Oil markets have a vocabulary all their own — a mix of geology, shipping, finance, and futures-market jargon. This glossary defines the terms you'll encounter most often in Brent and WTI reporting, futures trading, and energy investment analysis. Entries are organized alphabetically.
A
API Gravity: A measurement of how heavy or light a petroleum liquid is compared to water, developed by the American Petroleum Institute. Crude with an API gravity above 31.1° is classified as light; between 22.3° and 31.1° is medium; below 22.3° is heavy. Brent crude has an API gravity around 38°, making it a light crude.
Arbitrage: The simultaneous purchase and sale of an asset in different markets to profit from a price difference. In oil, common arbitrages include the Brent-WTI spread and the trans-Atlantic refined product flow.
Asset-Backed Crude: Crude oil purchased with a long-term offtake commitment, often used by sovereign lenders to secure repayment of infrastructure loans.
B
Backwardation: A futures market structure in which front-month contracts trade at a premium to later-dated contracts. Backwardation typically signals tight physical supply or strong near-term demand. The opposite of contango.
Barrel (bbl): The standard unit of measurement for crude oil, equal to 42 U.S. gallons or about 159 liters. The "bbl" abbreviation predates the standardization and originally stood for "blue barrel," used by Standard Oil to distinguish its containers.
Basis: The price difference between a specific physical crude grade and its benchmark futures price. For example, a Nigerian Bonny Light cargo priced at "Dated Brent + $1.20" has a basis of plus $1.20.
Benchmark Crude: A reference grade against which other crude oils are priced. Brent, WTI, and Dubai/Oman are the three principal global benchmarks.
BFOET: The basket of five crude streams — Brent, Forties, Oseberg, Ekofisk, and Troll — that physically settle the Dated Brent benchmark. The basket has expanded over time as North Sea fields decline.
BNO: Ticker symbol for the United States Brent Oil Fund, an ETF that tracks Brent crude futures and is the most accessible Brent-specific instrument for U.S. retail investors.
Brent Crude: A light, sweet crude oil sourced from fields in the North Sea. Brent is the most widely used pricing benchmark for crude oil, referenced in roughly two-thirds of internationally traded oil contracts.
C
Cargo: A standard physical shipment of crude oil, typically 600,000 to 2 million barrels depending on vessel size.
Cash Settlement: Settlement of a futures contract by paying the difference between the contract price and the final settlement price, rather than delivering or taking delivery of physical barrels. ICE Brent futures settle financially against the Brent Index.
Choke Point: A narrow maritime passage through which a significant share of global oil shipments must pass. The Strait of Hormuz, the Bab el-Mandeb, the Strait of Malacca, and the Suez Canal are the most critical oil choke points.
Condensate: A very light hydrocarbon liquid that condenses out of natural gas streams. Often classified separately from crude oil because it requires different refining and is used in petrochemicals.
Contango: A futures market structure in which front-month contracts trade at a discount to later-dated contracts. Contango typically reflects abundant near-term supply or weak prompt demand. Storage arbitrage becomes profitable in steep contango.
Crack Spread: The price difference between crude oil and the refined products derived from it, usually gasoline and heating oil. The crack spread is a proxy for refining margins. The 3-2-1 crack spread (three barrels of crude to two of gasoline and one of distillate) is the most quoted version.
Crude Slate: The mix of crude oil grades that a refinery is configured to process.
D
Dated Brent: The physical benchmark used to price North Sea crude cargoes that have been assigned a specific loading date (a "date"). Dated Brent is published daily by Platts and is the reference price for most Atlantic-basin physical crude trade.
Demurrage: A penalty fee charged when a vessel is held beyond the agreed loading or discharging window. Demurrage costs spike during shipping disruptions or port congestion.
Differential: The premium or discount of a specific crude grade against its benchmark, reflecting quality differences and transport costs.
Distillate: Middle-of-the-barrel refined products including diesel, jet fuel, and heating oil. Distillate demand is closely tied to industrial activity and freight.
Downstream: The refining, distribution, and retail segment of the oil industry, as distinct from upstream (exploration and production) and midstream (transport and storage).
E
EIA: The U.S. Energy Information Administration, the federal statistical agency that publishes the most closely watched weekly U.S. crude inventory report (the Weekly Petroleum Status Report) every Wednesday.
Expiry: The date a futures contract ceases trading. Brent futures on ICE expire on the last business day of the month two months prior to the contract's delivery month.
F
Floor Price: An informal lower bound that producers or producer groups attempt to defend, often through production cuts. Saudi Arabia has historically signaled floor-price preferences for Brent.
Forward Curve: The series of prices for futures contracts of progressively later expiry, plotted as a curve. The shape of the forward curve (contango or backwardation) carries information about market balance.
Front Month: The nearest-expiry futures contract currently trading. Front-month Brent is the most liquid and most quoted contract.
Futures Contract: A standardized agreement to buy or sell a fixed quantity of an asset at a specified price on a future date. ICE Brent futures specify 1,000 barrels per contract, cash-settled against the Brent Index.
G
Gasoil: The European term for diesel and heating oil distillates. ICE Gasoil futures are a key European refined-products benchmark.
Glut: An informal term for a sustained oversupply condition, often coinciding with steep contango and rising inventories.
H
Heavy Crude: Crude oil with API gravity below 22.3°. Heavy crudes are denser, harder to refine, and typically trade at a discount to light crudes. Western Canadian Select and Venezuelan Merey are well-known heavy grades.
Hedging: The use of derivatives to offset exposure to physical oil prices. Airlines, shipping companies, and producers all hedge oil exposure using futures, swaps, or options.
