Benchmarks, Grades, and Differentials
Physical crude trades as a differential to benchmark futures, with quality and location converting Brent/WTI references into cargo-level pricing.
Core Points
- Benchmark futures anchor pricing, but cargo economics are set by grade-specific differentials.
- API gravity, sulfur, and yield profile determine refinery value.
- Prompt spread and freight shifts can move differentials faster than headline benchmarks.
Case Studies
Case: Middle East Sour Grade Repricing
When refinery demand for sour barrels rises, official selling prices and spot differentials can widen even if Brent is flat.
Case: Atlantic Basin Arbitrage Window
A temporary Brent-WTI structure shift opened Atlantic arbitrage into Europe, tightening vessel availability and changing crude slate choices.
References
Last reviewed: 2026-03-21