Crude Oil


Crude Oil Trading

Imperium Commodity Search builds and maintains relationships across the Energy sector and has an excellent network across both trading and brokerage shops covering the global crude oil space. 

Our consultants stay up to date on current events, news and price shifts in global crude and speak with oil professionals on a daily basis.  Imperium Commodity Search is well placed to assist both clients and candidates looking for growth in the crude oil markets. 

What is Crude Oil?

Crude oil is a fossil fuel composed of hydrocarbons and found beneath the earths crust.  In short, crude oil is the unrefined and raw material that goes into the production of petroleum/distillates.  Crude varies in colour dependent on viscosity and hydrocarbon content from black to yellow.  

First discovered during the industrial revolution, crude oil has become a key fuel globally and is the most important raw material that goes into powering day to day life around the world.  Crude oil is found by drilling down into the earth and is often found beneath natural gas deposits.  

Crude oil differs to many commodities in that it does not have a specific formulation or compound structure that makes it a base-level commodity.  Crude varies in content greatly between regions and sites and can be categorised in different ways dependant upon the type of crude that is being drilled. 

Crude oil is characterised primarily by the type of hydrocarbon compounds that are most prevalent.  These break down into paraffins, naphthenes and aromatics which all have their own specific application and are more important in certain distillates or products derived from crude oil.  Aromatics are important as a feedstock to the petrochemical industry with benzene being a common constituent of crude oil high in aromatics. 

Sweet vs sour crude refers to the level of sulfur (sulphur) content present.   Sweet crude oil is that which has less than 0.5% sulfur by weight and sour crude is that which has more than 1% sulfur by weight.  Heavier crude generally is more ‘sour’ than lighter crude.  

Crude oil is normally shipped via oil tankers to refineries, which process the crude, remove impurities and separate the hydrocarbons through a process of fractional distillation.  This converts crude oil into usable grades of fuel, from heavy residuals and heating fuels, gasoline and petrol, through to light ends like naphtha. 

Two common crude oil types are Brent and WTI (West Texas Intermediate) which are produced in the North Sea and America respectively.  Crude from these oil fields tends to be light and sweet in build, and thus is suitable for refining into Gasoline. 

How is Crude Oil traded? 

Crude oil is traded on both physical and derivative markets.  Physical trading occurs largely with majors, who manage the logistics, supply and distribution of crude oil to refineries globally.  This involves a lot of analytics and market coverage to ensure that crude is shipped to the refineries that demand it, and done so in a cost effective and timely manner.  The cost of transporting crude is huge and the global physical trading has to account for both the movement and timing of crude oil deliveries. 

Back to Back and Physical Arbitrage traders play an important role in the global availability and supply of crude oil, ensuring that the physical product is with the right people at the right time.  Back to Back traders ensure the supply chain keeps moving, purchasing crude from producers and selling it into refineries where they have relationships, ensuring availability of product.  Some trading houses will blend and store the oil ready for shipment as and when the market needs it, aiming to make a margin on the product between the purchase and sale of the crude oil. 

Derivative Traders trade WTI and Brent crude on exchanges for profit, either working with flow (in a fund or asset management set up) or prop basis (generating profit from own financials).  Derivative traders also work in house at oil majors and back to back trading houses to generate further revenues alongside the physical activity, drawing on experience and knowledge of the physical markets to generate returns on the futures markets across crude oil. 

Crude Oil Futures Brokers work with physical crude oil market participants on hedging their price risk and exposure to volatility in the markets.  Brokers have access to exchanges to execute and clear trades for both corporate and institutional market players.  Brokers must have a keen eye for the markets, movements and analysis behind them to ensure timely advisory and execution services are delivered to clients globally. 

Where is Crude Oil traded? 

Crude oil is a major global commodity; traded and refined on a global scale.  There are certain trade regions and partnerships that exist in the crude markets to give regions power in global markets.  OPEC (Organisation of the Petroleum Exporting Countries) is the key example of this; a political tie up of 14 oil producing stats accounting for almost half of all oil production and over 80% of known reserves. 

OPEC Members (in order of production volume): 

  • Saudi Arabia
  • Iraq
  • Iran
  • United Arab Emirates
  • Kuwait
  • Venezuela 
  • Nigeria
  • Angola
  • Algeria
  • Ecuador
  • Libya
  • Republic of the Congo
  • Equatorial Guinea
  • Gabon
In terms of the largest exporters of crude oil, these are the top 5 by quantity (bbl/day):
 
  • Saudi Arabia (8.3m)
  • Russia (5.2m)
  • Iraq (3.8m)
  • USA (3.8m)
  • Canada (3.6m)

The largest importers of crude oil (bbl/day):

  • European Union (14m)
  • China (8.4m)
  • United States (7.9m)
  • India (5.1m)
  • Japan (3.4m)
  • South Korea (2.9m)

Who are the key players? 

Most crude oil activity is generated from ‘majors’; very large crude oil exploration and trading companies that control millions of barrels of product each day.  

By revenue, the largest oil and gas companies globally (USD revenue 2018) are: 

  • Sinopec Group (China) 430bn
  • Royal Dutch Shell (Netherlands/UK) 388.4bn
  • Saudi Aramco (Saudi Arabia) 356bn
  • CNPC (China) 349bn
  • BP (United Kingdom) 304bn
  • Exxon Mobil (USA) 280bn
Outside of the majors/producers of crude oil, many firms exist in a back to back capacity to facilitate global trade within crude oil, such as Trafigura. 
 

What is the Salary for a Crude Oil Trader? 

Crude Oil traders are on high salaries compared to many commodity traders, primarily due to the margins, profit and scale of the trading activity within crude.  Experienced crude oil traders in Switzerland can earn well over 300,000CHF (Swiss Francs) per year in base salary, and sometimes in excess of 1MM CHF in bonus payments. 

Junior crude oil traders can expect much more modest starting salaries as they shadow experienced traders whilst learning the markets and building their own portfolio.  

Imperium Commodity Search – Specialist Headhunter to the Global Crude Oil markets

Imperium Commodity Search and her consultants have worked with crude oil traders, brokers and operators for years, covering front and middle office roles across trading houses, majors and brokerages globally.  We utilise a headhunt led and research backed approach to recruitment within the crude oil space, ensuring we are only matching exceptional candidates with exceptional clients and vice versa.  

If you are interested in finding out how we can assist you in finding your next opportunity in the crude oil marketplace, or are growing your trading team and looking to identify/source top talent, then please call us now on +44 (0) 203 927 5090 or register online here and one of our Oil and Gas Consultants will contact you ASAP.

To view our current crude oil and energy trading, operations and support vacancies click here or contact one of our consultants to discuss current careers / jobs in crude trading to discuss your needs in more detail. 

To arrange a consultation with a consultant to discuss your hiring needs / growth plans and where we can assist click here or contact one of our consultants directly here for a confidential discussion

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