Why do Crude Oil is expensier in some parts of the world than in other?

Question

For example, Brent price is higher than Mexican petroleum. Why does this happen?

Answer 1

First, not all petroleum is created equal. Some has more sulfur in it than others.

Second, the buyer sets the price. The seller can charge whatever the buyer is willing to pay.

Answer 2

There are several factors.
Firstly different oils have different composition. North Sea oil has much less tar and bitumen (heavier, less valuable parts) than Mexican oil. In particular North Sea oil is one of the only types suitable for long term storage- eg in strategic reserves.

Secondly the oil is extracted in different locations and priced undelivered. Mexico is cheaper partly because the there is one most obvious buyer. Brent Crude could easily be bought and used by any European country.

Thirdly oil is subject to currency variations in the producing countries. Where some currencies are stronger, weaker etc this will have an effect on oil that country produces.

Answer 3

There are many differences in oils from different parts of the world. The most obvious difference is that between light and heavy crude. Light crude is, as it suggests much lighter and more viscous. It carries less of the heavier elements and is therefore much easier and cheaper to transport and refine.

Heavier crude is very much like a grease and needs to be heated to make it flow through pipes and be pump-able in tanks. This makes it much more difficult to transport, bunker and to refine.

There is also the problems involved in getting the oil in the first place. Drilling in easy to access areas, areas where the rock is easy to drill through, the type of oil, the size of the reserve and the ease with which it can be extracted can make it cheaper.

Remote areas with no transport links, hard rock, small reserves, difficulties in extraction such as the need to pump water or slurry in to force the oil out all make it more expensive.

You can add to that the cost of pipeline building and maintenance, building of docks and oil terminals and a whole host of other factors.