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The Ultimate Guide To Starting A Crude Oil Brokerage Business (Crude Oil Selling) In Nigeria And Africa

The global demand for crude oil has only continued to climb over the years. From the 1800s till now, this commodity has been the major source of income for many nations, oil & gas organizations, and even crude oil brokers.

In Nigeria, it is the holy grail of the country’s economy. A shift in its global price sends the nation nose-diving into a recession. But despite this, the country has a crude oil production capacity of about 2.5 million barrels a day, leaving Nigeria as Africa’s largest producer of crude oil and the sixth largest producer in the world.

The implication of these figures show that Nigeria’s excessive crude oil deposit and extraction activities have created a major business opportunity for people who intend to venture into the crude oil brokerage business in the country.

By far, crude oil brokerage is one of the most profitable oil and gas segments for entrepreneurs who have no money to venture into the trade. Since it involves arranging a transaction for a commission of about $1 per barrel, it makes it an excessively lucrative venture for crude oil brokers who land major crude oil supply contracts.

See Also:  How To Find Real Crude Oil Sellers And Buyers In Nigeria

First, What Is Crude Oil Production   About?

According to the oecd.org, “Crude oil production is defined as the quantities of oil extracted from the ground after the removal of inert matter or impurities.”

This mineral oil is usually between yellow to black in colour, contains a mixture of hydrocarbons, and has a variable density and viscosity.

See Also:   How To Buy Crude Oil From Nigeria: Complete Guide For Buyers And Sellers

So What Is Crude Oil Brokerage   About?

Crude oil brokerage is the arrangement of a transaction between a crude oil buyer and a crude oil seller for a commission when the deal is executed. A crude oil broker who acts as a seller or buyer becomes a principal party to the crude oil transaction.

Here, the broker initiates the deal between a crude oil buyer, which is mostly an oil trader or refinery, and the crude oil seller, which in this case, is the company buying from the Nigerian National Petroleum Corporation (NNPC) to resell to the international buyer, or the oil regulatory body of the country you reside in.

See Also:   How To Start A Commodity Brokerage Business From Anywhere Around The World

Facts Of Crude Oil Brokerage

• You’re only brokering a transaction between a crude oil buyer (oil trader or refinery) and a crude oil seller (the company getting crude oil from the NNPC).
• The buyer would be asked to show proof of finance before shipment is made.
• The crude oil broker is paid about $1 per barrel sold by the crude oil seller.
• You can venture into crude oil brokerage by partnering with a person who has an allocation from the government or that buys on OFF-OPEC basis.
• As a crude oil broker, you can venture into this business with $0.
• Nigeria produces one of the most demanded crude oil in the world: Bonny Light Crude Oil (BLCO).
• Some other crude oil products in Nigeria include Qua Ibo, Escravos blend, Brass River, Forcados, Pennington Anfan, and over 15 more light crude oils.
• Crude oil is measured in barrels.

See Also:   How To Find Real AGO Sellers And Buyers In Nigeria

Business Opportunities In Crude Oil Brokerage

Before venturing into the crude oil brokerage business in Nigeria or Africa, there are some terminologies you must know, which also defines the various opportunities within the petroleum sector with respect to crude oil trading. These includes:

1). Free On Board (F.O.B):

In this situation, the crude oil seller will load the vessel with the petroleum products and cover the cost of clearance, while the crude oil buyer will cover the cost of transportation after making payment. This is the model the Nigeria National Petroleum Corporation (NNPC) uses to handle crude oil sales from everyone.

2). Tanker Take Over (T.T.O):

In this situation, the crude oil buyer takes over the hiring of the vessel and all the products onboard.

3). Tanker to Tanker Transshipment (T.T.T):

In this situation, the crude oil buyer will hire their own vessel, then use it to tranship the products from the crude oil seller’s vessel.

See Also:   45+ Off-OPEC Frequently Asked Questions & Answers By Crude Oil Buyers In Nigeria

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Setting up your crude oil brokerage  business, step 1: register a company.

Before you venture into the crude oil brokerage business, you should first register a company. By doing this, you form a legal structure that separates your personal liabilities from your business’s.

Step 2: Identify A Firm With Crude Oil Allocation Or That Purchases On PLR Basis

After registration, partner up as a broker with a company who already has a crude oil allocation from the NNPC. Having a crude oil allocation means you have a fixed allocation issued to you for a fixed amount of time. This could mean having 20 million barrels of crude oil allocated to a business for a period of one year.

The largest problem the industry faces is most allottees don’t have the funds to even fulfil their allocations, and as a result, are always welcoming crude oil brokers who are ready to trade through their allocations for a commission.

Another way is to broker for companies who sell on OFF-OPEC basis. Those who legitimately do this purchase the crude oil on Provisional Lifting Rights procedures, at a discount, and ship to the crude oil buyer at a discount.

Step 3: Find A Crude Oil Buyer

After forming a partnership with a crude oil seller, the next step is to find a crude oil buyer. Organizations who buy crude oil products are oil traders and refineries, and as a result, are constantly on the lookout for companies that can meet up to their supply needs.

You can reach out to them via their company’s phone numbers, emails, LinkedIn, or even via recommendations.

See Also:   How To Find International Buyers For Your Import/Export Business

Step 4: Link Them To The Crude Oil Seller

Now you’d need to ensure they send a Letter of Intent based on what has been realistically agreed, and it should be addressed to the crude oil seller through your company. After which the crude oil seller could either send a Corporate Offer or send the final contract.

Step 5: Crude Oil Seller Ships The Oil To The Crude Oil Buyer

Now the crude oil seller would purchase the crude oil from the NNPC on FOB terms and ship the oil to the crude oil buyer anywhere they are in the world.

Step 6: You Are Paid About $1 Commission Per Barrel Sold

After shipment is complete and the crude oil seller has received payment, depending on your agreement with the crude oil seller, you could earn up to $1 per barrel, which the company would then credit your company’s bank account. If your banking coordinates were listed in the contract, the crude oil buyer would also pay your commissions directly.

The interesting part of the crude oil brokerage business is most supplies are always in millions of barrels. So if your transaction covered 1 million barrels of crude oil, for instance, the crude oil buyer would pay about $1 million Dollars in commissions, since commission could be around $1 per barrel. Since there’s usually a total commission of about $4 to be paid in every transaction, if you’re not in a long list of brokers, you could earn up to $1 per barrel, making it a full $1 million Dollars.

If you’re lucky enough, you could get a much larger contract that covers a monthly supply to the crude oil buyer for a period of time, possibly running into years.

The high returns from this venture make it one of the most profitable oil and gas business opportunities in the world because as a crude oil broker, you only require $0 to run your operations.

See Also:   Everything You Need To Know About Crude Oil Marketing In Nigeria: Terms, Laws, Questions, And Answers

Challenges Of The Crude Oil Brokerage Business

1). It’s difficult to find real OFF-OPEC crude oil sellers that will agree to reasonable transaction procedures.

2). Your time could be wasted as a result of long-term conversations with refineries who have no real money to pay.

