October 16, 2022 [Inventiva] – By utilizing blockchains to create immutable ledgers that people amongst participants can share, there should be no question about who owns or controls any asset 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, traders and producers—face risks. Blockchain technology has the potential to change how these relationships work by automating business processes and fundamentally changing how we think about transparency in our global market. However, before you start in Oil trading you may consider knowing about the Pros And Cons Of Oil trading.
The below-mentioned portion 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 for the rapid transfer of assets through the exchange of digital information and is continually 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 handling while increasing transparency as every transaction is logged onto 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, such as field-to-refinery trading, commodity trading intermediaries or supertankers that trade oil across oceans. By improving transparency and linkages in the supply chain, this technology could lead to significant efficiency gains across the value chain and substantial cost savings for customers.
The oil demand is currently increasing, which means there is a need for more efficient ways to move oil between sources and refineries worldwide. The primary 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 affecting 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 their production up with their shrinking market shares. Blockchain is the real solution to any challenge related to supply chain management.
According to reports, transporting crude from countries producing more oil than demand can be costly, with prices rising around a hundred dollars a barrel. It is well known that many factors can drive oil prices up and down briefly: supply and demand, geopolitics and natural disasters.
Despite these factors, the volatility of oil prices is attributed to their lack of predictability. Blockchain technology can help by making the supply chain more transparent. Oil tankers are currently the most efficient method for transporting oil from one country to another.
These tankers must follow a specific route to avoid countries’ exclusive economic zones, which reduces the time spent at sea searching for a trade partner; however, demand for these vessels is growing so fast that shipyards cannot keep up with the pace. Current shipping methods, especially in the Middle East, rely on long-term contracts that typically contain undesirable clauses such as the refusal to pay tariffs or fines to change a ship’s route.
Oil tankers must follow strict transit times, so carriers must be able to determine their position when traveling between different countries accurately. These long-term contracts usually cover more than 100 years and force tankers to remain at sea for months, especially when storms force ships out of their assigned route. In addition, many stakeholders are involved in the supply chain, each with its own needs and expectations.
The oil production and refining industry must meet several challenges to survive:
Sustainable development, compliance, automation, technology and globalization. At the same time, companies also need to optimize their costs while remaining competitive.
Blockchain technology offers highly efficient solutions to this challenge, removing friction from supply chain management at every level. For example, users can use blockchain technology to transport oil and store information on refined products like gasoline or jet fuel shipments.
Blockchain provides a real-time update and valid contracts:
The technology can help optimize the process of transporting oil, enabling all shipments to be easily tracked and providing precise information on fuel inventories at the refinery. In addition, blockchain technology can be used by users to manage contracts in a transparent way that users cannot alter without being detected by all parties involved. Some of the
Main features of blockchain technology include:
Several opportunities and challenges are associated with implementing blockchain technology across the electrical power sector. Blockchain will help improve the industry’s efficiency, accelerate innovation and potentially reduce costs for energy producers. Blockchain will disrupt current business models and change how we think about energy markets.