Oil trading seems rife with potential volatility and uncertainty these days. Between geopolitical issues, price fluctuations, diminishing consumer demand, and global suppliers threatening to cut off energy supplies, every day holds new surprises in 2023.
The Covid-19 pandemic and the Russian invasion of Ukraine are prime examples of how quickly risks and stakes can increase when dealt with uncertainty. In this piece, we’ll look at oil trading and risk management trends from 2022. Here’s what you need to know:
Understanding Trends In Oil Supply And Demand Shifts
The Ukraine war has put numerous supply constraints on top of the usual oil and gas industry risks. We saw global oil demand decrease to 99.2 mb/d, but we’re expecting a gain in the coming year of 2.1 mb/d, which is more than the pre-pandemic amounts.
Meanwhile, the oil supply increased in North America to 99.5 mb/d due to the large output. As the Russian oil ban led Russia to shut down some of the wells, the production volumes in the United States and OPEC continued to increase to meet the supply shortfall.
Global Recession Risk Management
The Ukraine war increased the barrel prices to $140 per barrel last year, which decreased to 113$ in May. However, the inflationary conditions worsened as the end of the year approached. Banks globally are now trying to increase interest to balance out the recession risks prevailing in the American and European economies.
Also, oil prices increased exponentially as soon as the ban on Russian oil was announced by the EU members. It’s determined that inflation will continue to increase as electricity and other fuel and energy sources become expensive.
In this situation, oil and gas producers are at an advantage because they’ll have earned twice as more in dollars. However, the uncertainty because of the geopolitical situation is making it difficult for investors to make strategic capital decisions.
Investments In Modern Technology
Since organizations can’t predict or control world events, modern technology is now helping them mitigate risks regarding poor weather conditions and oil and gas industry risks. Many emerging digital tools can help increase dependability on production processes and reduce overall emissions.
Oil production, supply, and distribution companies invest in software and technology to help automate processes and use data insights to increase efficiency. This technology also helps them keep track of the oil production and supply process in real-time so they can manage commodity trade more efficiently.
Check Out BBGC For Commodities Trading Software Development Services
If you’re looking for commodities trading and risk management software development services to help you manage your oil and gas production and supply and keep an eye on the industry trends, BBGC can help you. Get in touch with us today for more information about our services.