Petroleum Products Trading: Introduction
- Rapid globalization has led to a surge in demand for energy. Oil and gas plays a vital role in meeting the demand for energy. Natural gas is the cleanest burning and fastest growing fossil fuel, contributing almost one-third of total energy demand growth through the last decade. Oil is the raw material that is used as feedstock for many chemical products. Gasoline is extracted from oil, which plays an important role as a conventional fuel.
- Petroleum products trading is the act of buying and selling petroleum products. Petroleum products are derived from crude oil. Crude oil is an extremely popular commodity in the commodity market for trading. The price of crude oil changes continuously according to change in its supply and demand. Petroleum products trading works using futures contracts, which enable investors, speculators, and businesses to buy and sell barrels of petroleum products for set prices on a set date in the future. Hundreds of millions of futures contracts are traded every day.
- Rise in demand for transport and growth in industrial activities are expected to boost the demand for crude oil and natural gas in developing countries. According to S&P Global Platts, global demand for oil is projected to reach 99.53 million b/d by the end of 2021 from 98.3 million b/d in 2018. This growth can be ascribed to the increase in mobility and expansion of industrial activities in developing countries. Thus, rise in demand for crude oil and natural gas is expected to boost the petroleum products trading market.
- According to a report by Global Data, a data analytics company, India is the largest consumer and importer of oil & gas resources in Asia Pacific. It is likely to witness commencement of 647 new oil & gas projects during 2021 to 2025. The country is focusing on increasing the production of oil & gas resources; and development of refineries and petrochemical infrastructure. Development of infrastructure and deep sea exploration technology; and rise in connectivity to oil wells with the help of IoT devices are anticipated to boost the efficiency of exploration activities.
Key Drivers and Restraints of Petroleum Products Trading Market
- Oil and natural gas meet 50% of the world’s energy demand, according to the International Energy Agency. Consumption of natural gas increased by 4.6% in 2018.
- According to the International Energy Agency, petrochemical products are expected to be the pillars of growth of the oil industry. Global oil consumption is projected to reach 104.1 mb/d by 2026, representing an increase of 4.4 mb/d from that in 2019.
- Crude oil and natural gas are types of fossil fuels that are extracted from the earth’s subsurface by drilling. Oil & gas resources are used as fuel for electricity generation due to their high calorific value. In industrial applications, crude oil is used as feedstock for the production of tar, asphalt, paraffin wax, lubricating oils, etc. In residential and commercial application, oil & gas sources are used for heating purposes. Crude oil is a vital feedstock used in the production of jet fuel, gasoline, and diesel fuel. Thus, demand for crude oil has been rising constantly, as it is used to meet the increasing need of transportation fuels
- Governmental initiatives toward low carbon future may impact the consumption of oil and natural gas. This is likely to result in limited production of oil and natural gas, thus affecting the capture of oil and gas reserves by drilling (upstream activities). In turn, this is expected to hamper the global petroleum products trading market in the near future.
COVID-19 Impact Analysis on Supply Chain
- Governments of several countries across the globe have imposed stringent lockdowns to limit the spread of the coronavirus. Movement of individuals and economic activities, related to goods and services, have come to a halt because of lockdowns. Supply could not adjust to the drop in consumption. This resulted in considerable buildup of gas in storage. Low prices and unprecedented drop in demand has created difficulties for the upstream sector in regions with unfavorable production economies.
Petroleum Products Trading Market Segmentation
- The global petroleum products trading market can be segmented based on product and mode of transport
- In terms of product, the global petroleum products trading market can be divided into crude oil, diesel, petrochemicals, refined products, and others
- In terms of mode of transport, the global petroleum products trading market can be segregated into pipeline, marine vessel, general purpose vessel, medium range vessels, and others
Petroleum Products Trading Market: Regional Segmentation
- In terms of region, the global petroleum products trading market can be split into Middle East & Africa, Latin America, Asia Pacific, Europe, and North America
- According to Rystad Energy, well service spending is expected to rise to US$ 54 Bn in 2021 from US$ 50 Bn in 2020 in North America. Thus, petroleum products trading market is projected to expand at a rapid pace in the region.
- According to the Oil and Gas Journal, well intervention in Middle East & Africa is anticipated to rise at a faster pace, with around 10,000 active offshore wells on oil fields with average well age of 16-21 years compared to average well age of 10-15 years in other regions
Key Players Operating in Global Market
- Gazprom Neft PJSC
- Royal Dutch Shell plc
- Saudi Arabian Oil Co
- ExxonMobil Corporation
- Chevron Corporation
- Trafigura Group Pte. Ltd.
- Sinochem Oil Co., Ltd.
- AP Argus Petroleum Ltd.
- GS GLOBAL CORP
- Parsec AG
Global Petroleum Products Trading Market: Research Scope
Global Petroleum Products Trading Market, by Product
- Crude Oil
- Refined Products
Global Petroleum Products Trading Market, by Mode of Transport
- Marine Vessel
- General Purpose Vessel
- Medium Range Vessel
Global Petroleum Products Trading Market, by Region
- North America
- Russia & CIS
- Rest of Europe
- Asia Pacific
- Rest of Asia Pacific
- Latin America
- Rest of Latin America
- Middle East & Africa
- South Africa
- Rest of Middle East & Africa
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