Grab a chair, kick off your shoes, chill and chat.Any comments on this take?
Oil
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Niftyons
- Posts: 423
- Joined: Mon Oct 18, 2021 5:45 pm
Oil
That was my second try at getting the link to post as intended.
Nada.
Cp
A complex power struggle between buyers and sellers determines the oil market.
Largest buyers of oil can pressure suppliers into lowering prices if they do not have alternative clients, which was especially true in the early years of oil trade.
Producers of oil, however, have an even better way to exercise power over prices - simply slowing or accelerating production will push up or depress global prices.
Oil-producing countries leverage this power to project their influence globally.
Since 1960, we have OPEC (Organisation of the Petroleum Exporting Countries).
OPEC acts as a partnership of oil suppliers aiming to coordinate how much they produce to keep the oil price where they need it (in economic terms, they are a cartel).
OPEC is led by Saudi Arabia and currently has 12 member-states, but a number of other major producers (known as OPEC+) have often supported OPEC strategy to varying extent.
In recent years, OPEC has launched a number of “price wars”, attempting to drop global oil prices by overproducing.
Saudi Arabia and OPEC were attempting to stop the growth of US oil and gas industry, which needed higher prices to be profitable.
In 2022, OPEC accounted for 36.2% of global oil production.
Why are oil prices so important?
Almost a third of all the energy used by humans comes from oil.
The majority of cars, planes and ships run only on fuels made from oil (or petroleum) - like gasoline, kerosene or diesel.
When electricity is used for energy instead of fuel it likely comes from a power plant burning gas, which is often extracted together with crude oil.
As a result, any economy relies on there being enough oil available to grow or at least maintain itself.
Apart from energy sources, oil is used to make plastics, as well as fertilisers, cleaning products and medicines.
This means that oil is a component of almost any product or service, through the cost of either transportation or materials, or, most likely, both.
There are very little substitutes for crude oil, as alternative plastics or biomass petroleum remain fringe technologies.
Changes in oil price, therefore, strongly affect all prices in the economy.
Read more on postfactum.co.uk
Nada.
Cp
A complex power struggle between buyers and sellers determines the oil market.
Largest buyers of oil can pressure suppliers into lowering prices if they do not have alternative clients, which was especially true in the early years of oil trade.
Producers of oil, however, have an even better way to exercise power over prices - simply slowing or accelerating production will push up or depress global prices.
Oil-producing countries leverage this power to project their influence globally.
Since 1960, we have OPEC (Organisation of the Petroleum Exporting Countries).
OPEC acts as a partnership of oil suppliers aiming to coordinate how much they produce to keep the oil price where they need it (in economic terms, they are a cartel).
OPEC is led by Saudi Arabia and currently has 12 member-states, but a number of other major producers (known as OPEC+) have often supported OPEC strategy to varying extent.
In recent years, OPEC has launched a number of “price wars”, attempting to drop global oil prices by overproducing.
Saudi Arabia and OPEC were attempting to stop the growth of US oil and gas industry, which needed higher prices to be profitable.
In 2022, OPEC accounted for 36.2% of global oil production.
Why are oil prices so important?
Almost a third of all the energy used by humans comes from oil.
The majority of cars, planes and ships run only on fuels made from oil (or petroleum) - like gasoline, kerosene or diesel.
When electricity is used for energy instead of fuel it likely comes from a power plant burning gas, which is often extracted together with crude oil.
As a result, any economy relies on there being enough oil available to grow or at least maintain itself.
Apart from energy sources, oil is used to make plastics, as well as fertilisers, cleaning products and medicines.
This means that oil is a component of almost any product or service, through the cost of either transportation or materials, or, most likely, both.
There are very little substitutes for crude oil, as alternative plastics or biomass petroleum remain fringe technologies.
Changes in oil price, therefore, strongly affect all prices in the economy.
Read more on postfactum.co.uk
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Hotrodder
- Posts: 3370
- Joined: Mon Jul 12, 2021 8:31 pm
- Location: Brittany 22
Oil
Lots of interesting info there Nifters. It was only missing the reasons why oil is only sold in US dollars. Somewhere along the line the US must have thought it would give them some sort of advantage but I have no idea why the rest of the world still dances to that tune. General Gaddafi of Libya had a go at trading oil with interested parties using a gold-backed currency which was gaining favour in some quarters before the US and others decided to slap him down.
On my headstone it will say: Please switch off mobile phones. I'm trying to get some sleep.
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exile
- Posts: 2726
- Joined: Mon Jul 12, 2021 9:57 pm
- Location: Auvergne Rhone Alpes
Oil
Everything in that article is correct and shows the vulnerability of countries which do not have their own oil/gas supplies to external influences - and even if they do have supplies the market will still impact on local prices unless the government has complete control of local production. When the market is volatile, I have seen consignments of oil and oil based raw materials be traded several times between the ship setting sail with its cargo and the ship arriving at its discharge port - which could change while the ship was underway.
As for why the price of oil is in USD $: international trade* has been in dollars for as long as I have been in business. It is viewed as an internationally safe currency based on a stable government (??). Even trade with Commonwealth countries would be almost certainly in $ rather than GBP £. When I retired, the Euro was just beginning to make minor inroads but very minor. The Swiss Franc might be seen as an alternative to $ but I suspect that it is not used because there are just not enough Swiss Francs in the world. And that points to the other reason that the $ is used. There are enough dollars in the world to support the massive amounts of trade.
* That is everything traded across the world (toys, electrical goods, food etc.) and not just oil.
As for why the price of oil is in USD $: international trade* has been in dollars for as long as I have been in business. It is viewed as an internationally safe currency based on a stable government (??). Even trade with Commonwealth countries would be almost certainly in $ rather than GBP £. When I retired, the Euro was just beginning to make minor inroads but very minor. The Swiss Franc might be seen as an alternative to $ but I suspect that it is not used because there are just not enough Swiss Francs in the world. And that points to the other reason that the $ is used. There are enough dollars in the world to support the massive amounts of trade.
* That is everything traded across the world (toys, electrical goods, food etc.) and not just oil.
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Hotrodder
- Posts: 3370
- Joined: Mon Jul 12, 2021 8:31 pm
- Location: Brittany 22
Oil
And as long as the US continues to print more and more money while themselves being in incalculable debt the world economy is safe, is it? Certainly when the mighty dollar is no longer backed up by anything real, like gold etc.
Last edited by Hotrodder on Sun Jun 02, 2024 9:44 pm, edited 1 time in total.
On my headstone it will say: Please switch off mobile phones. I'm trying to get some sleep.