Oil markets dubai
The API gravity scale measures how heavy or light a crude oil is, relative to water thus the terms heavy and light oil. The API gravity of a crude oil is measured by taking its specific gravity density relative to water , and calculating:. Sulfur content is another important determinant of value; the lower the sulfur content the better.
So-called "sweet" oils are low in sulfur, while "sour" oils have a higher sulfur content. There are some differences in crude oil quality among the major trading regions.
Pricing of heterogeneous commodities often involves establishing a benchmark or "marker" prices that is used to track general price movements. Pricing in any particular transaction is based on the marker price, with adjustments for location and quality. Below are some brief descriptions of some of the major global benchmark oil streams, and the Energy Information Administration has a very nice article on the most important global marker prices.
Earlier, I mentioned that when demand increases, higher-cost supplies must be brought online to meet that higher demand. Does this mean that a few years ago we thought all of the cheap oil in the world was gone, but we have now discovered new supplies of cheap oil?
And if not, then what explains the price movements that we have seen in the oil market in recent years? The answer depends on some understanding of the cost of supplying crude oil. The low-cost resources are conventional oil fields that have been operating for decades. If the producers of conventional oil were to flood the market, then the price would drop so low that unconventional players would be forced to shut down.
This would be good for consumers right now, but bad for the producers of conventional oil and eventually for consumers , since there would be less oil to sell later on.
Thus, conventional oil producers hold some output back, leaving the unconventional producers to serve the leftover or "marginal" demand. This is good for conventional oil producers in both the short and long term because they earn larger profits , but is bad for consumers in the short term.
In the long term, this strategy keeps prices from rising to even higher levels in the future. Part of the reason that crude-oil prices have been so high for so long is the increased role that unconventional oil is playing in world oil supply. This is due in some part to the natural decline in output that is expected from conventional oil fields as they mature more on this later when we talk about "peak oil".
The growth in unconventional oil supplies has been so rapid that countries with large reserves of unconventional oil, such as the United States, have become large oil producers in a very short period of time, as shown in Table 1.
OPEC's actual ability to manipulate oil prices is not all that clear, and its influence has dwindled as more "unconventional" petroleum resources have been developed, including the oil sands in Canada and shale oil in the United States.
Most cartels are difficult to sustain, since each member of the cartel has an incentive to cheat - in OPEC's case this means that countries have often produced more oil than they were supposed to under the quota system, as shown in Figure 1. Saudi Arabia's production decreased by 0. Prices did indeed go up, but largely as a result of fear and higher taxes rather than actual supply shortages.
The actual production cuts lasted only three weeks; the embargo fell apart in December when Saudi Arabia raised production. While OPEC has historically been viewed as a cartel that keeps oil prices high, its members have, more recently, probably been at least partially responsible for the rapid decline in oil prices.
The Economist has a nice and recent article describing the factors that have been contributing to the slide in oil prices. This has been partly due to sluggish economies in developing countries, energy efficiency in rich countries, the boom in shale-oil production in the United States which we will come back to in a few weeks and a strategic decision by Saudi Arabia to maintain high oil production levels even in the face of low prices this is perhaps an attempt to inflict economic pain on the shale-oil business in the U.
While the market for oil is global in reach, trade has clustered itself into several primary regions. This has happened despite shipping costs that are generally low only a few dollars per barrel and the ease with which oil cargoes can be directed and redirected towards the highest-priced buyers in financial terms, oil is "fungible". Nevertheless, prices in these regions tend to move in tandem. In the homework assignment for this week, you will get some hands-on experience using prices for some of these regional crude oils to investigate how world oil prices move relative to one another.
One reason for regional pricing of crude oil is that it is a heterogeneous commodity - not all crude oils are alike. Some oil can be extracted at a cost of a few dollars per barrel, and flows like water it would look like Coca-Cola coming out of the ground.
Other oil requires sophisticated equipment, techniques and processing to extract, and is thick as tar, requiring special methods to transport it to the refinery and to refine into saleable petroleum products.
In general, oil with a low viscosity is referred to as "light," while thicker, higher-viscosity crude oils are referred to as "heavy. The API gravity scale measures how heavy or light a crude oil is, relative to water thus the terms heavy and light oil.
The API gravity of a crude oil is measured by taking its specific gravity density relative to water , and calculating:. Sulfur content is another important determinant of value; the lower the sulfur content the better.
So-called "sweet" oils are low in sulfur, while "sour" oils have a higher sulfur content. There are some differences in crude oil quality among the major trading regions. Contact us with any questions at info durise. The property has also witnessed 4. How do oil prices influence the Dubai real estate market. Decrease in the price of oil has many multiplier effects we will try and examine how a low oil price will impact real estate in Dubai. Federal government of the United Arab Emirates UAE has relied on its oil wealth since the s to fuel growth and development of its country.
Reduction in the price of oil reduces its revenues and therefore its fiscal spending. In July , UAE removed fuel subsidies enjoyed by its residents, as a measure to cut cost and improve finances. UAE is expected to post budget deficit first time since and this was one small step reduce the deficit.
Therefore the price of oil has not yet had a negative impact in the volume of real estate transactions in Dubai. One of the reasons is the Dubai labour market. Dubai is the second most popular destination of retailers present, followed by Shanghai surpassing New York in