Description
Crude oil is a yellowish black mineral oil that is extracted from under the surface of the earth. This oil is consists of a number of hydrocarbon compounds as it is formed from the million of years old animal and plant remnants. This mixture of hydrocarbons remains in the liquid form under the normal atmospheric temperature and when distilled, a number of by-products can also be extracted. Crude oil is also an important ingredient of some medicines due to the curing properties it has.Crude oil can be of different types depending upon its origin and its relative weight. Brent crude oil is one of the most important types of crude oil and it is also considered as a benchmark in the context of the price fixation of the other types. Brent crude oil is a lighter type crude oil possessing API (American Petroleum Institute) gravity of 38 to 39 units and having medium levels of sulfur.
Overview
Oil is the single most important commodity that holds the position of a key factor in each and every economy of the world. The world’s richest nations are at their current positions just because of the oil factor. The importance of oil has reached such a level at which there is no country in the world, which doesn’t need oil and its by-products, and if somehow it doesn’t have much reserves of oil to meet their domestic demand, these nations are ready to import the product at any cost. Many nations have a huge share of their earnings constituted by oil exports only. Every industry requires oil to function properly either directly or indirectly as both crude oil and its by-products serve as their inputs. The extent of the commodity’s importance was shown to the world when the world’s most strong economies were shaken up as the oil prices shot up in 1973 and 1979 when the gulf countries refused to supply oil to the countries that were the supporters of Israel in its war with Egypt and Syria. Crude oil alone bears 60% share to meet the global energy needs in the current scenario. The reason for this high share in the primary energy consumption in the world is due to the advantages that oil has over the other constituents of primary energy such as diverse application, comparatively lesser harm to the environment, easy handling, lower capital costs and above all higher efficiency.Crude oil reserves on earth are estimated to be more than 1 trillion barrels that are mostly found in the Middle East, Eastern Europe, Africa and Central America, Middle East being the top reserve holder. It is a clear fact that oil is a limited resource and would finish off in a maximum of 80 years if the current rate of consumption continues. Of these 1 trillion barrels, the world produces around 75 million barrels per day. The largest crude oil producing country is Saudi Arabia followed by Russia and United States of America. The refining capacity of oil in the world as in 2002 was 4166 million tons. The consumption of crude oil in the world has been rising with the change in time and the technological improvements that are accompanying it. Oil is consumed all over the globe, consumption figures standing at 76 million barrels per day and United States of America consumes the maximum level of oil in the world. The major consumer countries of crude oil along with their consumption figures pertaining to the year 2006 are

  • United States of America (20.7 million barrels/day)
  • China (6.5 million barrels/day)
  • Japan (5.4 million barrels/day)
  • Germany (2.6 million barrels/day)
  • Russia (2.6 million barrels/day)
  • India (2.3 million barrels/day)
  • Canada (2.3 million barrels/day)
  • Brazil (2.2 million barrels/day)
  • South Korea (2.1 million barrels/day)
  • France (2.0 million barrels/day)
  • Mexico (2.0 million barrels/day)

Regarding the world trade situation, one important aspect is the presence of an organization namely OPEC that controls and regulates the exports and imports of most of the countries of the world. OPEC stands for ‘Organization of Petroleum Exporting Countries’ and the members include all the 11 major crude oil producing countries and nations that are highly dependent on the revenues from oil and oil products. As a matter of fact, OPEC nations have 75% of the world’s total crude oil reserves of 1 trillion barrels and control around 40% of the world oil production. OPEC member countries also dominate the world exports of crude oil contributing to 55% of the total world exports. The major crude oil exporting countries with their exporting figures are

  • Saudi Arabia* (8.73 million barrels per day)
  • Russia (6.67 million barrels per day)
  • Norway (2.91 million barrels per day)
  • Iran* (2.55 million barrels per day)
  • Venezuela* (2.36 million barrels per day)
  • United Arab Emirates* (2.33 million barrels per day)
  • Kuwait* (2.20 million barrels per day)
  • Nigeria* (2.19 million barrels per day)
  • Mexico (1.80 million barrels per day)
  • Algeria* (1.68 million barrels per day)
  • Iraq* (1.48 million barrels per day)
  • Libya* (1.34 million barrels per day)
  • Kazakhstan (1.06 million barrels per day)
  • Qatar* (1.02 million barrels per day)

In the above list, the countries with the * sign are the member countries of OPEC. The imports of crude oil are generally done by the countries, which do not have appropriate reserves of oil and are incapable of satisfying the domestic consumption demand. The following is list of the countries with their net import figures that are the major importers of crude oil in the world

  • United States of America (12.1 million barrels per day)
  • Japan (5.3 million barrels per day)
  • China (2.9 million barrels per day)
  • Germany (2.4 million barrels per day)
  • South Korea (2.2 million barrels per day)
  • France (1.9 million barrels per day)
  • Italy (1.7 million barrels per day)
  • Spain (1.6 million barrels per day)
  • India (1.5 million barrels per day)
  • Taiwan (1.0 million barrels per day)