Traded Commodity: Crude Oil (Business & Marketing Essay)

Traded Commodity:
Crude Oil
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Commodification of Crude Oil
Supply Chain of Crude Oil
Crude Oil Market
Crude Oil Pricing History
Reasons for Fluctuation
ConclusionCommodification of Crude Oil
People have been relying on the world's natural products. All the things we consume, from basic needs to luxuries, are made from and with nature's materials. Some factors allow these natural materials to be produced into a consumable good, such as production and labor costs, exportation, and many others. These factors commodify or put a monetary value on the natural material for it to be regulated. If not, it might get abused and consumed to its maximum.
One of the commodified natural material that is highly consumed by the world is crude oil. Crude oil is a natural petroleum material. It is one of the nonrenewable fossil fuels found underground along with natural gas. This natural material is mined by digging of land/ground areas that are rich in natural fossil fuels and gasses. As mentioned earlier, crude oil is highly consumed because it is processed into many every day consumed goods like kerosene, gasoline, and asphalt which is used for concrete building (Fazli, Mavi & Vosooghidizaji, 2015).
Supply Chain of Crude Oil
Before crude oil reaches the market, it undergoes processes that are handled by several experts. Since crude oil is harvested from underground and deep-sea, such areas are examined by land experts such as geologists. They study the ground and the factors such as a gravitational activity that can affect the mining procedure. Once the land is cleared, the area is explored for the presence or amount of the natural resources. After this procedure, well construction will start by designing the whole mining operation like the positions of excavating machines. The design and construction will ensure the safety of the people working in the mining area. Once this is done, the production of crude oil will commence. In this step, excavation of land will start the mining and extraction of crude oil from land and/or sea. Extracted crude oil will not be transported to a storage facility where it will stay until transported to other supply chains. From the storage, crude oil will go to refineries where it will be processed into usable materials. After the refinery stage, the usable material from the crude oil will go to feedstocks. In this stage, refined material from crude oil will be utilized as a material for other goods such as lubricants, plastics, equipment, etc. On the other hand, refined fuels will go to terminals. From there, it will go to its selling point where it is demanded. Some of the selling points are gas stations, manufacturing companies, etc (Fazli, Mavi & Vosooghidizaji, 2015).
Crude Oil Market
The demand for crude oil in the market never falls. Because it has many uses in our everyday living, crude oil never runs out of the target market. Because of this, many dive into the petroleum business. Business enthusiasts enter the industry to make a profit from demand. The demand for crude oil, despite the need of the world for it, also goes through highs and lows just like any commodities. It is important to go with the supply and demand to kn...