Crude oil, a natural petroleum product, is a type of fossil fuel extracted from the ground. Crude oil, composed of hydrocarbons and other organic matter, is refined to produce a wide range of usable products, including gasoline, diesel, and other types of petrochemicals.
Because crude oil cannot be substituted naturally at the same rate of consumption, it is a limited non-renewable resource. To date, crude oil is the most important source of energy production and, therefore, plays an important role in the global energy scenario. Due to the high market value in the energy scenario, crude oil is often compared to gold and is called “black gold”. In 1859, Col. Edwin Drake drilled the first successful well through rock and produced crude oil in Titusville, Penn. In this article, we will explain more about crude oil: the definition, composition, types and determinants of crude oil prices.
What is crude oil?
Crude oil can be defined as a blackish and yellowish fossil fuel consisting of a mixture of hydrocarbons extracted by drilling from the ground. Crude oil contains a combination of hydrocarbons, nitrogen, sulfur, oxygen and other miscellaneous organic compounds. Crude oil is formed due to the conversion of large numbers of dead organisms due to heat and intense pressure under the earth’s sedimentary rock.
After extracting this crude oil by oil drilling method, its components are separated by fractional distillation technique in the fission column. Numerous products such as gasoline, kerosene, diesel, asphalt, plastics, drugs, pesticides, chemicals and… crude oil are produced.
Crude oil composition
The composition of crude oil differs from one organization to another. However, it is approximately within the range presented in the table below.
Crude oils are characterized by a variety of hydrocarbon compounds: alkanes or paraffins, naphthenes and aromatics, and asphalt. The most common hydrocarbons in crude oil are alkenes. Naphthenes are also an important part of all liquid refinery products. Aromatics and asphalt usually make up a small percentage of most crude oil. The relative percentages of these four hydrocarbon groups that determine the exact properties of crude oil are shown in the table below.
The appearance and color of crude oil depends a lot on its composition. The usual color of crude oil is black or dark brown.
Types of crude oil
According to various parameters, crude oil is divided into several groups:
Crude oil type based on API gravity scale
Depending on the weight of the crude oil API, they are classified into the following three types:
Heavy Crude Oil (Gravity API 10-200)
Medium crude oil (gravity API 20-250), and
Light Crude Oil (> 250 API Gravity)
Types of crude oils based on the amount of sulfur
Depending on the presence of sulfur or hydrogen sulfide (one of the main pollutants), crude oil is classified into two categories:
Sweet crude oil (sulfur content less than 0.5)
Sour crude oil (sulfur content> 0.5)
Heavier crude oil usually has more sulfur.
Types of crude oil based on geographical location
The classification of crude oil based on the geographical location in which it is produced is very important because it directly affects transportation costs. Depending on the geographical location of production, crude oil is classified into the following classes
- WTI (West Texas Intermediate) Crude Oil: High quality, sweet and light crude oil.
- Brent oil: Oil production from Europe, Africa and the Middle East is commonly referred to as Brent oil.
- Dubai-Oman crude oil
- Topis Crude Oil: From Malaysia
- Minas Crude Oil: From Indonesia
- OPEC Crude Reference Basket: Mixtures of crude oil from different OPEC countries.
- Midnight Crude Oil: California Heavy Crude Oil
- Selected Crude Oil of Western Canada
Crude oil prices
The price of crude oil refers to the current price of a barrel of standard crude oil. Prices also vary significantly depending on the type of crude oil. Factors on which the price of crude oil depends are:
- Extraction cost : As the cost of extraction increases due to the cost of technology, the price of crude oil increases.
- Crude oil specific gravity or API weight : Lighter crude oil is more expensive compared to heavier grades.
- Sulfur content of crude oil : Sour is cheaper than sweet crude oil.
- Location of crude oil: WTI crude oil is more expensive than other grades.
- Oil demand : Like other products, crude oil prices rise as demand increases.
- Production volume : When crude oil extraction exceeds demand, crude oil prices fall.
- Natural disasters : Natural disasters or severe weather conditions in major oil-producing regions affect production, leading to higher crude oil prices.
- Dependence on other energy sources : The price of crude oil decreases as energy dependence on other energy sources such as renewable energy sources increases.
- Political factors : war, terrorism, attacks, political instability and… reduce oil prices.
- Dollar exchange rate : Global dollar price fluctuations affect local crude oil prices.
- Economic factors : Crude oil prices fall during the recession.
- Speculators and speculators : The price of crude oil is also affected by speculators and traders.
OPEC decisions: OPEC or Organization of Petroleum Exporting Countries (15 countries: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Nigeria, Libya, Algeria, Angola, Congo, Ecuador, Gabon, United Arab Emirates, Qatar, Equatorial Guinea) have an important Impact on world oil prices Their decisions affect the price of crude oil.
Barrels of crude oil
A barrel of crude oil is a unit of crude oil that shows the volume of crude oil. Briefly displayed as bbl. Crude oil prices are based on “crude oil prices per barrel”. In the global oil industry, a barrel of crude oil is 42 US gallons or 35 gallons of imperial oil, which is approximately 159 liters. Production of oil companies is shown in barrels (bbls) per unit day.
Crude Frequently Asked Questions
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What are the top oil producing countries?
The United States, Russia, Saudi Arabia, Canada and Iraq are the top five oil producers.
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When will oil production end?
It is not easy to answer this. However, BP has estimated that oil production will end in 2067, based on estimates of countries’ oil reserves and consumption. But do not worry, scientists will create other renewable resources to depend on them.
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