3). Getting a real crude oil buyer to show a Proof of Finance (POF) can be difficult because most of them can’t secure the credit facility they need to enable them to purchase crude oil

4). The large pool of fraudsters and illiterates posing as crude oil brokers makes it difficult for crude oil buyers to trust you.

5). You could easily get circumvented by the crude oil seller and crude oil buyer.

See Also:   14 Things That Kill Crude Oil Marketing Transactions In Nigeria

The crude oil brokerage business is an oil and gas business where success is heavily based on having a wide network, carrying out smart marketing, and being trustworthy & knowledgeable through the entire process. By building a strong reputation and always delivering on your promises to your clients, you’d succeed a whole lot easier.

See Also:  How To Start A Diesel Supply Business In Nigeria: The Complete Guide

What are your thoughts on this complete guide on how to start a crude oil brokerage business in Nigeria? Let me know by leaving a comment below.

This article has been updated for better clarity of content

An Important Point

Trying to buy crude oil from Nigeria through genuine sellers can lead to a lot of wasted time and efforts on the part of the crude oil buyers. They spend a lot of time vetting crude oil sellers in Nigeria, doubting their results even if positive, and going back and forth too many times than they can count, only to end up either cancelling their decision to buy or making a purchase after months or years have passed.

Since finding genuine crude oil sellers in Nigeria is a problem, it is always wise for a crude oil buyer to use a Nigerian organisation as its representative, so they can be on the ground and help the crude oil buyer make better calculative decisions.

To make this possible for crude oil buyers, Startup Tips Daily Media, through her sister company,  Globexia,  can help genuine crude oil buyers facilitate crude oil purchases from Nigeria.

Whatever position that helps crude oil buyers in Nigeria to close genuine crude oil transactions fast, transparently, and easier, we can make the process as stress-free as possible.

If you’re a genuine crude oil buyer, crude oil buyer mandate, crude oil seller, or crude oil seller mandate, you can reach out to us through the contact form below. If you’d like us instead to represent your interests as your crude oil seller mandate or crude oil buyer mandate, we’d be glad to do so.

We also offer a thorough  in-depth due diligence service  on exporters in Nigeria.

In addition to our crude oil facilitation business in Nigeria, we’re also  AGO sellers in Nigeria (diesel suppliers in Lagos),  and can supply AGO to tank farms, private or government organizations in Nigeria, or to countries like Cameroon, Ghana, and more, in the West African coast, while remaining willing to also represent your interests as your AGO buyer mandate or AGO seller mandate.

If you’re only a scam, don’t waste your time, as the conversation wouldn’t last too long after a few questions and demands to prove your authenticity have been made from our end.

Professional Due Diligence Checks In Nigeria By Globexia

International buyers are always wary of doing business with Nigerian based businesses because of the high risk of disappointments either in the form of time wasted or money lost, and as such, are highly sensitive of any organisation that presents them a trade offer.

To curb this problem and help international buyers make comfortable and confident trade decisions, Startup Tips Daily, through her sister company,  Globexia,  has set up an in-depth due diligence check consulting service that will help international buyers get in-depth information on any organisation looking to do business with them. Some of the information the international buyers stand to gain from the in-depth due diligence exercise that will be  carried out by Globexia’s  team of experienced lawyers in Nigeria are:

• Verification of Company Registration
• Verification of Export Licence
• Verification of Export Activity
• Verification of Past Certificates of Origin
• Verification of Past & Present Bill of Ladings
• Verification of International Passport / Driver’s Licence of The Exporter
• Verification of Bank Verification Number (BVN)
• Verification of Tax Documents
• Verification of Financial Health of The Company
• Verification of Mining Licence
• Physical Verification of Office Address With Pictures & Videos
• Physical Verification of Mining Site With Pictures & Videos
• Full List of Registered Company Directors

And much more based on the client’s requirements.

You can read more about the service  here.

If you simply want general commodity trade consulting in Nigeria spanning through Due diligence & proper verifications of both parties, understanding the entire Nigerian commodity trading industry, identifying and completing all due trade registrations, clearing & forwarding of the commodities, market research/feasibility study reports, and much more, Globexia Limited is the right partner to talk to.

We look forward to hearing from you.

You can reach us through the contact form below.

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Startup Tips Daily Media

Lagos, Nigeria

Phone: 234 808 0888 162

Email: [email protected]

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23 Comments

Thank you so much Stan for the quality of your right-up and the insight. I will like to give this a short. First, is registering Business name(an Enterprise as called by CAC) enough or do I have to incorporate. As getting proof of finance may be difficult, am asking if supplying the buyer by TTT(that is the bring their tank to Nigeria and buy) may remove the need of POF as requested by NNPC. Or is their any other way to mitigate the POF because the finance involved is much. Also the profit involved are quite much. Are you exaggerating? Thanks.

Thank you for the commendation.

1). You don’t need a license to run a broker business. All you need is links to a person with crude oil allocation and a refinery.

2). Concerning TTT, I’m not quite sure on that. But FOB is the most common practice.

3). Before attempting to link up a buyer, you’d need them to raise a Bank Guarantee, which you’d use to get finance from a financial institution, which would then be presented as the proof of finance to the NNPC.

4). The figures aren’t exaggerated. They are precisely what it is. Every linkage with the NNPC comes at a minimum of $1 compensation per barrel, paid to the person with an allocation that initiated the transaction. If you source clients for an allottee who can provide POF to the NNPC instead, you could negotiate 10 to 30 Cents per barrel. Depending on the number of people running through the deal, the percentage could be lower.

Thank you for asking.

Thanks Stan for your quick response. I am encouraged. I have seen the 39 list of companies(off-takes as it is called) with crude oil allocation for 2017. They include Oando, Master Energy, Eterna oil and gas, North-West ect(correct me if I am wrong). Is their a special format for mailing this off-takers or the simple formal inquiry and request will do cause you know Nigeria, the security men wont let you pass the flowers talk more of the gate. The OFF-OPEC private offer market is quite interesting its worth looking into I guess. Anyway my Journey has started wish me good luck.

I’d advise you find a way to reach out to their procurement officers.

An email would suffice, but an introduction would be better.

Hello, thanks for the detailed post. I emailed you concerning a crude oil allocation but I still haven’t gotten a reply from you. Please kindly reply my mail let’s take it from there. Thanks.

Hi Jennifer,

I believe I may have replied your email.

If I haven’t, do resend so I can reply to it.

Thank for all this free article on crude oil brokerage business, I want know how to partner with a crude oil allocation company in Nigeria, and a format on how to write a letter to crude oil buyers. I look forward to here from you

Thank you UMO ETIM CEO – UMO A&E GLOBAL LIMITED

You’d need to determine whether you intend to partner with an OPEC or OFF-OPEC seller.

Hey Stan, stan I need your help I am trying to get my feet in the door of the crude oil business and I need you to guide me along the way. I need you to be my mentor is that a yes thanks Stan

Hi Charles,

You can always ask any questions via email at [email protected] .

Thank you for the comment.

