Module XII·Article I·~1 min read
Oil and Gas Market: Structure and OPEC
Commodity Markets
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Oil and natural gas are key energy resources of the global economy, determining the dynamics of inflation, balance of payments, and geopolitics. Global oil consumption is about 100 million barrels per day. The oil market is one of the largest commodity markets in the world in terms of trading volume. Understanding its structure is critical for investors, since oil influences a wide range of assets.
Structure of the oil market. The physical oil market: production (upstream), transportation and storage (midstream), processing and marketing (downstream). Main benchmark oil grades: WTI (West Texas Intermediate) — the American benchmark, traded on NYMEX; Brent — European and global benchmark (North Sea), the basis for pricing about 70% of global oil; Dubai/Oman — benchmark for the Asian market. The WTI-Brent spread reflects differences in quality, transportation costs, and regional balances.
Financial oil market: oil futures and options on CME/NYMEX and ICE. The volume of paper trading far exceeds physical production. Participants: producers (hedge revenue), refiners, airlines (hedge fuel), speculators (commodity hedge funds, CTA), financial investors (commodity index funds).
OPEC and OPEC+. OPEC (Organization of the Petroleum Exporting Countries) was established in 1960. Today it includes 13 members — Saudi Arabia, UAE, Iraq, Iran, Kuwait, Nigeria, and others. OPEC+ (since 2017): OPEC plus Russia, Kazakhstan, Mexico, Azerbaijan. Mechanism: members agree on production quotas, attempting to balance the market and maintain a target price. Saudi Arabia is the swing producer, providing balancing.
Oil price formation factors: fundamental (supply/demand balance, inventories), geopolitical (sanctions against Iran or Russia, conflicts), macroeconomic (global economic growth, dollar exchange rate — oil is traded in dollars), seasonal (winter demand for distillates, summer for gasoline). The energy transition creates long-term uncertainty: forecasts for the oil demand peak range from 2025 to 2040.
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