In the context of global oil prices, 'Brent crude oil' is frequently referred to in the news. What d

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UPSC Prelims is a competitive examination conducted in India. This question is from the 2011 UPSC Prelims Economy paper.

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Question

In the context of global oil prices, 'Brent crude oil' is frequently referred to in the news. What does this term imply?It is a major classification of crude oil.It is sourced from North Sea.It does not contain sulphur.Which of the statements given above is/are correct?

Accepted Answer

Correct Answer: B — 1 and 2 onlyStep-by-step Solution:Brent Crude Oil is one of the most important benchmarks in global oil trading. Understanding it is essential for anyone following global economic news.Statement 1 — It is a major classification of crude oil: This is correct. Brent crude is one of the world's three major oil price benchmarks: (1) Brent Crude — the global benchmark, primarily representing North Sea oil; prices approximately 65–70% of the world's oil contracts; (2) WTI (West Texas Intermediate) — the US benchmark; typically slightly lower than Brent; (3) Dubai/Oman Crude — benchmark for Middle Eastern oil supplies to Asia. Brent is the dominant global benchmark used for pricing most international oil trades. ✓Statement 2 — It is sourced from the North Sea: This is correct. Brent crude was originally extracted from the Brent oilfield in the North Sea (between Scotland and Norway). The name 'Brent' comes from Shell's naming convention — oil fields named after birds (Brent is a type of goose). Brent crude now represents a blend of crudes from several North Sea oilfields (Brent, Forties, Oseberg, Ekofisk, Troll — the 'BFOET basket'). ✓Statement 3 — It does not contain sulphur: This is incorrect. Brent crude DOES contain sulphur — but it is classified as 'low-sulphur' or 'sweet' crude (sulphur content approximately 0.37%). 'Sweet' crude has less than 0.5% sulphur; 'sour' crude has more than 0.5% sulphur (like Middle Eastern heavy crude — Dubai crude, Saudi Arabian Heavy). Brent's relatively low sulphur content makes it easier and cheaper to refine into petrol and diesel compared to sour crudes. However, it definitely CONTAINS sulphur — the statement that it 'does not contain sulphur' is factually wrong. ✗Key Concept: Oil classification: API gravity (lighter/higher API = easier to refine, commands higher price); Sulphur content (sweet = low sulphur, sour = high sulphur); Brent = light, sweet; WTI = light, sweet (even lighter/sweeter than Brent); Heavy crudes (Venezuela, Canada tar sands) = heavy, sour. India's oil imports: India imports ~85% of its crude oil needs; major suppliers: Iraq (~25%), Saudi Arabia (~20%), UAE, Russia (significantly increased since 2022), USA; India buys at discounts from Russia since 2022 Ukraine sanctions; India's own production: Bombay High (ONGC), KG Basin, Assam. The Brent price is quoted in US dollars per barrel (1 barrel = 159 litres).

In the context of global oil prices, 'Brent crude oil' is frequently referred to in the news. What does this term imply?It is a major classification of crude oil.It is sourced from North Sea.It does not contain sulphur.Which of the statements given above is/are correct?

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In the context of global oil prices, 'Brent crude oil' is frequently referred to in the news. What does this term imply?It is a major classification of crude oil.It is sourced from North Sea.It does not contain sulphur.Which of the statements given above is/are correct?

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