COMMODITIES-CRUDE OIL
SUBMITTED BY:
ANKITA DWIBEDI
What Is a Commodity Market-
A commodity market is a physical or virtual marketplace for buying, selling,
and trading raw or primary products. There are currently about 50 major
commodity markets worldwide that facilitate trade in approximately 100
primary commodities.
Commodities are split into two types:
Hard and Soft commodities.
• Hard commodities are typically natural resources that must be mined or
extracted—such as gold, rubber, and oil, whereas
• soft commodities are agricultural products or livestock—such as corn,
wheat, coffee, sugar, soybeans, and pork.
Crude Oil: One of the most important commodities in the world, crude oil is an
unrefined petroleum product that occurs naturally. It is used to produce different
products including gasoline and petrochemicals. The price for crude oil
generally reported in the U.S. is based on the NYMEX futures price. Contracts
are based on 1,000 barrels and trade in U.S. dollars per barrel.
TOP CRUDE OIL IMPORTERS
1. China $239.2 billion 20.2%
2. United States $163.1 billion 13.8%
3. India $114.5 billion 9.7%
4. Japan $80.6 billion 6.8%
5. South Korea $80.4 billion 6.8%
TOP CRUDE OIL EXPORTERS
1. Saudi Arabia
Officially known as the Kingdom of Saudi Arabia, the country of Saudi Arabia
is the world's number one oil exporter and the country with the largest amount
of oil reserves.
2. Russia
The massive, transcontinental country of Russia is the world's second-largest oil
exporter. In 2018, Russia's oil exports accounted for 11.4% of global oil
exports, exceeding a value of $129 billion.
Initially formed in 1932, Iraq is the world's third-largest exporter of oil. In 2018,
Iraq exported $91.7 billion worth of the commodity, which accounts for 8.7% of
global exports.
4. Canada
The northernmost nation in North America, Canada is the world's fourth-largest
exporter of oil. In 2018, the country exported $66.9 billion worth of the
commodity, or 5.9%.
5. United Arab Emirates
Number five on the list is the United Arab Emirates (UAE). Located on the
Arabian peninsula, the UAE is approximately the size of South Carolina. In
2018, the UAE exported 5.2% of the world's total oil exports, accounting for
$58.4 billion.
TOP 5 CRUDE OIL RESERVES
RANK COUNTRY OIL RESERVES WORLD
SHARE
1 Venezuela 299,953,000,000 18.2%
2 Saudi Arabia 266,578,000,000 16.2%
3 Canada 170,863,000,000 10.4%
4 Iran 157,530,000,000 9.5%
5 Iraq 143,069,000,000 8.7%
CURRENT SCENARIO IN INDIA OF CRUDE OIL
• The oil and gas sector is among the eight core industries in India and
plays a major role in influencing decision making for all the other
important sections of the economy.
• India’s economic growth is closely related to energy demand; therefore
the need for oil and gas is projected to grow more, thereby making the
sector quite conducive for investment.
• The Government of India has adopted several policies to fulfil the
increasing demand. The government has allowed 100 per cent Foreign
Direct Investment (FDI) in many segments of the sector, including
natural gas, petroleum products, and refineries, among others. Today, it
attracts both domestic and foreign investment, as attested by the presence
of Reliance Industries Ltd (RIL) and Cairn India.
Market Size
• India is expected to be one of the largest contributors to non-OECD
petroleum consumption growth globally. Oil imports rose sharply to US$
87.37 billion in 2017-18 from US$ 70.72 billion in 2016-17. India
retained its spot as the third largest consumer of oil in the world in 2017
with consumption of 4.69 mbpd of oil in 2017, compared to 4.56 mbpd in
2016.
• India’s domestic crude oil production in July 2019 is 2,769 thousand
tonne (TMT). As of 2017, the country had 600 million metric tonnes
(MMT) of proven oil reserves.
• In FY19, total crude oil imports were valued at US$ 111.96 billion as
compared to US$ 87.70 billion in FY18. In FY19, crude oil imports
increased to 4.53 mbpd from 4.41 mbpd in FY18.
HIGHEST AND LOWEST PRICE OF CRUDE OIL EVER
COMMODITY HIGHEST PRICE LOWEST PRICE
EVER EVER
CRUDE OIL-PRICE $148.93 $10.82
(YEAR) (2008) (1998)
CRUDE OIL CRISIS
Oil prices have been forced downward due to major influences from both the
demand and supply sides.
Demand for crude oil and petroleum fuels has fallen worldwide because of the
coronavirus pandemic, nowhere more so than in China. Locking down
millions of people closed factories, cut supply chains and reduced transport at
home and abroad via trade. This is key, because China is the globe’s largest
oil importer and a major driver of global demand. A global downturn
in demand from transportation, not least in air travel, has eroded demand
further
CURRENT SCENARIO OF CRUDE OIL
It can be seen that the price of crude oil is gradually decreasing over the past
two months.
The average prices in January was $61.63 and that in February was $51.16.
It shows the declining trend in the prices which has brought many oil producing
firms on the verge of closing down.
The main reason behind the falling prices is the 2019 outbreak of COVID19.
It has caused shutting down of factories, countries going in quarantine zones
thus decreasing their demand as well as supply resulting in declining prices.
FUTURE OF CRUDE OIL
In my opinion, if the COVID19 lasts for more time then the prices will fall
down further which can be an alarming situation for many companies.
Tough it can benefit the countries which totally rely on imports as they can buy
more and more at lower costs.
But overall it will never replenish and stay in the market as it is a necessity and
every country whether they produce crude oil or not, need it for their
functioning.
After things get stable around the globe, crude oil can make a come back with
high prices resultant of high demand.
