LONDON--(BUSINESS WIRE)--SpendEdge has been monitoring the global crude oil market and the market is poised to experience spend growth of nearly USD 390 million between 2017-2021 at a CAGR of over 2% during the forecast period. Request Free Sample Pages.
Read the 102-page research report with TOC and LOE on "The Global Crude Oil Market, Pricing Outlook in Geographies that include APAC, North America, South America, and MEA, and insights into best practices to optimize procurement spend.”
Statistics of the global crude oil market indicate a new low with the oil price going negative in the US as the COVID 19 pandemic firms its grip on the global economy. Stockpiles of crude oil have reached their limit and are now becoming a major concern for suppliers. The reason for this appalling crude oil market condition can be directly attributed to the closedown of economic activities. However, there is no doubting the fact that the demand in the crude oil market will take an upward surge once the enterprises start large-scale activities to make up for their losses during the lockdown. This makes it critical for buyers to prioritize strategic partnership with crude oil suppliers who have the bandwidth to cater to ad-hoc requirements. Pricing terms should be the area on which buyers must focus while finalizing contracts with suppliers.
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Insights into market price trends:
- The discovery of shale gas in the US has resulted in a rapid increase in the production volumes of natural gas in the country. This has also led to a substantial decline in the crude oil market prices. Some petrochemical companies have moved from naphtha to natural gas for producing ethylene, as natural gas is cheaper in the country.
- Crude oil market price is projected to observe further slowdown owing to the wide popularity of electric vehicles in the developed nations. This has limited the consumption of primary crude oil products such as gasoline and diesel casting a negative impact on the crude oil market price.
What are the strategies that buyers must adopt to address the volatile demand scenario in the crude oil market?
Strategic partnerships with suppliers will play a vital role in achieving an optimal procurement in this market that is expected to be punctuated with extreme demand and supply uncertainties in the months to come. A collaborative initiative between buyers and suppliers will not only facilitate a risk-free procurement but will also help to unlock newer avenues to save costs. Insights into some of the strategies that buyers must follow while negotiating and during the contract period with suppliers are given below:
Enter into offtake agreements with suppliers
In an offtake agreement, suppliers agree to sell a portion of their future production to buyers. This helps them to secure supply of the product for future needs. It also helps suppliers to easily raise funds for the initial CAPEX required for various stages of crude oil production such as feasibility study and construction of production plants. Buyers gain the benefit of securing the supply of the product at lower than the prevalent or future prices due to terms associated with offtake agreement.
Collaborate with suppliers to monitor global crude oil market dynamics
The global crude oil supply market is considerably affected by factors such as geopolitical instability in MEA, the discovery of new shale oil reserves in countries such as the US and Canada, and changes in environmental regulations pertaining to drilling and fracking. Thus, buyers should partner with suppliers to gather market intelligence and predict demand-supply dynamics. This will also help buyers and suppliers gauge the impact of factors such as changes in export and environmental laws and allow them to offset any possibility of supply disruptions.
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Some of the key topics covered in this report are:
- Crude oil market spend segmentation by region
- Total cost of ownership analysis in the crude oil market
- Regional spend opportunity for crude oil suppliers
- Crude oil suppliers cost structure
- Crude oil pricing models analysis
- Crude oil procurement best practices
- Category management objectives
- Cost saving opportunities in the crude oil market
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