Crude Price Marker: How do refineries price their crude in Thailand?

Crude oil pricing is influenced by a range of factors, primarily supply and demand dynamics, and is often set using "marker" benchmarks, namely, Brent, West Texas Intermediate (WTI), and Dubai Crude. Prices fluctuate based on geopolitical events, changes in production levels, and economic data.

The quality of crude oil, such as its sulfur content and viscosity, also impacts pricing. Lighter, sweeter crudes like Brent and WTI generally command higher prices due to their easier refinement into products like gasoline. Heavier, sourer crudes like Dubai Crude are priced lower because of the additional processing required. Regional factors also play a role; for instance, oil prices in North America can be affected mainly by U.S. production or Canadian inventories, while prices in the Middle East may be influenced largely by OPEC's production quotas.

In Thailand two key markers that are widely used among refineries are Dubai Crude & Brent. As the crudes used in production in Thailand often come from the region that adopt these two markers as pricing benchmark.

1. The Dubai marker, often referred to as the Dubai Crude, is a key benchmark for traders to assess the oil price produced in the Middle East and Asia, particularly in the Gulf region. Dubai Crude is a medium-sour crude oil, meaning it has a higher sulfur content compared to light, sweet crude oils.

2. The Dated Brent marker is another important benchmark in the global oil market, primarily used for pricing crude oil in Europe and the North Sea. Unlike the Dubai marker, Dated Brent represents the physical oil delivered from the North Sea, which is a light-sweet crude oil, meaning it has a lower sulfur content and is more refined. Dated Brent is widely used by producers and refiners in Europe and around the world as a price reference for crude oil.

Both markers, Dubai and Dated Brent, are vital in the global oil trade, but they represent different regional pricing structures. Dubai Crude is more reflective of the pricing in Asia, whereas Dated Brent is more influential in Europe and the broader Atlantic market. These markers help in determining the market value of oil from different regions and act as essential reference points for oil traders and investors.

As mentioned above, there are adjustments that included into the crude price apart from the marker itself. What are them? And how each of them is assessed? We will discuss it in the upcoming blog next week!