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LONDON: S&P Global Platts will include U.S. crude oil grade WTI Midland in its Brent price assessment from June 2023, the commodities pricing agency said on Wednesday, as it bolsters the physical supply underpinning the global benchmark.

Dated Brent, the underlying contract for Brent futures traded on the Intercontinental Exchange (ICE), is currently based on five North Sea crudes - Forties, Brent, Oseberg, Ekofisk and Troll - of which supply is in long-term decline.

WTI Midland crude is produced in the United States and will be the first grade from outside the North Sea to be included in Brent, which is used to price more than half the world’s physical trades. The last addition was Norway’s Troll in 2018.

“The inclusion will help ensure a stronger and more robust Brent complex for the decades ahead,” Platts Global Head of Established Benchmarks Vera Blei said in a statement.

The statement follows Platts’ latest proposal in February to tweak the benchmark.

US crude, distillate inventories rise: EIA

As well as dated Brent, its plan covers the wider Brent complex of forwards and swaps. Platts said it would finalise the methodology for Cash BFOE, a forward market, in coming months.

The dated Brent assessment will remain on a free-on-board basis (FOB), Platts said. Its initial proposal last year to add WTI Midland and shift to a cost, insurance and freight (CIF) basis met with a backlash from traders and reluctance from ICE.

“Platts will reflect bids, offers, and transactions of WTI Midland on a CIF Rotterdam basis in its Market on Close assessment process as per current guidelines,” it said.

“A value for an FOB-equivalent cargo of WTI Midland in the North Sea will be derived by a calculation of an evenly weighted average of freight values for the five existing ports of Sullom Voe, Hound Point, Sture, Teesside, and Mongstad.”

The agency will also increase the physical cargo size to 700,000 barrels from the current 600,000. The last time it changed the cargo size was two decades ago.

Thomson Reuters competes with Platts in the provision of news and price assessments about the oil market.

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