Crude oil remains the world’s primary energy source, making the price per barrel a critical factor in the global economy and industrial activity. This price fluctuates based on a complex interplay of supply, demand, and geopolitical factors. Understanding these elements is key to navigating the complexities of the oil market.
Brent Crude, extracted from the North Sea oilfield, serves as a benchmark for oil pricing in Europe. This light crude oil is transported via underwater pipeline to the Sullom Voe Terminal in Shetland before being shipped globally by tanker.
Beyond its role as a primary energy source, crude oil is a vital raw material in the production of plastics, cosmetics, and even pharmaceuticals. This versatility contributes to the continuous demand and subsequent price fluctuations in the oil market. The finite supply of crude oil coupled with ever-increasing global demand exerts constant upward pressure on prices, making it a critical commodity. Experts estimate that approximately 45% of crude oil is used in the manufacturing of primary materials.
Limited growth in the crude oil industry due to insufficient investment in exploration, extraction, and processing has resulted in a tight supply market. Global production struggles to meet the voracious demand from major economies like the USA, China, and India. This imbalance further exacerbates price volatility in the oil market.
Several types of crude oil exist globally, each with unique properties and corresponding prices. These variations originate from diverse regions such as Alaska North Slope, Arab Light, and Zueitina in Libya. To facilitate trading on futures exchanges in major financial hubs like London and New York, standardized reference oils are used. These benchmarks set the price for other crude oil varieties. West Texas Intermediate (WTI) serves as the primary reference oil for the USA, while Dubai Fateh holds significance in Asian markets. Other notable reference oils include Leona, Tijuana, Alaska North Slope, Zueitina, and Urals. These benchmarks provide a framework for understanding today’s oil price per barrel.
The International Petroleum Exchange in London serves as the principal trading hub for European Brent Crude Oil. This exchange plays a vital role in determining the daily price of oil per barrel for the European market.