Good day, Thank you for the enlightening posts. I don’t know if you can assist to procure buyers for BLCO.whatever quantity is required can be made available.

Hi Olawale,

Please send an email to [email protected] .

Hello, Thank u for a good job u are doing, Please can u help me to start a broker with the crude oil?

I have prospective buyers for crude oil and need more info how to register as an broker.

Kind Regards

Dear Sir, I am a Broker, trying to conclude on a crude oil transaction. I need your advise as regards to receiving my commission wired into my GTBank dollar account. It is an off-OPEC transaction. Please what kind of documentation do I need to show to my bank for the commission to be cleared successfully. The commission is $1.00 per barrel for 1 million barrel spot. I am skeptical about the CBN-FG foreign exchange/international transfer policy, as I don’t want my funds to be ceased or blocked.

Good day, Please is there Cost of insurance and freight involved, or will that be handled by the seller.

CIF is a trade term.

Hi Edom, I need information on any genuine OPEC/OFF-OPEC seller who can deliver. Sincere rgds Francis Adeyemi

Hi edom I have sent you an email on your email address but you did not respond

Hi Stanley, thanks for providing us with insights and enlightment on crude business. As a broker in the system, I have buyers making enquiries already and wouldn’t mind if you can work in hand in assisting me to linking up trusted suppliers with good reputations. I hope you’d help in that mentor aspect as that can go a long way to help me suspect and possibly shun events relating to fraudulent acts. Thanks

Thank you Edom. I have been searching for such information thank you I gotten something now. First I have to register a company for the broker business.

Comments are closed.

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WATSON POST

Business and money, 9 steps on how to start an oil brokerage company.

Starting a business takes courage and ability to take risks. The fact that you are reading this article means or indicates that you are thinking about how to start an oil brokerage company. That is a good idea and I am here to help you make it a reality.

It is important that you are starting this journey of tapping into the opportunities in the oil and gas industry. You should know that it is possible to venture into the oil brokerage business.

Starting an oil brokerage firm is very lucrative. It is going to provide you with an opportunity to generate high and fast revenues.

If you ask me, this is can form the foundation of building your oil and gas empire.

How to Start an Oil Brokerage Company

If you are keen to start an oil brokerage company, you should be do the following;

Step by Step Guide to Start Oil Brokerage Business

These are the steps you should follow to start an oil brokerage business today;

9 Steps to Start an Oil Brokerage Company

This is what you need to do right now. You should take the first step towards starting an oil and gas brokerage firm.

Conduct market research.

Ensure you create a business plan..

Once you have conducted your research, you should create a plan. This is a guide on how you will run your new oil brokerage company.

Build or pick your business structure.

Find capital for your business..

Another important step on how to start an oil brokerage company is related to finances.

Having the right sources of financing for your business is very important.

Choose your business location.

The location of your oil brokerage business is a decision that needs to be strategic. This will help you manage your expenses while also being able to serve your clients.

Think and pick your business name.

This is an easy one. You should find a name for your business.

Register your business officially.

In most countries, starting a business means you will need to formally register it with government agencies.

Get licenses and permits.

When ti comes to operating your oil brokerage business, you might be required to secure certain licenses and permits.

Open a bank account.

This means that you should open a bank account for your oil brokerage business.

What You Need to Succeed as an Oil Broker

This is what you need to succeed in your oil brokerage;

7 Things You Need to Succeed as an Oil Broker Today

Enjoy the oil business..

It would a great advantage if you can be positive about the oil and gas industry. It will make your work easier if love being an oil broker.

Be a servant.

In this regard, you should focus on being a servant. Ensure you are aspiring to provide the best service to your customers at all times.

Have Confidence

Starting and running an oil brokerage business requires confidence. You should not doubt yourself or your abilities to make it.

Self confidence and also confidence in your company’s products or services is needed to succeed as an oil broker today.

It is also critical to build your strategic capacity to do oil business. This requires that you constantly train yourself as well as your team.

Create good habits

This means you should cultivate rituals, work environment and adopt habits that will help you become a productive oil broker.

Bring the buyers and sellers of crude oil together will require some convincing. This is where your marketing skills come in.

Get a Business Mentor

One of the toughest things about being an entrepreneur is the fact that you will be lonely.

It is for this reason you should seek a mentor. Find someone who has started and who has build a business for guidance.

How do I become an oil broker?

You should pass exams that will help you become an oil or a commodities broker.

How much do oil brokers make?

The salaries of oil brokers in the US range from $19,391 to $521,331, with a median salary of $93,710.

Who is a fuel broker?

A fuel broker helps in creating a deal involving the buying and selling of crude oil.

Which broker is best for crude oil trading?

You should find the crude oil broker that meets your needs. It is possible to use online trading platforms today, which are provided by some of the commodity traders.

Becoming an oil broker is going to provide you with a chance to create value, and earn money while at it.

You should aspire to build your business to become one of the best crude oil trading broker in your market.

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1. Learn What Moves Crude Oil

2. understand the crowd.

• 3. Choose Between Brent and WTI

4. Read the Long-Term Chart

• 5. Pick Your Venue

The Bottom Line

• Commodities

5 Steps to Making a Profit in Crude Oil Trading

• Guide to Investing in Oil Markets
• How to Invest in Oil
• Making a Profit in Crude Oil CURRENT ARTICLE
• Risks of Oil Investing
• How the Oil Industry Works
• Effect of Crude Inventories
• How to Buy Oil Options
• Understanding Oil Firms
• What Determines Oil Prices?
• Factors That Affect the Price of Oil
• OPEC vs. the US
• OPEC's Influence on Global Oil Prices
• Oil and Natural Gas Prices Correlation
• Oil Prices and Inflation
• Oil Prices and the US Economy
• United States Oil Fund
• Oil Prices and the Stock Market
• Economic Indicators for Oil Investors
• Especially Important Economic Indicators

Crude oil trading offers excellent opportunities to profit in nearly all market conditions due to its unique standing within the world’s economic and political systems. Also, energy sector volatility has risen sharply in recent years, ensuring strong trends that can produce consistent returns for short-term swing trades and long-term timing strategies.

Market participants often fail to take full advantage of crude oil fluctuations, either because they haven't learned the unique characteristics of these markets or because they're unaware of the hidden pitfalls that can eat into earnings. In addition, not all energy-focused financial instruments are created equally, with a subset of these securities more likely to produce positive results. 

Key Takeaways

• If you want to play the oil markets, this important commodity can provide a highly liquid asset class with which to trade several strategies.
• First, decide what is appropriate for you: a spot oil (and if so what grade); a derivative product such as futures or options; or an exchange-trade product like an ETN or ETF.
• Then focus on the oil market fundamentals and what drives supply and demand, as well as technical indicators gleaned from charts.

Here are five steps needed to make a consistent profit in the markets.

Crude oil moves through perceptions of supply and demand , affected by worldwide output as well as global economic prosperity. Oversupply and shrinking demand encourage traders to sell crude oil markets, while rising demand and declining or flat production encourages traders to bid crude oil higher.

