Word of the Week: Brent crude oil prices are soaring — but what does ‘Brent’ actually refer to?

The Turbulent Journey of Brent Crude Oil

As conflict between the US, Israel, and Iran intensifies throughout the Middle East, the oil market has been thrown into turmoil. This week, the price of Brent crude oil—often affectionately referred to as “Brent”—has experienced dramatic swings, reaching heights not seen in years before tumbling and rebounding repeatedly.

And it’s only midweek. The volatility has left many market watchers feeling sympathy for “Brent,” whose value has been on a wild ride.

Understanding Brent: The Global Oil Benchmark

If you’re not immersed in the world of commodities or energy trading, you might not know that “Brent” refers to Brent crude oil, the most widely recognized benchmark for pricing oil internationally. Brent’s price serves as the reference point for much of the world’s oil, while West Texas Intermediate (WTI) is the primary standard for US crude.

However, the mechanisms behind oil pricing are complex, and Brent’s story is particularly intricate—especially now, as the Iran conflict adds further uncertainty.

The Origins of Brent Crude

Brent crude originally came from Shell UK’s Brent oil field, a joint venture with Esso, located off the Shetland Islands in the North Sea. The field’s name was inspired by the “brent goose,” following Shell’s tradition of naming oil fields after water birds in alphabetical order—Brent followed Auk and preceded Cormorant after its discovery in 1971.

A brant goose (Branta bernicla) along the North Sea coast, April 13, 2023. - Wolfram Steinberg/picture alliance/dpa/Getty Images

The brent goose, sometimes called the brant, is a small migratory bird that winters along Britain’s shores. There’s an old, though unverified, theory that the bird’s name comes from “brand,” referencing its dark, smoky feathers. While “brant” was the more common spelling in earlier centuries and remains prevalent in the US, British usage shifted to “brent” in the late 1700s, according to the Oxford English Dictionary.

Brent’s Evolution into a Market Standard

Over time, Brent crude became more than just oil from a single field. When Shell began trading Brent oil in the 1980s, it quickly became a key reference for traders. Its North Sea origin made it easily accessible to Europe, Africa, and the Middle East, notes Adi Imsirovic, a veteran oil trader and author of “Brent Crude Oil: Genesis and Development of the World’s Most Important Oil Benchmark.”

This accessibility and transparency helped Brent become the world’s leading oil benchmark, with prices for other oil grades often calculated in relation to Brent.

Brent’s Transformation and the Rise of Oil Trading

An oil platform en route from Stavanger, Norway, to the Brent field, August 5, 1975. - PA Wire/Getty Images

By the 1990s, as global demand for oil surged, the Brent field’s output began to decline, limiting supply. Yet by then, Brent had become much more than a source of crude—it was the foundation for a sophisticated network of futures and forward contracts, providing vital risk management tools for the industry, explains Liz Bossley, a seasoned oil trader and CEO of Consilience Energy Advisory Group.

To keep the benchmark relevant, the definition of Brent was broadened to include oil from additional North Sea fields. The last of the original Brent platforms ceased operation in 2021. Today, Brent is less a specific oil and more a brand representing a suite of contracts—spot, forward, futures, swaps, and options. Shell, Intercontinental Exchange, and S&P Global Energy each play roles in managing the Brent market, though control remains a subject of debate.

Nowadays, a tanker labeled as “Brent” may actually contain oil from West Texas rather than the North Sea. The US only began exporting its own crude in 2015, and since then, oil from Texas’s Permian Basin has reached Europe and beyond, while North Sea production has waned.

Instead of replacing Brent with a new North American benchmark, the industry incorporated WTI Midland, a US oil grade, into the Brent complex in 2023.

Bossley notes, “If you purchase a Brent contract today, there’s a better than even chance you’ll receive WTI Midland oil. So, is Brent still a UK or Norwegian market? In reality, it’s often a US market now, since most deliveries are WTI Midland.”

This inclusion of US oil has made Brent’s quality more variable, requiring traders to adjust prices accordingly. The blending of US and European interests has also shifted Brent’s perceived neutrality. “Now, those with political or economic stakes may see Brent differently than before,” Bossley observes. “It could even fall under the influence of US leadership.”

Geopolitics and Brent’s Recent Volatility

Recent price swings are tied to decisions by President Donald Trump, whose actions against Iran have prompted threats from Tehran to attack any vessel passing through the Strait of Hormuz—a vital passage for about 20% of the world’s oil. CNN’s Natasha Bertrand reported that Iran has begun laying mines in the strait, severely restricting shipping. As a result, oil storage is backing up and producers in the Persian Gulf have sharply reduced output. This supply crunch, and the fear of further disruptions, is pushing up prices for gasoline, air travel, and, fundamentally, Brent crude.

The Parnassos crude oil tanker anchored in Muscat, Oman, March 10, during a near-halt of traffic through the Strait of Hormuz. - Benoit Tessier/Reuters

Bossley, who has witnessed previous crises from the Iranian Revolution to the Iraq wars, notes that while Iran has often threatened to close the Strait of Hormuz, this is the first time in modern history it has effectively done so. “Even though the Persian Gulf’s share of global oil supply has diminished, it remains significant. Losing 20% of supply will send prices soaring,” she says.

Patrick De Haan, head of petroleum analysis at Gas Buddy, likens the situation to a bidding war: “There’s only so much oil available, so the highest bidder wins. Countries most affected by the Strait’s closure are willing to pay more, which drives up prices for everyone.”

Other Factors Shaping Brent’s Future

Additional technical factors are also at play. As the US administration seeks to counter rising oil prices, there’s speculation about tapping the Strategic Petroleum Reserve (SPR), the world’s largest emergency oil stockpile, though officials have so far denied such plans.

Bossley points out that the SPR’s oil is not the same grade as WTI Midland and isn’t part of the Brent system, but it could be blended with Brent-approved oil for export. If this happens, a significant portion of Brent supply could disappear.

She asks, “If the SPR is released, where does it go? And if its quality differs from Permian Basin WTI, does that mean WTI can no longer be part of Brent? The market is facing considerable uncertainty.”