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Trading and Price Discovery for Crude Oils: Growth and Development of International Oil Markets - Paperback | Diverse Reads

Trading and Price Discovery for Crude Oils: Growth and Development of International Oil Markets

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This is a book about the international oil market. It takes a historical perspective on how the market emerged, developed, and became what it is today—the biggest commodity market in the world. It is mature and complex, but far from perfect. Throughout most of its 150-year history, the oil market has been monopolised by companies and governments. For only a fraction of that, oil traded in a relatively free market. As a result, we had to live with ‘big oil’, economic shocks, high oil prices, instability and wars. Using a simple concept of market power, this book will explain the meaning of ‘oil price’ and how it is established while offering a valuable lesson for other commodities.

Market power is the key to understanding the ‘price of oil’. This book uses a simple concept of price-makers and price-takers to examine the evolution of oil markets, their structure, and prices. The early decades of the oil industry were competitive with low barriers to entry. Barely 25 years later, the Standard Oil company created a refining monopoly, buying oil at its own ‘posted’ price. In the following century, the cartel of major oil companies, helped by their governments, did the same at the international level. OPEC helped producing governments regain control of their own resources, but the organisation was never able to retain a similar level of control. After 1986 price collapse, OPEC abdicated the price-making function in favour of the market. While it never gave up attempts to influence prices, OPEC had to link their official prices to one of the global oil benchmarks. Modern international oil markets function because of oil benchmarks such as Brent, WTI and Dubai.

This book showcases:

• How oil traders played a prominent role in development of the industry

• How policies of consuming nations helped oil cartels

• Why and how the US price of oil was negative

• How AI has changed the way markets operate and the way in which the markets are likely to change in future


This book explores how oil markets grew, functioned, and have occasionally failed to do their job. The ecosystem of derivatives or ‘paper barrels’ trading in far greater volume than physical oil plays a very important role in mitigating risk. With this core tenant, setting the ‘price of oil’ is explained in detail.

ISBN-13: 9783030717209

Media Type: Paperback

Publisher: Springer International Publishing

Publication Date: 05-20-2021

Pages: 252

Product Dimensions: 6.10(w) x 9.25(h) x (d)

Adi Imsirovic, PhD, is a Senior Research Fellow at the Oxford Institute for Energy Studies (OIES). He was a Head of Oil Trading at Gazprom Marketing & Trading, Director, a regional manager of Petraco, Singapore, and a Regional Head of trading for Texaco in Asia. Adi taught Energy Economics as well as Resource and Environmental Economics at Surrey University for several years. He has published a number of papers and book chapters on the subject of oil prices, benchmarks, and energy security. Adi is a Fulbright Scholar and studied at the Graduate School of Arts and Sciences, Harvard University. @AdiSurreyEnergy

What People are Saying About This

From the Publisher

“This book will have wide appeal in the energy industry, among academics, regulators and practitioners, and will be of interest to those keen to understand the economic history of the life-changing business of oil …” (Petroleum Economist)

“Having known Adi for more than 30 years and traded with him, I am certain there is no better person to write about the history and the workings of the oil market. His insights in the most complex commodity market in the world are applicable to other markets as well. A must read for anyone involved in commodities.” (Marco Dunand, Chief Executive Officer, Mercuria Energy Group)

“The evolution of oil markets and of government attempts to control them is the theme of Adi Imsirovic’s fascinating book. Imsirovic covers this in impressive detail, reviewing the current state of the markets including the role of benchmarks, some of which are currently in flux. Written by an insider with hands-on experience in oil trading who knows how markets work and have developed, there is much we can learn in this book.” (Adrian Binks, the Chairman and Chief Executive Officer, Argus Media)

“As someone who has walked the walk in trading and given it proper academic thought, Imsirovic is ideally placed to start well-informed and insightful discussion around the history of some of the world's most important energy benchmarks and help shape the discussion around what opportunities and challenges the future may hold.” (Dave Ernsberger, Global Head of Commodities Pricing, S&P Global Platts)

“Oil is an increasingly competitive business, but oil markets are esoteric and rarely well understood. Adi Imsirovic’s book combines insider knowledge of markets and prices with economic rigor yet is accessible to all. The price of oil is a key global economic indicator, reported daily even in the generalist press. What determines the price? Which factors influence it? In this book, history, anecdotes, and details combine to unveil the riddle. Oil still moves the world, and markets move the oil.” (Giacomo Luciani, Paris School of International Affairs)


Table of Contents

Chapter 1: Introduction.- Chapter 2: Oil, Policy and Market Power.- Chapter 3: Looking at the Mirror: Early Days of the Oil Markets in the United States.- Chapter 4: From Competition to Monopoly.- Chapter 5: From Monopoly to Competition (Oil Markets Going Global).- Chapter 6: Governments and Oil Markets.- Chapter 7: From one Cartel to Another.- Chapter 8: Producers and Companies: Transfer of Power.- Chapter 9: The Producers’ Cartel.- Chapter 10: Governments and Markets.- Chapter 11: Benchmarks: Brent.- Chapter 12: Dubai and Oman: Brent’s Asian Relatives.- Chapter 13: US Oil and the WTI Benchmark.- Chapter 14: Global Oil Markets: Lessons From the 2020 Covid-19 Pandemic.- Chapter 15: Epilogue.