Tight convergence between positive elements can produce powerful uptrends, like the surge of crude oil to $145.31 per barrel in July 2008, while tight convergence between negative elements can create equally powerful downtrends, like the August 2015 collapse to $37.75 per barrel.   Price action tends to build narrow trading ranges when crude oil reacts to mixed conditions, with sideways action often persisting for years at a time.

Professional traders and hedgers dominate the energy futures markets , with industry players taking positions to offset physical exposure while hedge funds speculate on long- and short-term direction. Retail traders and investors exert less influence here than in more emotional markets, like precious metals or high beta growth stocks.

Retail's influence rises when crude oil trends sharply, attracting capital from small players who are drawn into these markets by front-page headlines and table-pounding talking heads. The subsequent waves of greed and fear can intensify underlying trend momentum , contributing to historic climaxes and collapses that print exceptionally high volume.

3. Choose Between Brent and WTI Crude Oil

Crude oil trades through two primary markets, West Texas Intermediate Crude and Brent Crude . WTI originates in the U.S. Permian Basin and other local sources while Brent comes from more than a dozen fields in the North Atlantic. These varieties contain different sulfur content and API gravity, with lower levels commonly called light sweet crude oil.  Brent has become a better indicator of worldwide pricing in recent years, although WTI in 2017 was more heavily traded in the world futures markets (after two years of Brent volume leadership).

Pricing between these grades stayed within a narrow band for years, but that came to an end in 2010 when the two markets diverged sharply due to a rapidly changing supply versus demand environment. The rise of U.S. oil production, driven by shale and fracking technology, increased WTI output at the same time Brent drilling underwent a rapid decrease.

U.S. law dating back to the Arab oil embargo  in the 1970s aggravated this division, prohibiting local oil companies from selling their inventory in overseas markets. This ban was removed in 2015.  

Many of CME Group's New York Mercantile Exchange (NYMEX) futures contracts track the WTI benchmark, with the "CL" ticker attracting significant daily volume.   The majority of futures traders can focus exclusively on this contract and its many derivatives. Exchange-traded funds (ETFs) and exchange-traded notes (ETNs) offer equity access to crude oil, but their mathematical construction generates significant limitations due to contango and backwardation .

WTI crude oil rose after World War II, peaking in the upper $20s and entering a narrow band until the embargo in the 1970s triggered a parabolic rally to $120. It peaked late in the decade and began a torturous decline, dropping into the teens ahead of the new millennium. Crude oil entered a new and powerful uptrend in 1999, rising to an all-time high at $157.73 in June 2008. It then dropped into a massive trading range between that level and the upper $20s, settling around $55 at the end of 2017. As of January 2021, it was trading at about $47.  

5. Pick Your Venue

The NYMEX WTI Light Sweet Crude Oil futures contract (CL) trades in excess of 10 million contracts per month, offering superb liquidity . However, it has a relatively high risk due to the 1,000 barrel contract unit and .01 per barrel minimum price fluctuation.   There are dozens of other energy-based products offered through NYMEX, with the vast majority attracting professional speculators but few private traders or investors.

The U.S. Oil Fund offers the most popular way to play crude oil through equities, posting average daily volume in excess of 20-million shares. This security tracks WTI futures but is vulnerable to contango, due to discrepancies between front month and longer-dated contracts that reduce the size of price extensions.  

Oil companies and sector funds offer diverse industry exposure, with production, exploration, and oil service operations presenting different trends and opportunities. While the majority of companies track general crude oil trends, they can diverge sharply for long periods. These counter-swings often occur when equity markets are trending sharply, with rallies or selloffs triggering cross-market correlation that promotes lockstep behavior between diverse sectors.

Some of the largest U.S. oil company funds are:

• SPDR Energy Select Sector Fund ( XLE )  
• SPDR S&P Oil & Gas Exploration and Production ETF ( XOP )  
• VanEck Vectors Oil Services ETF ( OIH )  
• iShares U.S. Energy ETF ( IYE )  
• Vanguard Energy ETF ( VDE )  

Reserve currencies offer an excellent way to take long-term crude oil exposure, with the economies of many nations leveraged closely to their energy resources. U.S. dollar crosses with Columbian and Mexican pesos, under tickers USD/COP and USD/MXN, have been tracking crude oil for years, offering speculators highly liquid and easily scaled access to uptrends and downtrends. Bearish crude oil positions require buying these crosses while bullish positions require selling them short.

Trading in crude oil and energy markets requires exceptional skill sets to build consistent profits. Market players looking to trade crude oil futures and its numerous derivatives need to learn what moves the commodity, the nature of the prevailing crowd, the long-term price history, and physical variations between different grades.

Federal Reserve Bank of St. Louis. " Crude Oil Prices: West Texas Intermediate ."

U.S. Government Accountability Office. " Effects of the Repeal of the Crude Oil Export Ban ."

CME Group. " Welcome to NYMEX WTI Light Sweet Crude Oil Futures ."

USCF Investments. " United States Oil Fund ."

State Street Global Advisors. " The Energy Select Sector SPDR Fund ."

State Street Global Advisors. " SPDR S&P Oil & Gas Exploration & Production ETF ."

VanEck. " VanEck Vectors Oil Services ETF ."

iShares by BlackRock. " iShares U.S. Energy ETF ."

Vanguard. " Vanguard Energy ETF ."

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How to Become an Oil Broker: Guide

• December 13, 2023
• , Book review , Commodity trading , Energy , Guide

Becoming an oil broker can be a lucrative career for those with a strong interest in the energy industry. Oil brokers are responsible for facilitating the buying and selling of crude oil, refined products, and other energy-related commodities. They act as intermediaries between buyers and sellers, negotiating deals and ensuring that transactions are executed smoothly.

To become an oil broker, one must first gain a solid understanding of the energy markets and the various factors that affect supply and demand. This requires a deep knowledge of the industry, including an understanding of how oil is produced, transported, and refined. It also requires a strong grasp of economic and geopolitical factors that can impact the price of oil, such as changes in supply and demand, political instability, and environmental regulations.

Once an individual has gained a solid understanding of the industry, they can begin to build relationships with buyers and sellers and develop a network of contacts within the energy industry. This can be done through attending industry events, joining professional organizations, and building a strong online presence. With time and experience, an individual can become a successful oil broker and build a lucrative career in the energy industry.

Click here and discover the five best books about oil trading 

Understanding oil brokerage.

Oil brokerage is a complex field that requires a deep understanding of the oil market and the ability to negotiate deals between buyers and sellers. An oil broker acts as an intermediary between the two parties, facilitating the transaction and ensuring that both sides are satisfied with the terms of the deal.

To become an oil broker, one must have a strong foundation in finance, economics, and business. It is also important to have excellent communication and negotiation skills, as well as the ability to analyze market trends and make informed decisions.

Oil brokers typically work for brokerage firms or investment banks, where they are responsible for sourcing potential buyers and sellers, negotiating deals, and managing the transaction process from start to finish. They may also work independently as freelance brokers, although this requires a significant amount of experience and a strong network of contacts in the industry.

