The price of crude oil in Western Europe is linked to a price of high quality crude oil produced in an oil field in the North Sea called “Brent”. All other crude oils traded in Europe are priced with Brent oil as an index. The price of crude oil varies depending on differing contents of diesel fuel, petrol, viscous oil and heating oil. Sulphur deposits above all, but also metals and other elements have a large impact on prices as well. A crude oil with better quality properties than “Brent” is usually somewhat more expensive and accordingly a lower quality crude oil is somewhat cheaper.
Figure 4. The crude oil price on the world market.
Until the mid-1970s, it was very common for oil companies to purchase crude oil and related products on long-term contracts, with delivery volumes and prices agreed for longer periods of time. These days almost all trading in petroleum products is done on shorter contracts, on the spot market, where the pricing follows up-to-the minute quotations, the Rotterdam quotations. All oil prices in international oil trade are quoted in USD. The oil price has historically shown great variations. Apart from supply and demand, the price of oil is affected by factors such as global and regional political and economic developments in the commodity-producing regions, as well as to what extent OPEC and the other oil-producing countries affect global production levels. The oil price is also affected by a number of critical factors, such as the global economic situation, prices of alternative fuels, weather conditions and political turbulence. Crude oil and finished oil products, of equivalent quality, are traded at a market price which is generally the same around the world for the specific oil, excluding shipping costs. EIA forecasts a rising oil price in the future.