Crude oil pricing references
You may have been asked what are the crude oil pricing references ?
And in general, how is this material priced in the markets of the world؟ And how this material is classified at all? To answer these questions, follow this article from the Khazar Deniz website.
Due to being oil as a commodity is an important and influential in the global economy is concerned. many studies regarding it, and the issues with it. One of the main fields of study in the field of oil economics is the study of the factors affecting crude oil prices.
It seems Crude oil prices are influenced by economic factors and by many major international organizations. There are two of these organizations OPEC and OECD that, respectively, can change the price of crude oil with the supply and demand of crude oil.
Classification by geographical location
There are three types of reference crude for pricing worldwide, including Brent oil، Texas oil and Oman Oil. Brent oil consists of a mixture of 15 types of North Sea oil، fields from Scotland to Norway, mostly exported to Europe.
There are currently 161 types of crude oil traded in the world, which are priced on several crude oil indices.
Texas oil is a high-quality, light oil and product of the U.S. State of Texas that supplies North America's oil needs. Oman Oil or Dubai oil is also the reference for oil pricing in the Persian Gulf.
OPEC oil is another reference to pricing, with most Asian countries exporting oil being members.
Classification by degree API
Standard yen is a unit for comparing the density of crude oil with water. There are several classifications for crude oil based on the grade of yen. But generally crude oil below fifteen degrees-known as heavy oil and above fifteen as light oil.
Heavy oil contains sulfur and metals and requires more refinement than light oil.
Classification by sulfur content
Sulfur is present as a harmful impurity in crude oil, causing corrosion of metals and air. Crude oil that has more than {/5% sulfur is known as sour oil, and if it is less, it is known as sweet oil.Sweet oil due to more purity and not delivering to the environment, you count more quality oil.
Oil pricing formula
The pricing formula, which is the most important principle in commercial oil contracts acts as the price of the main base oil index is announced first and is priced according to the differences between the traded oil and the index oil.Currently, about one percent of the world's crude oil pricing is done by the Brent Crude Index and the rest of the pricing is done by other crude oil.
Oil delivery in the future months
It has been repeatedly reported in the news that exporting countries have increased or decreased the price of their oil exports for next month's delivery; A country may lower its oil price to deepen its economic relations with consumers; It should be noted that most of the oil trade contracts are long-term contracts.
These contracts, which are between one and two years old follow a specific formula, and the seller's party, based on this formula and the pricing index. determines their oil price for the next month, which is determined by the average oil price and adjustments made.
Today, exporting countries have official prices and announce them on their websites.