In addition to understanding the mechanics of the oil market, oil brokers must also be familiar with the legal and regulatory frameworks that govern the industry. This includes knowledge of international trade laws, environmental regulations, and tax codes.

Overall, becoming an oil broker requires a combination of education, experience, and skill. With the right training and a dedication to mastering the field, anyone can succeed as an oil broker and build a successful career in this exciting and dynamic industry.

Essential Skills for an Oil Broker

To become an oil broker, one must possess several essential skills that are crucial for success in the industry. These skills include analytical skills, negotiation skills, and communication skills.

Analytical Skills

An oil broker must have excellent analytical skills to be able to analyze market trends, identify potential buyers and sellers, and make informed decisions regarding the buying and selling of oil. They must be able to understand and interpret complex data, such as supply and demand trends, geopolitical events, and economic indicators.

Negotiation Skills

Negotiation skills are essential for an oil broker as they must be able to negotiate deals with buyers and sellers of oil. They must be able to understand the needs of both parties and find a mutually beneficial solution. An oil broker must be able to communicate effectively and persuade others to agree to their terms.

Communication Skills

Effective communication is crucial for an oil broker as they must be able to communicate with buyers, sellers, and other industry professionals. They must be able to communicate complex information in a clear and concise manner. An oil broker must also be able to build and maintain relationships with clients, which requires strong interpersonal skills.

In conclusion, to become a successful oil broker, one must possess excellent analytical skills, negotiation skills, and communication skills. These skills are essential for navigating the complex and ever-changing oil industry.

Educational Requirements

To become an oil broker, a bachelor’s degree in a related field is typically required. A degree in finance, economics, or business administration is preferred as it provides a solid foundation in financial and business principles.

Bachelor’s Degree

A bachelor’s degree program in finance, economics, or business administration generally takes four years to complete. The coursework typically includes subjects such as accounting, financial management, economics, and business law. Some universities also offer specialized programs in energy trading or commodities trading, which can be helpful for those interested in becoming an oil broker.

Master’s Degree

While a bachelor’s degree is sufficient for entry-level positions, a master’s degree in a related field can be beneficial for career advancement. Many employers prefer candidates with a master’s degree, especially for senior-level positions. A master’s degree in finance, economics, or business administration can provide advanced knowledge and skills in financial analysis, risk management, and strategic planning.

Overall, a strong educational background is essential for success as an oil broker. In addition to formal education, gaining experience through internships or entry-level positions in the industry can also be helpful in building a successful career.

Gaining Experience

Internships.

One of the best ways to gain experience in the oil brokerage industry is through internships. These programs offer valuable hands-on experience in the field and provide an opportunity to learn from experienced professionals. Interns can work on a variety of tasks, including market research, data analysis, and client communication.

To find relevant internships, aspiring oil brokers should research companies in the industry and reach out to their human resources departments. It is also recommended to attend career fairs and networking events to meet professionals in the field.

Entry-Level Jobs

Another way to gain experience in oil brokerage is through entry-level jobs. These positions typically involve working as a junior broker or assistant to a senior broker. In these roles, individuals can learn the ins and outs of the industry and gain valuable experience in client communication, market analysis, and deal negotiation.

To find entry-level jobs, aspiring oil brokers should search job boards and company websites for relevant openings. Networking with professionals in the industry can also lead to job opportunities.

Overall, gaining experience in oil brokerage is crucial for success in the industry. Internships and entry-level jobs provide valuable opportunities to learn from experienced professionals and develop the necessary skills for a career in oil brokerage.

Building a Network

To become a successful oil broker, building a network is essential. Networking provides access to industry professionals, information, and potential clients. Here are two ways to build a network as an oil broker:

Industry Events

Attending industry events such as conferences, seminars, and trade shows can provide valuable opportunities to meet with industry professionals and potential clients. It is essential to research and attend events that are relevant to the oil industry. Networking events are an excellent opportunity to meet with other brokers and learn about the latest trends in the market.

Professional Associations

Joining a professional association can also help build a network. Professional associations, such as the National Association of Energy Service Companies (NAESCO) and the American Petroleum Institute (API), provide access to industry professionals, training, and events. These associations also offer opportunities to build relationships with other brokers and potential clients.

In summary, building a network is crucial for becoming a successful oil broker. Attending industry events and joining professional associations are two effective ways to build a network and gain access to valuable resources.

Career Prospects and Challenges

Becoming an oil broker can be a lucrative career choice, but it also comes with its own set of challenges. As the oil industry is constantly evolving, it is important for oil brokers to stay up-to-date with the latest trends and regulations.

One of the major challenges faced by oil brokers is the volatility of the oil market. The price of oil can fluctuate rapidly due to a variety of factors such as political instability, natural disasters, and changes in supply and demand. This can make it difficult for oil brokers to accurately predict future prices and make informed decisions.

Another challenge is the competition in the industry. As the oil industry is global, there are many players in the market, and brokers must compete with each other to secure deals. Building a strong network of clients and suppliers is crucial for success in this field.

Despite the challenges, there are also many career prospects for oil brokers. As the demand for oil continues to rise, there will always be a need for brokers to facilitate transactions between buyers and sellers. Additionally, as the industry evolves, there may be opportunities for brokers to specialize in areas such as renewable energy or carbon trading.

Overall, becoming an oil broker requires a combination of industry knowledge, networking skills, and the ability to adapt to changing market conditions. With dedication and hard work, a career in oil brokering can be both rewarding and challenging.

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• Resources for Entrepreneurs > Become an Entrepreneur > Becoming an Entrepreneur

How to Start a Crude Oil Business

Becoming an Entrepreneur

This advice is ideal for aspiring entrepreneurs who hope to start a crude oil business. Read this advice before you open up shop.

Thinking about opening a crude oil business? We tell you what you need to know to get started.

How to Create Effective Crude Oil Company Business Plans

Struggling to get the attention of lenders and investors? Maybe it's because you're lacking a high quality business plan.

Business plans address a wide range of issues, including startup financials. Not surprisingly, lenders immediately turn to the financial section and use the accuracy of your forecasts to gauge the value of other parts of the plan.

Subsequently, a thorough understanding of business plan financial basics is a prerequisite to effective business plan writing for crude oil businesses.

Review Competitors

Prior to launching a crude oil business in your area, it's a smart move to see how many competitors you have. Try our link below to get a list of local competitors near you. After clicking on the link, type in your city, state and zip code to get a list of crude oil businesses near you.

• Locate Crude Oil Businesses Near You

Gain a knowledge of how existing firms have positioned themselves in the marketplace, and then design your business in a way that sets you apart from the others.

Getting Advice from Experienced Entrepreneurs

If you want to open a crude oil business it's a wise move to speak with somebody who is already in the business. Local competitors are not going to give you the time of day, mind you. The last thing they want to do is help you to be a better competitor.

However, an entrepreneur who owns a crude oil business in a location that is not competitive to you may be willing to share their entrepreneurial wisdom with you, once they realize that you are not going to directly compete with them in their community. Many business owners are happy to give advice to new entrepreneurs It can take a while to find an entrepreneur who is willing to talk, but it's well worth the effort.

