Crude Oil Pricing Case Study

Crude Oil Pricing:

Four central point help focus the cost of oil: supply, consumption, government policies and financial markets. Fundamental financial matters shows us that a high supply of oil eventually means demand is low, which implies that the costs will be low, as well; the converse, that a low supply escalates demand and raises costs.

The way oil is exchanged on the financial market has a huge impact on its cost. Speculators deal with oil futures, and this thusly influences how other individuals think oil ought to be valued. It additionally influences the amount of oil the petroleum organizations will discharge to the business sector.

Government regulation additionally has a major impact on oil costs. Duties on gas can likewise influence

2.3 Oil Refining: Crude oil is generally not used in its raw form neither for home consumption nor for industrial usage. So, crude oil will be processed to some product for utilization. Products can be heating oil, kerosene, LPG etc., Oil refineries make use of massive pipelines that carries fluids, huge chemical processing equipments and undergoes intensive processes. Refinery has to locate away from residential areas. Refineries have to be located near rivers or sea shore as they need huge source of water. Refineries have to be spacious as plants involve large volume of products and long intensive processing. Generally, huge amount of chemicals accompanied with odor will be released out of refineries which cause air pollution. Also, refineries expose the environment to noise pollution and are prompted for explosions. Proper disposal of wastes should be taken into prior concern of refineries. In order to prevent environment governments have restricted some machineries that release too much of contaminants. Refinery activities exist as an abundant source for health

Corrosion leads to equipment failures and contributes to major cost of maintenance. Corrosion mostly leads to shut down of equipments. Cost incurred by United State’s refinery industry is estimated to be $3.7billion/year. Corrosion takes various forms in refinery industry. Corrosion is being faced through preventive management. Corrosion can be avoided by using law alloy steels. Corrosion is being fought by on-line and off-line monitoring system brings modernization into picture.

2.4 Market Forecast:

 Demand for oil is expected to hit somewhere around 100mb/day by 2019 though pace of growth is slowing down in 2015 as per International Energy Agency’ s 2014 oil medium – term market report. Figure 2.1 Source: Retrieved from http://www.mcxcalls.in/crude-oil-scenario/  Demand would hit 111mb/day in 2040 with a growth of 21mb/day from 2013 as per OPEC’s World Oil Outlook report.

Figure 2.2 Source: Retrieved from