Page 49 - MEX-Yearbook-2017

Fundamental Facts • The maintenance and replacement of oil producing equipment lead to
• Brent Crude works as hedging and benchmark for most of the oil halt in the oil supply. Typically the summer maintenance period between
July to September takes place each year in the North Sea.
commodities. WTI, LLS, Mars, and Dubai are priced relative to the
Brent’s prices. It accounts for less than 1% of the world crude oil • Higher Brent Crude oil prices can help to increase inflation; the result
production but helps to determine the price of more than 60% of the can lead to recession of oil consuming countries.
internationally-traded crude oil.
• Western countries consume most of the oil exported that are produced • Brent Crude price will fluctuate if there is any disruption on the physical
by Europe, Africa, and the Middle East. So, Brent Crude remains as a market due to geopolitical events, logistic issues and changing global
relative gauge for the pricing of all the oils. demand.
• Gasoline and middle distillates such as kerosene, diesel, jet fuel and
heating oil are produced from Brent crude when refined. • Producers and marketers of Brent can minimize the risk of price
• Brent crude price is affected by any events of global economy, so it is fluctuations in the Brent oil market by using a short hedge, so that they
affected by political and economic events of key regions like the Middle get a specific amount as per the contract, for their oil supply even if the
East and oil refining countries. prices fall in the future.

World Oil Demandmb/d World Oil Supply
mb/d
98 98
96 97
94 96
92 95
90 94
88 93
86 92
91
90
89
88
87
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017
1Q2014
2Q2014
3Q2014
4Q2014
1Q2015
2Q2015
3Q2015
4Q2015
1Q2016
2Q2016
3Q2016
4Q2016
1Q2017

1Q2014-1Q2017 1Q2014-1Q2017

Source: OECD/IEA Brent Crude Source: OECD/IEA

1000 Futures
Spot
L 800
Brent Crude is extracted from January
the North Sea and comprises O 600 February

Brent Blend, Forties Blend, T 400 March
Oseberg and Ekofisk crudes April
The Brent Crude oil marker 200 May
is also known as Brent Blend, June
S July
London Brent and Brent August
petroleum. 0 September
October
November
December

Months (January 2017 - December 2017)

MEX NEPAL YEAR BOOK 2017 | 48