The oil markets are buzzing about a newly introduced benchmark for medium sour crude oil. Crude oil benchmarks were introduced in the mid-1980s, led by West Texas Intermediate (WTI) and followed by North Sea Brent and Dubai. The WTI and Brent benchmarks are used to price about 75% of oil produced worldwide. For years, WTI crude pricing has been the de facto oil benchmark for oil imports into the US, based on light, sweet crude futures traded on the New York Mercantile Exchange. NYMEX is the world's most prominent platform for oil trading and WTI is the most-traded contract on NYMEX. Two pricing agencies lead the world in assessing oil prices, using different methodogies: Platts, a unit of McGraw-Hill Cos. Inc. (since 1909) and London-based, privately owned Argus Media Group (since 1979). Oil prices fluctuate based on market speculation through futures trading, rather than strictly on supply and demand. The WTI index is based on oil delivered to Cushing, Okla., and WTI pricing can be affected by local storage and pipeline capacity issues. Another drawback of the WTI benchmark is that not all the world's oil is high quality, light, sweet crude. Sour crude oil, containing sulfur, is produced everywhere, and BP says that as much as two-thirds of the world's crude supply is now sour crude. It typically trades at a discount on the WTI price, depending on sulfur content. Enter the new alternative benchmark. Argus launched its new Argus Sour Crude Index (ASCI) in May 2009, based on US Gulf coast medium-sour crude. Saudi Arabia's national oil company, Saudi Aramco, has used the WTI benchmark to price oil destined for the US since 1994, but announced in late October that it will implement the new ASCI benchmark for oil sales to the US beginning in January 2010. Last week, the Wall St. Journal reported that Kuwait was also considering moving to the new ASCI benchmark, quoting Kuwaiti officials who said that Kuwait is usually in line with Saudi Arabia and that "the switch is in our favor because it relatively reduces volatility in the WTI, and it is more transparent and reflects what is happening in the market." How many others will follow? Venezuela is a major oil exporter to the US; on Nov. 4, oil minister Rafael Ramirez said he agreed with the Saudi decision to abandon the WTI and that Venezuela might follow suit. And several Canadian companies are interested in the Argus benchmark for oil sands crude that may be sent into the US through TransCanada Corp.'s proposed 1,980-mile Keystone XL pipeline. The new benchmark appears to be a positive step toward stabilizing world crude pricing. It offers an alternative for sour crude trading and could lead to a more stable market and realistic pricing.