Global oil companies around the world

1. CLASS ASSIGNMENT ; BANKING AND
INSURANCE
FIN301TOPIC : - GLOBAL OIL PRICES
Faculty Name :- Mr.Suresh Kashyap
Presented by: Kutoma.
Damanjeet Singh
Amritpal Singh

2. CONTENTS :-
 INTRODUCTION
 HISTORY
 MAJOR OIL RESERVES
 WHAT DETERMINE OIL PRICE AT GLOBAL LEVEL
 THE OIL FUTURE MARKET
 THE FUTURE CONTRACT
 HOW IS THE OIL PRICE DETERMINE IN INDIA
 ADMINISTERED PRICE MECHANISM

3. INTRODUCTION :-
 The petroleum industry
includes the global processes
of exploration, extraction,
refining, transporting and
marketing petroleum
products.
 The largest volume products
of the industry are fuel oil and
gasoline (petrol).
 Petroleum (oil) is also the raw
material for many chemical
products, including
pharmaceuticals, solvents,
fertilizers, pesticides, and
plastics.

4. HISTORY :-
 Petroleum is a naturally
occurring liquid found in rock
formations.
 It consists of a complex
mixture of hydrocarbons of
various molecular weights,
plus other organic compounds.
 It is generally accepted that oil
is formed mostly from the
carbon rich remains of ancient
plankton after exposure to
heat and pressure in the
Earth's crust over hundreds of
millions of years.

5. MAJOR OIL RESERVES COUNTRIES :-
1 Venezuela 297,740
2 Saudi Arabia 268,350
3 Canada 173,625 - 175,200
4 Iran 157,300
5 Iraq 140,300
6 Kuwait 104,000
7 UAE 97,800
8 Russia 103,000
9 Libya 48,014

6. 1. VENZUELA :-
 It is the world largest petroleum
reserve.
 Largest suppliers to the United
States sending about 1.4 million
barrels/day.
 The production rate will be same
for the next 234 years, said by
the OPEC. (Organisation of
Petroleum Exporting Countries).

7. 2. SAUDI ARABIA :-
 It is the second largest oil
reserve country in the
world.
 It has the one-fifth of the
total oil reserves.

8. WHAT DETERMINES OIL PRICE AT GLOBAL LEVEL
 TWO PRIMARY FACTORS
 SUPPLY AND DEMAND “When the demand for
oil is high, the price will be high and when the
demand is low, the price will be low
 MARKET SENTIMENT “A subjective
measure of how investors are feeling about a
security or market

9. Its an organization that
contains nations that
sell oil to other
nations…example ,
Saudi Arabia, Iran, Iraq,
united Arab emirates,
Venezuela etc.
Organization OF PETROLEUM
EXPORTING COUNTRIES..”
THE OIL future MARKET
The purpose of OPEC, a cartel, is to control the
production of oil and to establish favorable oil prices for
the member nations

10. THE FUTURE CONTRACT
 the future contract is a binding agreement
that gives one the right to purchase oil by
the barrel at predefined price on a
predefined date.
 However, no company purchases oil at a
fixed price as the oil prices are unstable
hence change at any time

11. HOW IS THE PRICE OF OIL DETERMINED IN INDIA?
 Let as assume that oil is being imported by
IOC (Indian Oil Corporation) from a company
in Saudi Arabia. The price at which this oil is
purchased is called FOB Price
 As the oil is in transit its exposed to certain
charges such as… Ocean Freight, import
charges like; Insurance charges, Port Dues,
Ocean Losses and Customs Duty

12. WHY DOES INDIA PAY MORE ONE
 when we add c&f price, import charges and custom
duty we get a very important term called ipp, i.e.
import parity price.
IPP = C&F Price + Import Charges + Custom Duty
End result high oil price
 This will result to Indian oil companies paying
more money on than the opec member country

13. ADMINISTERED PRICE MECHANISM (APM)
 this is a mechanism which actually involved
artificial price fixing by the government from
time to time though the government has no
full control over this
Now through Administered Price Mechanism
(APM) government is able to provide some
subsidies