Oil Markets: Benchmarks, Grades, and Refining

Oil is the largest commodity market in the world, and so far in this course it has appeared only as a fuel type and a history note. This lesson gives it the treatment it deserves from a trading point of view. We answer three questions a candidate must be able to handle. First, why do people quote “the oil price” when there are hundreds of different crudes, and what are Brent, WTI, and Dubai? Second, what actually makes one crude worth more than another, which means understanding API gravity, sulfur, and the grade differentials that price every real cargo? Third, how does a refinery turn crude into the products we use, and how is the refining margin (the crack spread) just the form arbitrage from the previous lesson at industrial scale? We build the benchmark-and-differential idea on a plain used-car example first, then map it onto crude, and we work both a grade differential and a crack spread by hand.