Russian President Vladimir Putin 's brutal war in Ukraine caused global gasoline and diesel prices to hit new highs this spring.
Concerns about the geopolitical consequences of the invasion have prompted a surge in oil market prices, with Brent crude, one of the three major industry benchmarks, rising to $125.19 (£105.74) a barrel on June 14, according to Market Watch. Highs, as conflict intensifies in Eastern Europe.
Russia normally exports about 5 million barrels of crude oil a day, accounting for more than 5% of the global total, but in light of the Kremlin suppliers are now reluctant to deal with the country despite the West's sanctions campaign to keep the lights on. lamp.
Traders are worried about further instability after placing orders that could prevent their oil from being delivered, and are worried about transactions involving Russian bank being sanctioned after being outside the Swift payment system used to complete payments between lenders complications. sex.
Russian crude is currently selling at a deep discount, but few European buyers are participating, while Chinese and Indian traders lack the capacity needed to make up for the shortfall.
Given this background and the fact that refined oil is the basic ingredient in the production of gasoline, fuel prices at the pump have begun to rise accordingly, which is more bad news for consumers who are already facing a cost of living crisis as the global economy Efforts are underway to rebound from lockdowns imposed to combat the coronavirus pandemic.
But what exactly is Brent crude oil, why is it used to judge value, and why is it affected by events in Eastern Europe?
International oil trade typically buys and sells about 100 million barrels of oil per day, but it is actually a relatively new phenomenon, with the first trade between the United States and Britain taking place in 1861, when the cargo ship Elizabeth Watts(Elizabeth Watts ) sailed from pennsylvania first shipment to london.
Trade remained largely regional until After World War II trade gradually began to become more global as large corporations exerted greater control over the world's natural resources.
Brent crude oil is drilled from Shell's North Sea field of the same name between the Shetland Islands and Norway, and was used starting in 1985 as a benchmark for judging the price of a barrel of oil because it is light and "sweet" , and therefore easy to refine into fuel.
Because it comes from the sea, it can be easily transported by chartered tankers and the pumping volume can be adjusted according to demand, ensuring that the supply remains consistent.
As production from the Brent field declines, oil from other nearby fields - Forties, Oseberg and Ekofisk (the four collectively known as "BFOE") is included in the mix that makes up the benchmark.
Today, Brent crude oil accounts for only a small portion of the actual daily production of oil, but determines 60% of the value of oil contracts, futures and derivatives transactions, not least because of the 13 powerful countries that make up OPEC ( OPEC , which controls most of the world's oil production and distribution, uses Brent crude as its benchmark.
Other competing benchmarks are West Texas Intermediate (WTI) and Dubai/Oman WTI. , Brent crude has the advantage of being equally conducive to fuel production, it comes from landlocked oil fields in the southern United States, which, as the name suggests, means it's less easy to transport because it relies on and is constrained by pipeline capacity
Having said that, WTI. The fact that it originates from the relatively stable continental United States means it is less likely to be affected by the market swings of geopolitical conflicts than Brent.
However, Brent's future as an industry benchmark is uncertain. determined, as resource depletion and China's recent efforts to promote Shanghai crude oil futures as an Asian alternative pose a threat to its position
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