So, what can you do to find a crude oil business founder in another community?

It's easy. Here's a link you can use to find a mentor outside of your area.

• Find Crude Oil Business Owners Who Might Advise You

Financial Benefits of Buying a Crude Oil Business

Startup crude oil businesses carry a host of financial risks and concerns. Without an operational history, it's hard to predict how your startup will actually perform in the marketplace.

One of the ways to mitigate the financial risk of a startup is to modify your approach to tap into the financial benefits of buying an existing crude oil business. Established crude oil businesses have reliable revenue streams and loyal customer bases � both of which will shape your company's financial landscape.

An acquired business also has documented assets and earnings - a big advantage with lenders and investors.

Is Franchising the Right Option?

Your chances of achieving the entrepreneurial goal of doing well with your venture are substantially improved if you opt for franchising and benefit from the prior work of others and their lessons learned.

Before opening a crude oil business, you would be wise to determine whether purchasing a franchise might make your life much easier.

The link below gives you access to our franchise directory so you can see if there's a franchise opportunity for you. You might even find something that points you in a completely different direction.

• How to Buy a Franchise

Other Useful Articles for Startup Entrepreneurs

These additional resources regarding getting started as an entrepreneur may be of interest to you.

Free Business Plan Templates

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Table of contents, thrive in the crude oil brokerage business.

• 16 April, 2024

Understanding Crude Oil Brokerage

In the world of finance, the crude oil brokerage business plays a crucial role in facilitating transactions between buyers and sellers in the oil industry. To thrive in this industry, it’s important to have a clear understanding of what brokerage entails and the role of a crude oil broker.

Definition of Brokerage

Brokerage, in general, refers to the act of facilitating transactions between parties involved in a particular market. In the context of the crude oil industry, crude oil brokerage involves connecting buyers and sellers of crude oil, assisting in negotiations, and ultimately helping to facilitate the transaction process.

A crude oil broker acts as an intermediary between the buyer and the seller, helping both parties navigate the complexities of the market. They provide valuable market insights, facilitate negotiations, and ensure that all parties involved fulfill their contractual obligations.

Role of a Crude Oil Broker

The role of a crude oil broker is multifaceted and requires in-depth knowledge of the industry. Some key responsibilities of a crude oil broker include:

Market Analysis: A crude oil broker must stay updated on market trends, including supply and demand dynamics, geopolitical factors, and price fluctuations. This analysis helps them provide valuable insights to their clients and make informed decisions.

Connecting Buyers and Sellers: One of the primary responsibilities of a crude oil broker is to connect buyers and sellers in the market. They leverage their network and industry contacts to identify potential matches and facilitate negotiations.

Negotiation and Documentation: Crude oil brokers play a vital role in negotiating the terms of the transaction, including price, quantity, quality, and delivery terms. They also ensure that all necessary documentation, such as contracts and agreements, is properly prepared and executed.

Risk Management: Managing risks is a crucial aspect of crude oil brokerage. Brokers help their clients navigate the risks associated with price volatility, market uncertainties, and contractual obligations. They may also advise on risk mitigation strategies, such as hedging.

Compliance and Regulation: Crude oil brokers must adhere to relevant laws, regulations, and industry standards. They must stay updated on compliance requirements and ensure that all transactions are conducted ethically and within legal boundaries.

By understanding the definition of brokerage and the role of a crude oil broker, aspiring professionals can gain a solid foundation for entering the crude oil brokerage business. To learn more about becoming a crude oil broker, check out our comprehensive guide on becoming a crude oil broker . Additionally, for an industry overview, including market trends and key players, refer to our article on crude oil brokerage industry overview .

Getting Started

Before diving into the world of crude oil brokerage, it’s important to understand the educational requirements and licensing regulations associated with this industry.

Educational Requirements

While there are no specific educational requirements to become a crude oil broker, a strong educational background in finance, economics, or a related field can provide a solid foundation for success. A bachelor’s degree in a relevant field can help you gain a deeper understanding of financial markets, trading strategies, and risk management. Additionally, pursuing courses or certifications in commodities trading or brokerage can enhance your knowledge and credibility in the industry.

Licensing and Regulations

In order to operate as a crude oil broker, it is important to comply with licensing and regulatory requirements. These requirements may vary depending on the country or region in which you intend to operate. It is essential to familiarize yourself with the specific regulations and licensing requirements of the jurisdiction in which you plan to establish your brokerage business.

For example, in the United States, crude oil brokers are subject to regulatory oversight by the Commodities Futures Trading Commission (CFTC) and may need to register as an Introducing Broker (IB) or be associated with a registered IB. Additionally, brokers may need to pass qualifying exams, such as the Series 3 exam, which tests knowledge of commodity futures and options trading.

It is crucial to consult with legal and regulatory experts or industry associations to ensure compliance with all applicable licensing and regulatory requirements in your specific market.

By understanding the educational requirements and licensing regulations associated with the crude oil brokerage business, aspiring brokers can set themselves on the right path to success. Always stay informed about the latest industry updates and seek professional guidance to ensure compliance with all relevant regulations and licenses. For more detailed information about becoming a crude oil broker, refer to our comprehensive guide on becoming a crude oil broker .

Building Your Business

Once you have a solid understanding of the crude oil brokerage industry and the role of a crude oil broker, it’s time to build your own brokerage business. This section will cover two crucial aspects of building your business: establishing connections and developing a business plan.

Establishing Connections

Establishing connections is a fundamental step in the process of starting a crude oil brokerage business. Building a strong network of industry professionals, including buyers, sellers, traders, and other brokers, will play a vital role in the success of your business.

To establish connections within the industry, consider the following strategies:

Attend industry conferences and events: Participating in conferences and events specific to the crude oil industry provides opportunities to meet key players and gain insights. Networking at these events can help you forge valuable connections and build relationships.

Join industry associations and organizations: Becoming a member of industry associations and organizations can provide access to a network of professionals in the crude oil industry. These associations often host seminars, workshops, and networking events that can assist in expanding your connections.

Leverage online platforms: Utilize online platforms and forums dedicated to the crude oil industry. These platforms provide a space to connect with professionals, share knowledge, and stay updated on industry trends.

Remember, building connections is an ongoing process that requires consistent effort and active participation. By fostering relationships and demonstrating your expertise, you can position yourself as a trusted and reliable crude oil broker.

Developing a Business Plan

Developing a comprehensive business plan is essential for the success of your crude oil brokerage business. A well-crafted business plan outlines your goals, strategies, and financial projections, serving as a roadmap for your business operations.

When creating your business plan, consider including the following key components:

Executive Summary: Provide a concise overview of your business, including its mission, vision, and objectives.

Company Description: Describe your brokerage business, its structure, and the services you will offer.

Market Analysis: Conduct thorough research on the crude oil industry, market trends, competition, and potential client base. Identify opportunities and challenges that may impact your business.

