Crude Oil Quality

The physical characteristics of crude oils differ.  Crude oil with a similar mix of physical and chemical characteristics, usually produced from a given reservoir, field or sometimes even a region, constitutes a crude oil "stream."   Most simply, crude oils are classified by their density and sulfur content.  Less dense (or "lighter") crudes generally have a higher share of light hydrocarbons -- higher value products -- that can be recovered with simple distillation.  The denser ("heavier") crude oils produce a greater share of lower-valued products with simple distillation and require additional processing to produce the desired range of products.  Some crude oils also have a higher sulfur content, an undesirable characteristic with respect to both processing and product quality.  For pricing purposes, crude oils of similar quality are often compared to a single representative crude oil, a "benchmark," of the quality class. 

The quality of the crude oil dictates the level of processing and re-processing necessary to achieve the optimal mix of product output.   Hence, price and price differentials between crude oils also reflect the relative ease of refining.   A premium crude oil like West Texas Intermediate, the U.S. benchmark, has a relatively high natural yield of desirable naphtha and straight-run gasoline.  Another premium crude oil, Nigeria's Bonny Light, has a high natural yield of middle distillates.  By contrast, almost half of the simple distillation yield from Saudi Arabia's Arabian Light, the historical benchmark crude, is a heavy residue ("residuum") that must be reprocessed or sold at a discount to crude oil.  Even West Texas Intermediate and Bonny Light have a yield of about one-third residuum after the simple distillation process. 

In addition to gravity and sulfur content, the type of hydrocarbon molecules and other natural characteristics may affect the cost of processing or restrict a crude oil's suitability for specific uses.  The presence of heavy metals, contaminants for the processing and for the finished product, is one example.  The molecular structure of a crude oil also dictates whether a crude stream can be used for the manufacture of specialty products, such as lubricating oils or petrochemical feedstocks. 

Refiners therefore strive to run the optimal mix (or "slate") of crudes through their refineries, depending on the refinery's equipment, the desired output mix, and the relative price of available crudes.  In recent years, refiners have confronted two opposite forces -- consumers' and government mandates that increasingly required light products of higher quality (the most difficult to produce) and crude oil supply that was increasingly heavier, with higher sulfur content (the most difficult to refine).

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