Crude Oil

Crude oil is a liquid fuel source located underground. It is extracted through drilling. Oil is used for transportation, heating and electricity generation, varied petroleum products, and plastics.

Crude oil is a naturally occurring fossil fuel - meaning it comes from the remains of dead organisms. Crude oil is made up of a mixture of hydrocarbons - hydrogen and carbon atoms. It exists in liquid form in underground reservoirs in the tiny spaces within sedimentary rocks. There are over 160 different types of crude oil traded on the market.

West Texas Intermediate (WTI), Brent Crude, OPEC Reference Basket, Dubai Crude, Bonny Light and Urals are just six of many.

Crude Oil is a liquid found within the earth compromised of hydrocarbons, organic compounds and small amounts of sediments and metal. Within the industry, people talk about ‘Crude Oil’ as if it is just one standard liquid form. However, this is far from the truth.

Crude Oil extracted from the ground in its natural unrefined state varies considerably in its density and consistency, from a very thin and volatile liquid to an extremely thick, semi-solid heavy weight oil. Furthermore, the colour of Crude Oil extracted from the ground can range substantially, from a light golden yellow to a deep dark black.

As we have now established, ‘Crude Oil’ is a term used to describe many different types of raw oil extracted from the ground. Within the industry, we categorize these different types into four main categories based on three factors: their viscosity, volatility, and toxicity.

Viscosity refers to the oils ability to flow. Higher viscosity oils do not flow as easily and therefore take more energy and effort to pump from the ground.

Volatility describes how quickly and easily the oil evaporates into the air. Higher volatility oils need additional processes to control their environments during extraction to ensure that as little oil as possible is lost.

Toxicity refers to how poisonous and harmful the oil is to the environment, wildlife, and humans during the extraction and refinement process. When oil spills do occasionally occur, each oil poses different challenges and priorities during the cleanup.

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With that said, the four main types of Crude Oil are:

Extracted in its natural unrefined state from the ground, crude oil significantly varies in its consistency and density – from a volatile and relatively thin liquid to a semi-solid and viscous substance. Still, often referred to as the ‘black gold’, the color of different crude oils may also vary from a light, golden yellow to dark black.

Main factors of crude oil classification

West Texas International (WTI)

WTI, often referred to as US Crude, is a premium-quality crude oil, highly valued around the world. It’s a common belief that more and better gasoline may be refined from one barrel of WTI than from any other type of oil traded on the market.

West Texas Intermediate is a light and sweet crude oil refined in the United States, which is one of the largest gasoline-consuming countries. WTI is usually priced $1 or $2 higher than it’s peer Brent Crude oil and $3 or $5 higher than OPEC Basket oils.

Brent Crude

Brent Crude is also an important benchmark, which typically serves as a benchmark for oil prices around the world. Mostly extracted from the North Sea, it consists of Brent Blend, Forties Blend, Oserberg and Ekofisk crudes – known as the BFOE Quotation.

Brent Crude is also an excellent source for producing gasoline and middle distillates. Mostly refined in Northwest Europe, Brent Crude is a primary oil type in Europe and Africa.

OPEC Basket

OPEC oil serves as a combination of seven different types of crude oil coming from Saudi Arabia, Nigeria, Algeria, Dubai, Venezuela, Indonesia and Mexican Isthmus. Founded in 1960, OPEC, or the Organisation of Petroleum-Exporting Countries, is one of the major players in the oil industry, managing oil production and sale within its jurisdiction.

OPEC oil is less sweet and much darker than WTI and Brent, which makes it a bit cheaper, but it remains extremely important on the global oil market.

Countries by oil Production :

This is a list of countries by oil production, as compiled from the U.S. Energy Information Administration database for calendar year 2020, tabulating all countries on a comparable best-estimate basis. Compared with shorter-term data, the full-year figures are less prone to distortion from periodic maintenance shutdowns and other seasonal cycles. The volumes in the table represent crude oil and lease condensate, the hydrocarbon liquids collected at or near the wellhead. The volumes in the table do not include biofuel. They also do not include the increase in liquid volumes during oil refining ("refinery gain"), or liquids separated from natural gas in gas processing plants (natural gas liquids).

Under this definition, total world oil production in 2020 averaged 76,124,800 barrels per day. Approximately 71% came from the top ten countries, and an overlapping 36% came from the thirteen current OPEC members, in the table below.

In recent history, the top three producers have been the United States, Russia, and Saudi Arabia. Each of these countries experienced major production declines at different times in the past, but since 2014 all three have been producing near their peak rates of 9 to 11 million barrels per day.Saudi Arabia and Russia also top the list of oil exporting countries.The monthly U.S. oil production reached 12.86 million b/d in November 2019, the highest monthly level of crude oil production in U.S. history. In May of 2019, the country became a net oil and gas exporter, the first time since 1953.