Oil Markets and Prices: The Brent Market and the Formation of World Oil Prices

pp.334, 74 tables, 41 figures

The price of oil is a key factor for the well-being of the world economy. It directly influences the standards of living and the wealth of nations. For some producing countries oil revenues offer the chance of riches and political influence. For consuming countries, secure and cheap oil supplies are crucial for maintaining economic growth.

This book addresses the question of how the price of oil is determined. The explanation is sought in an in-depth study of the world petroleum market. The focus is first put on the Brent market which generates a price for oil which is widely used by OPEC and other oil-exporting countries. Three important oil markets – that for WTI in New York, Dubai in the Gulf and petroleum products in Rotterdam – are examined next in the context of their relationship with Brent.

The scope of the study is then enlarged to embrace all spot crude oil markets and, more importantly, the pricing methods followed by the main OPEC and non-OPEC producing countries in exporting oil.

Oil Markets and Prices tells the fascinating story of how the markets for the major commodity in world trade have evolved in recent years and how they now function. It presents facts in lively detail, and an incisive analysis that will interest the general reader. It also offers insights into the complexity of oil market behaviour and price formation relevant to the concerns of economists, the energy industries, and policy-makers.

Contents

1.      Introduction

2.      The Physical Base of Brent Blend

3.      Physical Trading

4.      Description of Brent Markets and Trading Instruments

5.      The Fiscal Regime

6.      The Historical Development of the Brent Market

7.      The Structure of the 15-Day Brent Trading

8.      The Dated Brent Market

9.      Behaviour, Performance and Future

10.      Oil Price Reporting

11.      Prices and Price Movements

12.      The Brent Futures Contract and its Relationship to the Forward Market

13.      The Markets for Dubai, WTI and European Petroleum

14.      World Oil Spot Trade

15.      The Export of Crudes as Market-Related Formula Prices

16.      Conclusions

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