Why Different Varieties of Crude Petroleum Command Different Prices

Crude petroleum comes out of the ground in a surprising variety of types, grades, and basic kinds. While all petroleum is formed from the long time decay and mixing of various sorts of biological material, local geological conditions and other factors influence the character of the final product. As a result, crude petroleum pumped in one part of the world will often differ fairly significantly from that which is typical of another region. As this website makes clear, this fact sometimes ends up making more of an impact than might be assumed.

One of the most significant ways by which certain types of crude petroleum differ from others is by containing more or less sulfur. The vast majority of the petroleum that is pumped from wells every day will be refined before being used in particular applications, but the work of refining it will differ depending upon the composition of the raw material. Of all the undesirable substances that raw, crude petroleum can contain, sulfur tends to be the most troublesome and costly to deal with and dispose of. As a result, varieties of crude that contain less sulfur will normally fetch a higher price on the market, since they will necessitate less investment in order to achieve the same final output.

While sulfur content is one especially important way by which various types of crude differ, there are others that are nearly as significant. A given barrel of crude oil will typically be turned into a number of different kinds of fuel, from low-grade bunker oil to highly refined gasoline. Each of these final products will fetch a particular price of its own on the market, and different varieties of crude petroleum will tend to have their own characteristic output profiles. A form of crude petroleum that lends itself to the production of more valuable refined fuels will therefore also tend to be priced at a premium on global commodity markets.

Because of these factors and others, assessing the real world impact of particular petroleum pricing movements can be more complicated that it might seem. While market forces tend to regularize the results that follow, drivers fueling up their vehicles might sometimes be in for a surprise if they put too much stock in news about particular petroleum price fluctuations.