Crude oil is a fossil fuel; this means it is a mixture of hydrocarbons which formed million years ago from plants and animals. It exists in liquid form in underground reservoirs. Historically, crude oil that would seep to the surface was used to waterproof boats and for construction purposes.
The earliest oil wells were in ancient China 347 A.D. this marks some of the most initial oil extraction from the earth through wells and rigs. The workers in China used bamboo poles to enhance the drilling process, after which it was used as fuel to provide energy for the booming Chinese salt industry. Whale oil used to be the essential fuel but by 1950 crude oil replaced it.
Technology and Oil Extraction
Due to technology advancement, the extraction process has grown to a more complex and compelling. In today’s world oil from the ground is sent to a refinery where its separation occurs to form usable petroleum products such as gasoline, diesel, jet fuel, heating oil, plastics, asphalt, waxes, crayons and others.
These separations are based on the difference in grades and types of crude; this also is a determining factor of oil price as well as categorizes system of machinery example of cars, some uses diesel, gasoline, and compressed natural gas among others. These types include; light oil has low-density viscosity, heavy crude is the second type characterized by higher density, the third one is sweet oil which has low sulfur and the last one is sour crude that has more sulphur content. Globally, the light sweet type has the highest demand as it requires the least amount of refinement.
In the market today, oil is the most prized commodity thus creating a vast variety of worldwide contracts and different cars with differing levels of prices. Therefore, traders have a hard time locating a benchmark that is suitable for their kind of trading. Example West Texas Intermediate crude oil is of high quality due to light weight and low sulphur content and together with Brent Crude marks as the standard for most western oil traders.