Blockchain to increase efficiency in crude oil trading
By using blockchains to create immutable ledgers that people among the participants can share, there should be no doubt about who owns or controls assets or data. Let’s discuss how blockchain increases the efficiency of crude oil trading.
They are a fundamental component of the industry, and all parties involved – buyers, sellers, retailers and manufacturers – face risk. Blockchain technology has the potential to change how these relationships work by automating business processes and fundamentally changing the way we think about transparency in our global marketplace. Before you start oil trading, however, you may consider knowing about the advantages and disadvantages of oil trading.
The section below will examine blockchain technology’s potential impact on the international oil trade. We will outline some significant changes with this new technology and discuss specific implementations in the oil and gas industry.
Blockchain technology uses advanced cryptography and a distributed network to protect transactions from counterfeiting. The technology allows the rapid transfer of assets through the exchange of digital information and is constantly evolving to make transactions faster, safer and more secure. Blockchain can make all participants in a transaction more efficient by eliminating the potential for fraud in data management while increasing transparency as each transaction is logged on a shared database visible to all parties involved.
Areas where blockchain can help:
There are various areas where blockchain can be implemented across the oil and gas value chain, for example field-to-refinery trading, commodity trading intermediaries or supertankers trading oil over seas. By improving transparency and linkages in the supply chain, this technology can lead to significant efficiency gains throughout the value chain and significant cost savings for customers.
Supply chains:
Demand for oil is currently increasing, which means there is a need for more efficient ways to move oil between sources and refineries around the world. The main driver of this increase has been the rapid growth in emerging economies such as China, India, Mexico and Brazil. As these markets expand, the importance of speed increases, further driven by the price volatility that affects prices during transportation and refining.
Some of these new markets are also home to oil-rich resources and will potentially increase global oil demand in the future. These economies have some of the largest reserves in the world. They have become increasingly crucial as oil-rich countries such as Russia and Nigeria struggle to keep up production with their shrinking market shares. Blockchain is the real solution to any challenge related to supply chain management.
Transport:
According to reports, transporting crude oil from countries that produce more oil than demand can be costly, with prices rising around a hundred dollars a barrel. It is well known that many factors can briefly drive oil prices up and down: supply and demand, geopolitics and natural disasters.
Despite these factors, the volatility of oil prices is attributed to their unpredictability. Blockchain technology can help by making the supply chain more transparent. Oil tankers are today the most efficient method of transporting oil from one country to another.
These tankers must follow a specific route to avoid the countries’ exclusive economic zones, reducing the time spent at sea looking for a trading partner; however, the demand for these vessels is growing so rapidly that the shipyards cannot keep up with the pace. Current shipping methods, especially in the Middle East, rely on long-term contracts that usually contain undesirable clauses such as refusing to pay tariffs or fines for changing a ship’s route.
Oil tankers must follow strict transit times, so carriers must be able to accurately determine their position when traveling between different countries. These long-term contracts typically cover more than 100 years and force tankers to remain at sea for months, especially when storms force ships off their assigned route. In addition, many stakeholders are involved in the supply chain, each with their own needs and expectations.
The oil production and refining industry must face several challenges to survive:
sustainable development, compliance, automation, technology and globalisation. At the same time, companies must also optimize their costs while remaining competitive.
Blockchain technology offers highly effective solutions to this challenge, removing friction from supply chain management at all levels. For example, users can use blockchain technology to transport oil and store information about refined products such as gasoline or jet fuel shipments.
Blockchain provides a real-time update and valid contracts:
The technology can help optimize the process of transporting oil, so that all shipments can be easily tracked and provides precise information on fuel stocks at the refinery. In addition, blockchain technology can be used by users to manage contracts in a transparent manner that users cannot change without being discovered by all parties involved. Some of
The main features of blockchain technology include:
Several opportunities and challenges are linked to the implementation of blockchain technology across the electricity sector. Blockchain will help improve industry efficiency, accelerate innovation and potentially reduce costs for energy producers. Blockchain will disrupt current business models and change how we think about energy markets.
