A supply chain trade war stemming from US sanctions on Iranian oil exports has been brewing for the last few years on the world stage, and the latest round includes Venezuela, Libya and Iran. If you are curious about oil trading, here’s the top companies using bitcoin for oil trading. In response to these developments, the global oil trade has been negotiating how to cooperate in offsetting any possible losses.
The oil trade is complex, and the parties to the global oil trade are spread across the entire planet. The reports by experts show the paths of crude flows from the wellhead to refineries and how long it takes to get from the wellhead to the refinery.
Oil moves in many directions across many time zones across many borders. Petroleum products move in only one direction – towards end users who consume them. It makes energy “imports” and “exports” very different, as discussed further below. The global oil trade business is run by and large by integrated oil companies that own the wellheads, processing operations (refineries) and transport infrastructure.
Two types of pure-play integrated oil companies are Royal Dutch Shell and ExxonMobil. They usually own their wells, refineries and transport infrastructure – from pipelines to ships. They also control the marketing function. But some independent refiners either don’t have any wellheads for production or have a limited number of wellheads for production or thus must buy from other sources to process crude into refined products.
Current Situation of oil and bitcoin:
Brent crude futures recently skyrocketed, and the market value of each barrel shot up to $109 per barrel. But, on the contrary, one of the most famous classified commodities and digital currencies, bitcoin, was hit hard on the ground due to some strict regulations by the United States government authorities.
The currency was struggling to an exceeding extent compared to its bullish run last year. The bitcoin price has recovered from many hurdles in the past, but the current reform is a test for the cryptocurrency.
The government of the United States have taken many strict decisions against cryptocurrencies in recent months. In addition, government officials are also trying to ban bitcoin trade and exchange with other fiat currencies. In the below-mentioned portion, we will share some analysis related to today’s bitcoin cryptocurrency price movement and predict the future movement of this asset.
How are oil and bitcoin prices related to each other?
Each day in the United States, 440 million barrels of crude oil are consumed to produce refined products like gasoline and diesel fuel. Therefore, on the one hand, cryptocurrencies are gaining popularity as a medium of exchange. But on the other hand, the global market is continuously growing with the demands for the trading of bitcoin.
As per the prediction, the bitcoin price will accelerate towards higher levels than this year, and it will be the first digital asset to create new highs against the US dollar and Brent crude oil price. In the past, crude oil price movements impacted the bitcoin price. The main reason behind it is that many bitcoin users are concerned about the future of their asset and its future value.
How do Oil Prices Impact Cryptocurrency Prices?
It has been seen that almost every time crude oil prices plunge, traders tend to lose interest in digital currencies like bitcoin. They are also looking for hedging tools when there is a crisis in global stock markets. The use of bitcoin has become a great extent after the financial crisis of 2008.
The increase in the price of crude oil concerning another currency also leads to a steep rise in cryptocurrency prices. However, as both of these commodities have significant volatility in price movements, it does not change the fact that the underlying source of demand for all these commodities is very different. Bitcoin mining correspondingly has an indirect impact on the overall price of oil.
For a digital currency to become a viable trading asset, it would have to have enough trading volumes so that blockchain technology does not need to be updated too often. The existence of fiat currencies heavily influences the real-world economy. As such, bitcoin has had to take on the characteristics and behaviour of other currencies as well. Some hold gold because they feel it is a safe asset. After all, commodity prices are generally stable (it didn’t happen with gold in 2008).
Gold prices fluctuate based on the marketplace’s demand and supply changes. Similar to gold, bitcoin is now listed as a haven investment asset with much faster returns.
