There are several types of oil, and they can be classified based on various factors such as their composition, geographical origin, and market price. Here are some known types of oils:
- Crude oil: Crude oil is unrefined oil extracted from the ground. It is a mixture of hydrocarbons, organic compounds and impurities. Crude oil is also classified based on its density and sulfur content into different categories, such as light crude, medium crude, heavy crude, sweet crude (low sulfur content), and sour crude (high sulfur content).(
- Brent Crude: Brent crude is a light sweet crude oil commonly used as a benchmark for pricing and trading in the global oil market. It is extracted from oil fields in the North Sea, mainly from the Brent oil field..
- West Texas Intermediate (WTI): West Texas Intermediate (WTI) is another widely used standard for oil pricing. It is a high-quality, light sweet crude oil produced in the United States, primarily from Texas oil fields..
- Dubai crude: Dubai crude is a medium-acidic crude oil that serves as a benchmark for pricing Middle East and Asian oil. It is produced in the UAE.
- OPEC Reference Basket: The OPEC reference basket is the weighted average of oil prices from various OPEC member countries. It represents the price of a mix of crude oil produced by OPEC countries..
- Ural crude: Ural crude is a medium-acidic crude oil produced in Russia. It serves as a benchmark for pricing crude oil exports from Russia to Europe.
These are just a few examples of the types of oil that exist. Different types of oil have different characteristics, such as density, sulfur content and geographic origin, which can affect their market value and suitability for specific refining operations or end-use applications..
How does the quality of oil affect its price in the global market?
The quality of oil significantly affects its price on the international market. Several key factors contribute to this relationship:
API appeal:
Light vs. Heavy: Light crude oils with high gravity for the American Petroleum Institute (lower density) are generally priced higher because they produce a higher percentage of valuable refined products such as gasoline. American Petroleum Institute (API) low gravity heavy crude oils may be deducted due to additional processing required.
Sulfur content:
Sweet versus sour: Crude oil with a low sulfur (sweet) content is preferred because of its low environmental impact and low refining costs. Sweet crude oil is often required in addition to high-sulphur (sour) crude oil, which requires more extensive refining to meet environmental regulations.
Refining Compatibility:
Compatibility with refinery configuration: The compatibility of crude oil with the refinery’s processing capabilities affects its value. Some refineries are better equipped to handle certain types of crude oil, and this can affect prices.
Geopolitical stability:
Country of origin: Geopolitical factors, including the stability of the country of origin, can influence perceived risks associated with certain oil supplies. Political instability may lead to price fluctuations.
Global supply and demand:
Market conditions: Supply and demand dynamics in general play a crucial role. During periods of high demand or supply disruptions, the price impact may vary based on the quality and availability of crude oil.
Transportation cost:
Accessibility and transport infrastructure: The location and accessibility of oilfields, as well as the availability of transportation infrastructure, affect the final cost of delivering crude oil to refineries.
In short, the quality of oil, including its API attractiveness, sulfur content, and viscosity, affects its market value. The interplay of these factors, coupled with geopolitical considerations and market conditions, contributes to the pricing of crude oil in the international market.
Specific areas known for the production of certain types of oil
There are certain areas known to produce certain types of oil based on geological and environmental factors. Differences in crude oil types are often attributed to differences in organic matter, sedimentary conditions, and subsequent transformations over millions of years. Here are some of the main areas and types of oil they usually produce:
Brent crude:
- Region: North Sea (Europe)
- Properties: Light and sweet crude oil with high API density and low sulfur content.
- Reasons: formed under favorable conditions for the production of high-quality oil.
West Texas Intermediate (WTI)):
- Region: United States, primarily Texas
- Properties: Light and sweet crude oil with high API density and low sulfur content.
- Reasons: favorable geological conditions in the Texas area.
Dubai Raw:
- Region: Middle East, especially the United Arab Emirates
- Properties: crude oil of medium acidity.
- Reasons: Reflects the characteristics of oil produced in the Middle East.
OPEC Basket:
- Region: Various OPEC member countries
- Properties: diverse, including light, heavy, sweet and sour crude oils.
- Reasons: Represents the range of crude oils produced by OPEC member countries.
Canadian Oil Sands:
- Region: Canada, especially Alberta
- Characteristics: heavy and bituminous crude oil.
- Causes: Alberta’s oil sands contain bitumen, a heavy, viscous type of oil.
Venezuelan crude:
- Region: Venezuela
- Properties: different types, including heavy and extremely heavy crude oils.
- Reasons: Geology consists of a large percentage of heavy ore.
Nigerian Bonnie Light:
- Region: Nigeria
- Properties: light and sweet crude oil.
- Causes: Geological conditions in the Niger Delta region.
These territorial differences arise from the diverse geological processes that occurred during the formation of oil deposits. Factors such as source rock composition, and temperature contribute to the different qualities of crude oil found in different parts of the world.
