All About The Oil Market, A Lucrative Sector

All About The Oil Market, A Lucrative Sector

Oil supply and demand are constantly changing according to the circumstances of exporting and consuming countries. Of course, oil is a very lucrative market, but in the short run.

Oil market operators

The oil market has several operators. The oil-producing countries are organized as an organization, in this case OPEC (Organization of the Petroleum Exporting Countries). Moreover, this organization aims to coordinate the oil policies of the member countries, to bring more benefits in the production and to cover the needs of the consumers. Secondly, international companies also play a major part in the oil market.

In addition, consumer countries have a significant influence on the oil market. Indeed, their demand is based on their geopolitics. Then, the International Energy Agency (IEA) is one of the major operators in the market. This organization's mission is to regulate the energy policies of the member states and to guarantee their hydrocarbon supply. Moreover, market players tend to maintain and regulate the balance between oil supply and demand.

The price of oil

The price of oil occupies a fundamental place in the market.

In addition, the cost is based on a multitude of influencing factors. The price varies according to demand. However, the latter is influenced by the world's economic environment, weather and seasonality. The cost also depends on the supply. Only, this one varies according to the production of the countries and the evolution of the consumption. The stock is also a major factor in the amount of oil. In addition, the value of crude oil is based on the value of the rate of extracted products (fuel oil, kerosene, gasoline ...) during refining. This value also varies according to the amount of energy used during crude oil extraction procedures. Moreover, this value depends on the cost generated by the refining units to obtain high quality finished products and in accordance with the requirements of oil consuming countries.

The production of oil in the world

Three major leaders dominate the market because of their strong potential for oil production and export. These are the United States, Saudi Arabia and Russia. These three countries produce respectively 12 million, 11 million and 10 million barrels of oil per day. Nevertheless, the States are still the second largest global consumer of oil just after China.

In addition, oil production is shrinking, according to the IEA. Thus, consumers have an interest in preparing for a possible run out of resources. As a matter of fact, Tunisia, a major consumer of energy, now draws its resources from wind and solar energy. Indeed, this energy transition was initiated following the exhaustion of resources according to the director of HBS International Tarek Bouchamaoui. With the support of the government, Tarek Bouchamaoui encourages the industrial groups of Tunisia to opt for green energy.