because it is cash-settled and seaborne, Brent could rely on floating storage and flexible shipping instead of a single inland hub. The episode shows what physical delivery at one location means in practice: when storage at that location runs out, the futures price can detach from the rest of the market.

The role of OPEC+

The OPEC+ alliance, which joins OPEC’s members with Russia and other large producers, controlled about 47% of global crude production in 2024. Its output targets move both benchmarks, and many national budgets depend on the resulting price, which makes the group a major geopolitical force. OPEC also publishes its own price, the OPEC Reference Basket, made up of its members’ crude grades. It is a third reference point and should not be confused with either Brent or WTI.

Which benchmark to use

There is no single best measure of crude oil prices. The right one depends on what you are measuring.

• For global oil prices, international trade or oil-importing economies outside North America, Brent is the more representative benchmark, since most internationally traded crude is priced against it.
• For U.S. energy companies, U.S. gasoline costs, or American inflation, WTI is more closely tied to domestic conditions. Oil is one of the inputs behind the swings in U.S. inflation by year.
• For trading products, check which benchmark the instrument actually tracks. Many brokers and CFD platforms label WTI as “US Oil” or “USOIL” and Brent as “UK Oil” or “UKOIL.” The labels refer to the benchmarks, not to oil consumed in each country. An oil ETF or futures position tied to WTI carries Cushing delivery and storage risk that a Brent-linked one does not.

When analyzing an oil producer’s earnings, the benchmark matters too. A company selling barrels at prices linked to WTI realizes less per barrel than one selling into Brent-linked markets when the spread is wide. That difference flows straight into revenue, which is why the spread appears in fundamental analysis of energy stocks.

FAQs

The Bottom Line

Investors, traders and anyone tracking energy costs should match the benchmark to the question: Brent for global prices and international trade, WTI for U.S. companies, gasoline costs and inflation. Before buying an oil ETF, futures contract or CFD, check which benchmark it tracks, since WTI-linked positions carry Cushing delivery and storage risk. For oil producers, a wide spread lowers revenue per barrel on WTI-linked sales.