The approval paves the way for Midland-quality WTI crude to be included in Argus North Sea dated from May 2023
London/Houston, 22 November 2022
Global commodity price reporting agency Argus will include light sweet Midland WTI crude shipments in its assessment of North Sea Dated crude prices from May 2023. Following extensive industry consultation, Argus has published a list of 12 US Gulf coast terminals from which exports of Midland WTI to Europe are eligible for consideration in the price discovery process. The Argus list is also referenced in industry standard trading terms.
The future of Brent as a global crude benchmark has been called into question as the volume of light sweet crude available for delivery into the basket has declined sharply over the past two decades, despite the addition of other European grades. The removal of US crude export restrictions in 2015 has seen US exports of Midland WTI to Europe swell to 1.14mn b/d so far in 2022, significantly more than the production of the entire basket of crude streams currently contributing to the Brent marker -- Brent, Forties, Oseberg, Ekofisk, and Troll, which together produce only some 670,000 b/d. Midland WTI is a similar quality crude to the existing light sweet grades in the Brent basket. And the unrivalled liquidity and transparency in the markets for WTI at US trading hubs Houston and Midland have cemented the grade’s status as a key source of global crude oil price discovery.
Argus Media chairman and chief executive Adrian Binks said: “We have worked closely with market participants to address the North Sea liquidity issues and indeed first suggested including Midland-quality WTI into the basket in 2019. By incorporating cargoes of US Midland WTI crude delivered to Europe in our assessment together with the publication of approved export terminals, we will greatly expand the number of bids, offers and trades that will be considered.”
The approved terminals from which cargoes of Midland WTI loading for delivery to Europe will be eligible for inclusion in the Argus North Sea Dated assessment are:
Houston/Texas City/surrounding area
- Enterprise Houston Ship Channel (EHSC)
- Energy Transfer Houston Terminal (ETHT)
- LBC Bayport (Seabrook)
- Enterprise Texas City
- Enterprise Freeport
Corpus Christi/Ingleside
- Epic
- Enbridge Ingleside
- Flint Hills Resources
- Nustar Corpus Christi North Beach
- Pin Oak
- Buckeye Texas Hub
- South Texas Gateway
The use of Argus-approved terminals is explicitly referenced in the STASCO BFOETM 2022 contract published by Shell, which sets out terms and conditions that can be used by market participants for trading North Sea crude on a forward basis. The contract terms add Midland WTI to the basket of grades that can be supplied as physical settlement of forward North Sea positions. But to be eligible for inclusion in the Brent complex, Midland WTI cargoes must be nominated from one of the loading terminals approved by either Argus or its competitor S&P Global.
Argus assesses prices for WTI on a cif Rotterdam basis, and it is this price that will be included in the North Sea Dated assessment process from May 2023. Argus also assesses prices for WTI at Midland and Houston, which are the standard benchmarks for domestic US pipeline transactions. Argus further assesses Midland WTI on an fob US Gulf coast basis for export cargo sales.
The 12 terminals were selected because they regularly export Midland-quality WTI in line with Argus’ methodology. The Argus Media Texas Ports guide contains further key information about key US Gulf coast export terminals, including the 12 approved for consideration in the price discovery process.