I
ICE: The Intercontinental Exchange, which operates the primary trading venue for Brent crude futures. ICE acquired the International Petroleum Exchange in 2001.
IEA: The International Energy Agency, an intergovernmental body based in Paris. The IEA publishes the monthly Oil Market Report, a widely cited source of demand and supply forecasts.
Inventory Draw: A reduction in oil or refined-product stocks over a reporting period. A larger-than-expected draw is typically bullish for prices.
Inventory Build: An increase in oil or refined-product stocks. A larger-than-expected build is typically bearish for prices.
L
Light Crude: Crude oil with API gravity above 31.1°. Lighter crudes yield more high-value products like gasoline and distillate, and generally command a premium.
Long Position: A position that profits when prices rise. Buying a futures contract or shares of an oil ETF establishes a long position.
M
Marker Crude: Synonymous with benchmark crude. The reference grade against which others are priced.
Midstream: The transport, storage, and processing segment of the oil industry, including pipelines, tankers, and terminals.
N
NYMEX: The New York Mercantile Exchange, now part of CME Group, which operates the WTI crude futures contract.
O
OPEC: The Organization of the Petroleum Exporting Countries, founded in 1960. Member states coordinate production policy with the goal of stabilizing oil markets and supporting prices.
OPEC+: An informal grouping of OPEC member states plus several non-OPEC producers, most notably Russia, that has coordinated production policy since 2016.
Open Interest: The total number of outstanding futures or options contracts that have not been settled. Rising open interest alongside rising prices typically indicates new buying interest.
Options: Derivatives that grant the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a specified price. Brent options trade actively on ICE.
P
Paper Barrels: A trader's term for futures, swaps, and other financial oil instruments, as distinct from "wet barrels" (physical cargoes).
Platts: A division of S&P Global that publishes the Dated Brent assessment and many other physical oil price benchmarks.
Premium: The amount by which one price exceeds another. A grade trading "at a premium to Brent" is more expensive than the Brent benchmark.
R
RBOB: Reformulated Blendstock for Oxygenate Blending, the U.S. gasoline futures contract traded on NYMEX. The "RB" ticker prefix appears in futures quotes.
Refinery Utilization: The share of a refinery's capacity that is currently operating, expressed as a percentage. U.S. refinery utilization above 90% is considered tight.
Roll: The process of closing a near-expiry futures position and opening an equivalent position in a later-dated contract. Oil ETFs that hold futures must roll continuously, and roll cost is a major source of tracking error in contango markets.
S
Shale Oil: Oil produced from shale formations using horizontal drilling and hydraulic fracturing, primarily in the United States. Shale revolutionized U.S. production starting around 2010 and dramatically altered global supply dynamics.
Short Position: A position that profits when prices fall. Selling a futures contract without an offsetting long establishes a short position.
Sour Crude: Crude oil with sulfur content above 0.5%. Sour grades require more processing to meet fuel sulfur specifications and typically trade at a discount to sweet crudes.
Spare Capacity: Production capacity that can be brought online quickly (typically within 30 to 90 days) and sustained for an extended period. Saudi Arabia holds the bulk of global spare capacity.
Spot Price: The price for immediate physical delivery, as distinct from a futures price for forward delivery.
SPR: The U.S. Strategic Petroleum Reserve, a government-held emergency crude oil stockpile stored in salt caverns along the Gulf Coast. The SPR has been used to release oil during major supply disruptions.
Spread: The price difference between two related contracts. Common oil spreads include Brent-WTI (geographic), calendar spreads (different expiry months of the same contract), and crack spreads (crude vs. refined products).
Sweet Crude: Crude oil with sulfur content below 0.5%. Sweet grades are easier and cheaper to refine into low-sulfur fuels and command a premium. Brent and WTI are both sweet crudes.
T
Tanker: A ship designed to carry crude oil or refined products. Vessel classes include Aframax (80,000–120,000 deadweight tons), Suezmax (120,000–200,000 dwt), VLCC (200,000–320,000 dwt), and ULCC (above 320,000 dwt).
Tight Oil: Synonymous with shale oil — oil trapped in low-permeability rock formations that requires hydraulic fracturing to extract.
Time Spread: The price difference between futures contracts of different expiry months on the same underlying. Time spreads encode market views on short-term tightness or surplus.
U
UKOIL: A common ticker representation for spot Brent crude on TradingView and other charting platforms. Contract specifications differ from ICE Brent futures.
Upstream: The exploration and production segment of the oil industry, where crude is found and extracted.
USO: Ticker symbol for the United States Oil Fund, a WTI-tracking ETF and one of the largest oil funds by trading volume.
V
VLCC: Very Large Crude Carrier, a tanker class with a capacity between 200,000 and 320,000 deadweight tons, typically carrying around 2 million barrels of crude.
Volatility: The degree of price variation over time, often measured as annualized standard deviation of daily returns. Brent's implied volatility is tradable through ICE Brent options.
W
WTI: West Texas Intermediate, the U.S. crude oil benchmark. WTI is light, sweet crude delivered at Cushing, Oklahoma. WTI futures are the most actively traded oil contract by volume.
Wet Barrels: Trader slang for physical crude cargoes, as opposed to "paper barrels" (financial contracts).
Y
Yield: In refining, the share of refined product types produced from a barrel of crude. Yield depends on the crude grade processed and the refinery configuration.
Continue Learning
For broader context on these terms, see our guide to Brent crude oil, the introduction to reading oil price charts, and our historical price overview. Common reader questions are answered on our FAQ page.