Marketing and Sales Strategies: Outline your approach to marketing your services and acquiring clients. Define your target market and detail the strategies you will employ to reach potential clients.

Operations and Management: Describe how your brokerage business will be structured and managed. Identify key roles and responsibilities within your organization.

Financial Projections: Include projected financial statements, such as income statements, balance sheets, and cash flow statements. Provide an analysis of your start-up costs, operating expenses, and revenue projections.

A well-developed business plan not only helps you stay focused on your business goals but also serves as a valuable tool when seeking financing or attracting potential partners or investors.

By establishing connections within the industry and developing a comprehensive business plan, you can lay a strong foundation for your crude oil brokerage business. These steps are crucial in positioning yourself as a knowledgeable and reputable broker, and they will contribute to the long-term success of your business.

Conducting Transactions

Once you have established yourself in the crude oil brokerage business, conducting transactions becomes a crucial aspect of your role. This section will explore two key components of transactional activities: negotiating contracts and managing risks.

Negotiating Contracts

As a crude oil broker, negotiating contracts is a fundamental part of your job. It involves facilitating agreements between buyers and sellers in the crude oil market. Effective negotiation skills are essential to ensure favorable terms for your clients and to build a reputation as a reliable and trustworthy broker.

When negotiating contracts, it is important to thoroughly understand the needs and objectives of both parties involved. This includes factors such as quantity, quality, delivery terms, pricing, and payment terms. By comprehending the interests and requirements of both buyers and sellers, you can facilitate a mutually beneficial agreement.

Successful negotiation also requires staying updated on market trends, prices, and regulations. This knowledge enables you to provide valuable insights to your clients and negotiate favorable terms on their behalf. It is crucial to maintain open and clear communication with all parties involved, ensuring transparency and addressing any concerns or issues that may arise.

Managing Risks

Managing risks is an integral part of the crude oil brokerage business. The volatile nature of the oil market necessitates a proactive approach to mitigate potential risks and protect the interests of your clients. Here are some key aspects to consider when managing risks:

Market Risk: Stay informed about market conditions, fluctuations in crude oil prices, geopolitical factors, and global supply and demand dynamics. Regularly analyze and assess market trends to make informed decisions and provide valuable guidance to your clients.

Legal and Regulatory Risk: Familiarize yourself with the legal and regulatory frameworks governing the crude oil industry. Ensure compliance with applicable laws and regulations to minimize legal risks and protect the interests of your clients. Stay updated on any changes or developments in the legal and regulatory landscape.

Operational Risk: Establish robust operational procedures and internal controls to minimize operational risks. This includes ensuring accurate documentation, efficient trade execution, and effective risk management processes. Regularly review and improve your operational procedures to adapt to changing market conditions and industry best practices.

Credit Risk: Assess the creditworthiness and reliability of your clients and counterparties before entering into any agreements. Conduct thorough due diligence to evaluate their financial stability and reputation. Implement appropriate risk mitigation strategies, such as requesting collateral or utilizing credit insurance, to protect against potential defaults.

By effectively negotiating contracts and managing risks, you can facilitate successful transactions in the crude oil brokerage business. These skills, combined with a thorough understanding of the industry and market dynamics, will contribute to your success as a broker. To learn more about starting a crude oil brokerage business, refer to our article on becoming a crude oil broker .

Marketing Your Services

In the highly competitive world of the crude oil brokerage business, it’s crucial to effectively market your services to attract clients and establish your brand. This section will explore two key strategies for marketing your services: creating a brand and networking.

Creating a Brand

Creating a strong and reputable brand is essential for standing out in the crude oil brokerage industry. Your brand should reflect your expertise, professionalism, and commitment to client satisfaction. Here are some key steps to consider when creating your brand:

Define Your Unique Value Proposition : Identify what sets you apart from other crude oil brokers. This could be your experience, industry connections, or specialized knowledge. Highlighting your unique value proposition will attract clients who resonate with your expertise.

Craft a Compelling Message : Develop a clear and concise message that communicates your brand’s values, services, and benefits. Your message should resonate with your target audience and differentiate you from competitors.

Design a Professional Logo and Visual Identity : Invest in professional logo design and branding elements that visually represent your brand. Consistency in your visual identity across all marketing materials, including your website, business cards, and presentations, will create a strong and memorable brand image.

Build an Informative and User-Friendly Website : Establish an online presence with a well-designed website that showcases your services, expertise, and industry knowledge. Optimize your website for search engines to increase visibility and attract organic traffic.

Use Social Media : Leverage social media platforms to engage with your target audience, share industry insights, and promote your expertise. Regularly post relevant content, engage with followers, and participate in industry discussions to build credibility and expand your reach.

Networking Strategies

Networking plays a vital role in establishing connections and attracting clients in the crude oil brokerage business. Here are some effective networking strategies to consider:

Attend Industry Events : Participate in trade shows, conferences, and seminars related to the crude oil industry. These events provide excellent opportunities to network with industry professionals, build relationships, and stay updated on industry trends.

Join Professional Organizations : Become a member of professional organizations such as the Crude Oil Brokers Association to connect with like-minded professionals and access valuable resources. Engage actively in these organizations by attending meetings and events, contributing to industry discussions, and taking on leadership roles.

Utilize Online Networking Platforms : Leverage online platforms such as LinkedIn to connect with industry professionals, join relevant groups, and participate in discussions. Actively engage with others, share your expertise, and establish yourself as a thought leader in the field.

Seek Referrals : Request referrals from satisfied clients and industry contacts. Word-of-mouth recommendations can be highly influential in attracting new clients to your brokerage business.

Collaborate with Other Professionals : Collaborate with complementary professionals in the industry, such as petroleum engineers or energy consultants. By partnering with experts in related fields, you can expand your client base and offer comprehensive services to your clients.

Remember, effective networking requires building genuine relationships based on trust and mutual benefit. Prioritize providing value to others and establishing yourself as a reliable and knowledgeable professional.

By creating a strong brand and implementing effective networking strategies, you can successfully market your services in the crude oil brokerage business. Consistency, professionalism, and a focus on client satisfaction will help you gain a competitive edge and attract clients who value your expertise.

Growing Your Brokerage

Once you have established your crude oil brokerage business, it’s important to focus on growth and expansion. In this section, we will explore two key strategies for growing your brokerage: expanding your client base and diversifying your services.

Expanding Client Base

Expanding your client base is crucial for the growth of your brokerage business. By reaching out to new clients and building strong relationships, you can increase your market presence and generate more business opportunities. Here are some effective strategies to consider:

Networking : Actively engage in networking events, conferences, and industry associations to connect with potential clients. Attend trade shows and seminars related to the oil and gas industry to meet individuals and companies looking for brokerage services.

Referral Programs : Implement referral programs to encourage your existing clients to refer your services to others. Offer incentives such as discounts or bonuses for successful referrals. Word-of-mouth recommendations can significantly contribute to expanding your client base.

Digital Marketing : Establish a strong online presence through a professional website and active social media profiles. Share industry insights, market updates, and success stories to attract potential clients. Utilize search engine optimization (SEO) techniques to improve the visibility of your brokerage business in online search results.

