Many say that the money makes the world go round. Undoubtedly it does, however, there is the Oil, the substance often referred as the Black Gold, which is far more precious than the world’s currencies. The difference between the money and the oil is simple, we may print notes nearly indefinitely, whereas, petroleum has its natural resources limit. The is nothing uncommon to say that the oil is invaluable. There have been several international crises and even wars in regards to petroleum extraction.
As surprising as it seems, the oil prices have a real impact on every dollar we spent on a daily basis, not only when we fuel up our vehicles on gas stations on our way home. Since the beginning of the previous century, the petroleum has become the most important feedstock on the planet. All of our industry, transportation, and numerous of products are dependent or fabricated from the oil. Most of the cars, trucks, airplanes, ships, boats and other means of transport need petroleum to run. The first ever oil refinery was set up in 1856 by Ignacy Lukasiewicz, a polish scientist who now is being described as the father of modern petroleum industry.
The oil is being extracted every day on the every continent around the globe. No surprise, the biggest extractors, and producers are either the OPEC (Organization of the Petroleum Exporting Countries) members or well-known petroleum potentates like China, Russia, Canada or the USA.. It must be stated that the OPEC countries are often seen as the biggest cartel in the world, which controls more than 40% of world’s oil resources. The majority of the OPEC’s production and fields are located in the strongly unstable region of the Middle East. Every turmoil in the area results in immediate oil prices rise.
“As of 2015, the 14 countries accounted for 43 percent of global oil production and 73 percent of the world’s “proven” oil reserves, giving OPEC a major influence on global oil prices. As of July 2016, OPEC’s members are Algeria, Angola, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia (the de facto leader), United Arab Emirates, and Venezuela. Two-thirds of OPEC’s oil production and reserves are in its six Middle Eastern countries that surround the oil-rich Persian Gulf.”
There are many different kinds of crude oil around the oil, however, the main three, which are considered to be prime benchmarks, are WTI (Western Texas Intermediate), Brent. and Dubai . Using benchmarks makes referencing types of oil easier for sellers and buyers. There is always a spread between WTI, Brent and other blends due to the transportation cost. This is the price that controls world oil market price. The oil is mainly sold in monthly future contracts, which every consists of 10 000 barrels or 1000 in Dubai. The barrel is about 159 liters. The derivatives of that type are traded on the Mercantile Exchanges, such as NYMEX.
The Brent Crude is seen as the finest and major benchmark for other blends of oil. It is the most expensive type of crude petroleum that is extracted from the North Sea and is a blend of four oils Brent Blend, Forties Blend, Oseberg and Ekofisk crudes (also known as the BFOE Quotation). It is used to price two-thirds of the world’s internationally sold crude oil deliveries. the Brent Crude is extracted by the ExxonMobile and Royal Dutch Shell, one of the biggest corporations in the world (Fortune 100). The current price of a Brent barrel is $44.27
The second most important crude of oil is the WTI (Western Texas Intermediate), an all-American type of a petroleum.
It is the underlying commodity of New York Mercantile Exchange’s oil futures contracts. The WTI is often the one which is referred as the oil price in the media, financial markets et cetera. This oil is extracted in the South of the USA by Texaco(Texas and Mexican Gulf) and then transferred to Oklahoma, which is the biggest US oil hub. The price of the WTI is often slightly lower than the Brent, at the moment being at the level of $41.80.
The last one from the main oil benchmarks is a Dubai Brent, also known as the Fateh Crude. It is obtained in the Middle East and Persian Gulf area. The oil is delivered to Asia and Australia section. The contracts for the Dubai Crude are limited to 1 or 2 months period (NYMEX). The current price for the crude is $40.71
Undoubtedly, the oil is one of the most important human’s resources. It has helped us to make a giant leap in the modern development. However, it is the feedstock that is rapidly vanishing. We, as the human race, will be forced to find a new way of fueling our means of transport and industry. We have designed the nuclear power engines to run our ships. And then, there is that South African guy named Elon, who came with an idea that he would do it his way. Without coal, without petroleum – only with electricity. Clean and gentle, we will is in the future if Mr. Tesla would’ve been proud.