Trader’s guide to Brent crude oil

What is Brent crude oil?

Brent crude oil – also known as Brent Crude, is one of the most commonly traded types of crude oil along with US crude oil. It’s a light and sweet crude oil first extracted from the North Sea in 1976 and is now used as a benchmark to price about 80% of crude oil contracts worldwide. Brent crude is refined into products like gasoline, diesel, and kerosene.

Today, Brent crude oil refers to a broader oil market in the North Sea, called the Brent Complex, which includes crude oil from several fields between the UK and Norway. As of 2023, this also includes oil from Texas, due to declining production in the North Sea.

Brent crude’s light properties refer to its low density, and its sweet properties refer to its low sulphur content, making it easier to refine.

What are the differences between Dubai, Brent and US crude oil?

The three primary benchmarks of crude oil are Brent crude oil, US crude oil and Dubai crude oil.

Here’s a comparison table of the key differences between the three primary types of crude oil.

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What is Brent crude oil’s price history?

Brent crude oil’s price history dates back to the 1980s, when the physical over-the-counter market emerged with privately negotiated contracts like forwards and oil swaps. In June 1988, the International Petroleum Exchange (IPE) introduced Brent crude oil futures, creating a transparent and regulated market for North Sea oil trading. In the 1990s, the ICE Brent Index was launched to provide a benchmark settlement price for Brent futures based on physical cargoes of crude oil.

Emerging economic powerhouses like China and India significantly increased global demand for crude oil in the early 2000s, pushing prices to record levels. By 2008, Brent crude oil hit an all-time high of $147.50 per barrel, driven by soaring demand and speculative trading. However, the global financial crisis later that year led to a sharp collapse in prices, with Brent crude falling to just below $40 per barrel. This dramatic drop highlighted the oil market’s sensitivity to broader economic conditions, illustrating how external factors like financial crises can drastically impact oil prices.

The 2010s were marked by increased volatility in the Brent crude oil market. The surge in US shale oil production created a significant price gap between Brent and US crude oil (WTI), with Brent often trading at a premium. Geopolitical events such as the Arab Spring in 2011 and tensions between Iran and the United States further contributed to price fluctuations.

In 2020, the Covid-19 pandemic caused a dramatic drop in global oil demand, briefly pushing Brent crude prices to multi-year lows. As economies reopened and geopolitical tensions increased, particularly with the conflict in Eastern Europe, Brent crude prices rebounded sharply.

In 2024, the Brent crude oil market continues to evolve, facing new challenges from the global shift toward cleaner energy sources and ongoing geopolitical instability. Despite these changes, Brent crude oil remains a key benchmark in the global oil market.

What factors might affect Brent crude oil’s live price?

Here are some of the key factors that might influence the Brent crude oil live price:

North Sea production levels

Brent crude oil is primarily sourced from North Sea oil fields and production levels in this region directly impact its supply (and price). Maintenance schedules, new field discoveries and technological advancements may increase supply which could potentially lower prices. Conversely, the depletion of existing oil fields can reduce production levels, potentially leading to higher prices due to decreased supply.

Economic conditions

Economic growth in major economies like China, the United States, and Europe can boost industrial production and consumer spending, increasing oil demand and potentially causing prices to rise. On the other hand, economic slowdowns or recessions can reduce demand for oil, leading to lower prices due to decreased consumption. Since Brent crude oil serves as a benchmark for European oil markets, economic conditions in Europe also play a significant role in determining demand and prices.

Geopolitical tensions and events

Brent crude oil prices are particularly sensitive to geopolitical tensions or conflicts in oil-producing regions, including the Middle East and North Africa. Political instability, conflicts and international sanctions can disrupt oil supply chains, causing price volatility. Conversely, peaceful resolutions or increased cooperation among nations may stabilise or lower prices by alleviating supply disruptions.

OPEC+ decisions

The Organisation of the Petroleum Exporting Countries (OPEC) and its allies – collectively known as OPEC+ – play a major role in controlling global oil supply. Decisions regarding production quotas and output levels can significantly impact Brent crude oil prices. Announcements of production cuts can reduce supply, leading to higher prices due to scarcity. Conversely, decisions to increase production can boost supply, potentially lowering prices due to increased availability.

What are the Brent crude oil trading hours?

Brent crude oil is traded on the Intercontinental Exchange (ICE). Its trading hours are Monday to Friday from 11:00pm to 10:00pm UTC the following day – with a two hour break each day beginning at 10:00pm UTC.*

If you choose to trade CFDs, you can follow the Brent crude oil performance live in US dollars with our comprehensive Brent crude oil price chart.

Monitoring the commodity’s activity can help you to keep an eye out for any key fundamental or technical events that may affect short-term movements in its value.

*Trading hours may differ depending on national holidays and daylight savings time.

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How to trade Brent crude oil with CFDs

Brent crude oil is a commodity that can be traded either on spot markets or via derivatives like CFDs, which derive their value from the underlying asset. For those dealing with physical contracts, significant costs such as storage and transportation may arise, potentially causing financial strain due to unexpected fees or delivery obligations.

To avoid these challenges, contracts for difference, or CFDs, allow speculation on Brent crude oil prices without owning the asset. A CFD is a contract where one party agrees to pay the difference between the opening and closing prices of the asset.

CFDs offer the choice of using leverage, or margin trading, allowing you to control larger positions with less capital, which can enhance potential gains but also amplifies risks. Additionally, CFDs enable traders to go long (profiting from rising prices) or short (profiting from falling prices), providing flexibility in both bull and bear markets.

How to trade Brent crude oil with futures

You can also trade Brent crude oil using futures. Futures contracts are agreements to buy or sell crude oil at a specified price on a set future date. These contracts are standardised and traded on regulated exchanges, such as the ICE or NYMEX. Futures are typically used by both speculators and producers to hedge against future price changes, and they involve a firm obligation to fulfil the contract at expiration, unless closed out beforehand.

When you trade a futures CFD, you're speculating on the price movement of a futures contract without actually entering into the physical futures contract itself. This allows you to trade futures in a more flexible way, benefiting from leverage and smaller capital requirements, but without the obligation of settlement that comes with holding a physical futures contract to expiry.

Traders interested in Brent crude oil might also look into shares issued by energy sector companies involved in the production, refining and distribution of crude oil in the North Sea – such as BP and Shell. ETFs, options and mutual funds are also potential ways of gaining exposure to this commodity.

You can learn more about trading commodities with Capital.com in our comprehensive guide to commodity trading.

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