Did you know that oil is used to create nearly every product that people use?
When most people think about oil, they tend to think about gasoline and transportation. What they don’t realize is that oil is an essential component of almost every product. This is why, when the price of oil rises, the prices of other seemingly unrelated items rise as well.
If you want to understand why oil is priced the way it is, it’s important to know how to trace oil money. To help you out, we’ve created a guide. Keep reading if you want to find out more.
The Role of The United States
Until the 1960s, the United States was the world’s top producer of crude oil. This changed when OPEC was formed. In nineteen fifty-nine, the United States created quotas that said that imports could not be higher than nine percent of domestic consumption.
But in the 1960s and 70s, people started consuming more oil. At the same time, the USA’s domestic crude output declined. This gave oil exporters, including OPEC, more market power.
It wasn’t until 2011 that the United States’ domestic oil output started to rebound. This reignited the rivalry between OPEC and the United States.
There have also been many exciting technological innovations within the last twenty years such as the creation of software for trading oil that has these capabilities.
The Role of OPEC
The Organization of the Petroleum Exporting Countries (OPEC) was formed in nineteen sixty by oil-exporting countries that were in the process of development. Their goal was to have more control over their domestic oil production. They also wanted to have more influence over the global supply of oil.
If you are trying to figure out how is oil traded, it’s important to understand the role that OPEC plays. The five founding member countries are Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. There are also thirteen other member countries.
Every country that is part of OPEC has one vote and it’s necessary to have unanimous consent for the organization to make a decision.
Since Saudia Arabia produces much more oil than other member countries of OPEC, this country has always had more influence. Each OPEC member benefits when oil prices are higher.
At the same time, each member country has a good reason to produce more oil than its quota. By doing this, they are able to increase their revenue. This is one of the reasons why countries are always accusing one another of cheating.
Understanding Oil Money: A Complicated Global Network of Oil-Producing Countries
If you’re trying to figure out who controls the trade of oil and how oil money works, it’s important to understand how much influence OPEC has over global oil prices. The United States also plays a huge role in how oil gets traded.
If you want to find out more about the oil industry, don’t forget to check out the Business section of our blog.