Crude oil is considered to be one of the most sought-after and readily available commodities in the world today. It is expected to hold this significance for a fairly long time in the future. Even though crude oil is manufactured by a relatively small and niche number of companies which are often situated in remote locations, the market for crude oil and its derivatives is spread across the world. Trade for crude oil is robust and economically comprehensive. A significant portion of crude oil transactions is done using waterways. Supertankers are employed for crude oil transportation from the place of its mining to where it gets chemically synthesized. Oil traders direct fuel oil to places where profits are high, and the transportation and packaging costs are less.
Factors Affecting The Global Fuel Oil Prices And Trade Activities
Fuel and coal commodities with a global presence make shipment to all regions of the world. Hence, the worldwide demand and supply decide the trends and applications of fuel oil. Global trends are directly dependant on the nature of the market and quality of fuel oil required. Geopolitical events also have a direct impact on the prices and trade for fuel oils such as gasoline, and heating oil. Currently and for a past few years, oil prices have been on a higher scale factored due to diminishing sources of crude oil, various sanctions levied on South Asian countries and adoption of alternative fuel options. Aggressive and robust progress in developing and developed nations is also affecting the fuel oil market. With an apparent increase in the prices of crude oil, many cargoes are contracted for movement towards Asia and regions of Latin America.
In some countries, general and perpetual political unrest also affects the trade and prices of fuel oil. OPEC (Organization of the Petroleum Exporting Countries) such as Gabon, Ecuador, Iran, Iraq, Angola, Algeria, and Equatorial Guinea have socio-political stability and hence single-handedly manage the fuel oil prices in major parts of the world. According to experts, OPEC’s influence and veto in the global fuel oil trade are slowly getting overshadowed. Non-OPEC countries with oil sources are being discovered and encouraged and are making a significant trade with markets in developing countries.
The Role And Shrinking Dominance Of OPEC
The Global oil market has developed in phases over the years. The initial phase was dominated majorly by intra-company trade with rare instances of “spot” sales between manufacturing companies with other companies. This phase is followed by the emergence of OPEC and its growing influence on the global oil market. The third phase got defined with the commoditization of fuel oil products. This led to the fuel oil price forecast being defined according to inter-regional trade and a standardized global average price for fuel oil. Currently, sophisticated financial planning for better future prospects in trade is being employed in closing fuel oil trading contracts between major players.
The concept of “peak oil” is emerging in discussions related to fuel oil trade and pricing in recent years. The uncertainty of meeting the growing global demands for fuel and diminishing oil reserves are expected to cause an upheaval in the oil industry in the coming decades.