Among the markets of raw materials none come anywhere near the size of that of the crude oil. In 2024 it reached a value of 2990 billion of dollars, increased by 6% compared to 2023 (2830 billion). This is a figure much higher than that of market of top 10 metals combined: the market of iron, in fact, which represents the largest share among metals, it recorded a value of “just” of 279 billion.
This resource is crucial in modern society because from it we obtain, as well as i fuels for vehicles, materials plastics, fertilizers, cosmetics and drugs. For this reason, estimates indicate that the market will continue to grow in the coming years, reaching 3.65 trillion dollars by 2028. In addition to boasting impressive size, the oil market exerts significant economic and geopolitical influence, with a few countries dominating global production.
The global price of oil, expressed in US dollars per barrel (equal to 159.98 litres of crude oil), is mainly based on two oil benchmarks, viz reference oils which determine prices on international markets: the Brent and the West Texas Intermediate (WTI). Brent is a blend – mainly – of five oils coming fromoffshore the North Sea (Brent, Forties, Oseberg, Ekofisk and Troll) and is the reference for the markets of Europe, Africa and the Middle East. WTI, on the other hand, is extracted from Texas onshore depositshence the name, and is the reference crude oil for the United States market. Currently, Brent is priced at $75.37 (+0.37), while WTI is listed at $71.80 (+0.33).
Both are light oilsas they present a low sulphide content – 0.37% for Brent and 0.24% for WTI – and a density close to 40th APIwhere API (American Petroleum Institute) is a scale used to indicate the specific gravity of a hydrocarbon; Crude oils with a density higher than 31° API are considered light oils. These types of oil are ideal for refining into petrols and gasoline.
Despite the similarities in their composition, Brent and WTI crude oils are not priced the same. Numerous factors, in fact, influence their prices and market trends. For example, Brent crude oil, produced offshore, is easily transported via tankers to refineries and storage facilities around the world. Not surprisingly, about the 75% of crude oils produced globally uses Brent as a price reference. WTI, in contrast, is produced onshore and is sent to designated storage locations, such as the city of Cushing, Oklahoma, and Gulf Coast refineries, before being exported. These intermediate steps have an impact on shipping costs and, consequently, on the price of WTI.
Like all commoditiesthen, the price of crude oil is influenced by request and fromofferincluding changes in volumes produced and progress in extraction technologies. For example, the introduction of the technology of fracking in 2014 caused a sudden increase in the volumes of crude oil produced in the United States, with a growth of 16% compared to the highs of the last 70 years. This contributed to the collapse of the world price of crude oil, which went from approx $112 a barrel to $62 a barrel between June and December of the same year. Fracking, widely used in the United States, is considered the main cause oftrend reversal therefore WTI crude oil, which until 2014 tended to be more expensive than Brent, began to have generally lower prices than the latter, a situation which still persists today.
Among the factors that influence the world price of crude oil there is the current geopolitical situation, especially in the member countries of theOrganization of Petroleum Exporting Countries (OPEC), such as Algeria, Saudi Arabia, United Arab Emirates, Gabon, Equatorial Guinea, Iran, Iraq, Kuwait, Libya, Nigeria and Venezuela. These countries, controlling over the 70% of the world’s reservesexercise enormous power over the production, supply and, consequently, the price of crude oil.
Both Brent and WTI are primarily traded through “futures“, standardized contracts entered into between two parties for the trading of an asset at a price set at the time of the agreement for an exchange that will take place at a future date. The two main exchange markets are theIntercontinental Exchange (ICE), based in Atlanta, where Brent is mainly traded, and the NYMEX (New York Mercantile Exchange) of New York, where WTI is listed. In the past, Brent was listed on the International Petroleum Exchange in London, acquired by ICE in 2001.
