The world consumes over 30 billion barrels of oil per year, or about 84 million barrels a day.

The United States alone uses almost 20 million barrels a day, which is nearly 23 percent of global production. China is the second-largest consumer at almost 8 million barrels a day, or 9.5 percent, followed by Japan’s 4.7 million (5.5 percent) and India and Russia’s 3 million (3.5 percent). Therefore five nations alone consume 45 percent of the total global oil production.

Oil and natural gas plant liquids are produced in approximately 100 countries. The top five producers are Saudi Arabia with a 13 percent share of world production, and then Russia at 12 percent, the US at 9 percent and Iran and China at 5 percent. The Organisation of the Petroleum Exporting Countries, an organization of 12 oil-producing countries, produces over 40 percent of the world’s oil and has 60 percent of its reserves.

About 80 percent of the world’s accessible reserves are located in the Middle East. In 1973, the United States produced over 11 million barrels of oil a year, though presently it produces 9.1 million barrels. As a result, it must import 50 percent of its oil needs.

Petroleum, which means “rock oil” or “oil from the earth”, is mostly used, by volume, for producing fuel oil and petrol. After crude oil is removed from the ground, it is sent to a refinery by pipeline or ship.

About 84 percent of the hydrocarbons present in petroleum are converted into energy rich fuels.

Crude oil is measured in barrels (bbls), and a barrel is measured as 42 gallons in the US. A 42-gallon barrel of crude yields about 45 gallons of petroleum products, a processing gain of more than 6 percent. About 19 barrels of gasoline are produced from a barrel of crude, or 42 percent of the output, followed by diesel at 22 percent, jet fuel at 9 percent and heavy oil and liquefied petroleum gases at 4.5 percent. The remaining 15 percent is converted into other materials and used for chemical products such as pharmaceuticals, solvents, fertilizers, pesticides and plastics. For example, petroleum is used in ink, deodorant, CDs and even heart valves.

Crude is generally classified by the geographic location it is produced, its density and sulfur content. The categories are, light for low density, heavy for high density, sweet for low sulfur content and sour for substantial amounts of sulfur. Light is preferred as it produces a higher yield of petrol, and sweet is priced higher as it has fewer environmental problems and requires less refining to meet sulfur standards from consuming countries.

Brent, comprising 15 different oils from fields in the Brent and Ninian systems in the East Shetland Basin and North Sea, is the world benchmark for oil prices, although sale volumes are far below those of some other crude oils. Brent is used to price two-thirds of the world’s internationally traded oil. In the US the benchmark is West Texas Intermediate, which is a very high-quality, sweet and light oil. Prices on the New York Mercantile Exchange are therefore generally referred to as “light, sweet, crude”. The OPEC Reference Basket is a weighted average of oil blends from various OPEC countries.

Oil prices are determined by supply and demand, geopolitical events, weather, production bottlenecks and increasingly by speculation. Oil is traded on the spot markets and futures markets, and hit a high of US$147 a barrel in July 2008. It is presently trading at about $82 per barrel.

Anthony Galliano is chief executive of Cambodian Investment Management.

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