Partnerships : Collaborate with other professionals in the oil and gas industry, such as traders, suppliers, or consultants. By forming strategic partnerships, you can tap into their networks and gain access to a broader client base.

Remember, building a solid reputation for providing excellent service and maintaining strong relationships with your existing clients is essential. Satisfied clients are more likely to recommend your services to others, contributing to the growth of your brokerage.

Diversifying Services

Diversifying your services can help you attract a wider range of clients and enhance your value proposition. Here are some ways to diversify your offerings:

Additional Commodity Brokerage : Consider expanding your brokerage services to include other commodities related to the energy sector, such as natural gas, refined petroleum products, or renewable energy sources. This expansion can attract clients with diverse needs and open up new business opportunities.

Risk Management Solutions : Offer risk management services to your clients, such as hedging strategies or insurance products. By providing comprehensive risk management solutions, you can differentiate yourself from competitors and provide added value to your clients.

Financial Services : Explore opportunities to provide financial services related to crude oil trading, such as trade financing, credit facilities, or market analysis. This can attract clients who require financial expertise along with brokerage services.

Consulting and Advisory Services : Develop consulting or advisory services to assist clients with market analysis, regulatory compliance, or strategic decision-making. These additional services can position you as a trusted advisor and expand your revenue streams.

By diversifying your services, you can adapt to the evolving needs of the market and attract a broader client base. Remember to thoroughly research and understand the regulatory requirements and market dynamics associated with any new services you plan to offer.

As you focus on expanding your client base and diversifying your services, it’s important to maintain a strong business plan and continually assess market trends and opportunities. By staying proactive and adaptable, you can position your brokerage business for long-term growth and success in the crude oil industry.

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• 30 Jun, 2024
• Economic News

How to Start an Oil Trading Business

Starting an oil trading business can be a lucrative endeavor. The global oil industry is worth trillions of dollars, and there is much room for small enterprises to get a piece of this lucrative pie. However, starting an oil trading business is not without its challenges. Here are helpful tips on how to develop an oil trading business. If you like to start your oil trading journey, you may visit https://oilprofits.de/ to help you improve your trading skills.

Research the Market

Before you start trading oil, it is essential to do your research and understand the market. You need to know what factors affect oil prices and how those factors may change in the future. Also, understand the different types of oil you can trade on the market and the products that use each.

Find a Niche

Once you have researched and understood the oil market, you need to find a niche. There are many different types of oil trading businesses, so choosing one that fits your skills and interests is essential. For example, you could specialize in crude oil trading or focus on refined products such as gasoline or diesel.

Get Funding

Starting an oil trading business requires significant capital. You will need to have enough money to cover the cost of purchasing oil, shipping it to your customers, and storing it. You may also need to lease facilities for storing and processing oil. One way to get funding is to find investors interested in your business idea.

Get the Right Licenses and Permits

Before you trade oil, you need to obtain the necessary licenses and permits. The requirements vary depending on where you will operate your business. You may also need to get insurance to protect your business from any risks associated with oil trading.

Create a Business Plan

After acquiring all the necessary licenses and permits, you must create a business plan. And this should include your financial goals, strategies for marketing and sales, and a detailed operational plan. Your business plan will enable you to secure financing from investors and lenders and guide you as you start and grow your business.

Find Suppliers

Finding reliable oil suppliers is among the most critical aspects of starting an oil trading business. You need to find suppliers who can provide you with the oil you need at a competitive price. You can find suppliers by networking with other oil traders or searching online.

Develop a Marketing Plan

Once you have found reliable suppliers, you must develop a marketing plan. And this should include strategies for promoting your business and attracting customers. You may need to invest in advertising or create a website and social media accounts to reach more potential customers.

Start Trading Oil

After researching the industry and planning, you are ready to start trading oil. Begin by buying small oil quantities from your suppliers and then selling them to your customers. As your oil business grows, you can increase your inventory and expand your operation.

Trade Oil Online

You can trade oil online if you want to start buying and selling it but don't have sufficient time or resources to do it yourself. Online oil trading platforms might allow you to buy and sell oil without having to handle it physically. And this can be a convenient and cost-effective way to start your oil trading business.

Running an oil trading business can be a rewarding experience. By following these oil trading business tips, you can give yourself the best chance for success. Nevertheless, always research continuously because the industry keeps changing.

Commodity.com

Everything you wanted to know about commodity trading.

Start Oil Trading With This Ultimate Guide (Plus Online Brokers to Use)

Risk Warning: Your Capital is at Risk.

In this guide to trading crude oil, we explain how and where you can trade this popular commodity.

We list regulated brokers and platforms that are available in your country, discuss the reasons why people trade in oil, and provide some tips for understanding the oil market.

In a hurry? If you want to start trading oil right away, here are some online broker platforms available in to consider:

Disclaimer: Availability subject to regulations. Between 74-89% of retail investor accounts lose money when trading CFDs.

Understanding Oil Trading

How can i trade oil, where can i trade oil, why do people trade oil, tips for trading in the oil market, further reading.

Despite the advancement of renewable energy production, fossil fuels still make up most of world energy usage with oil being the most used energy source.

Since the oil trading market is subject to high volatility. With volatility comes great risk of losses, as well as the potential for profits so it’s important to familiarize oneself with technical analysis tools to get a better understanding of daily oil trends

Online brokers and exchanges offer several financial instruments that allow you to speculate on the price of oil :

• Shares of oil companies
• Contracts for difference (CFDs)
• Exchange-traded funds (EFTs)

An exchange-traded fund (ETF) is a basket of shares or securities traded as one financial instrument on an exchange.

The type of financial instrument you choose depends on the following factors:

• Margin requirements
• Contract expiry dates
• Management costs
• Security costs
• Physical delivery of assets

See our detailed explanation of leverages and margins .

How To Trade Oil CFDs

Contracts for Difference (CFDs) are contracts between a trader and a broker to exchange the difference in price between when a trade is entered and exited.

Leverages can be fixed or variable, based on the margin requirement of the broker.

Many CFD brokers provide the facility to speculate on the price of oil futures contracts but contract sizes are typically much smaller than standard futures contracts.

A crude oil CFD order can be for as little as 25 barrels (depending upon the firm) compared to 1,000 barrels for a standard futures contract.

IMPORTANT: CFDs are not available in the USA due to local regulation , and regulated brokers do not accept US citizens or US residents as clients.

How Do CFDs Work?

Please note, this is an example – not a recommendation.

Here’s an example : You’re bullish on WTI oil, so you decide to buy oil CFDs at the quoted price of $60.25 to $60.50 (the lower price is for a short contract, the higher for long).

• To buy 10 long CFDs on 3% margin, you would need $1,815 in your account ($60.50 [long price] x 10 [number of contracts] x 100 [number of barrels in a standard contract] x 0.03 [margin percent]).
• You would then “control” $60,500 worth of oil for your $1,815.
• That afternoon, you notice the price is $62.75, so you exit the trade, which now has a value of $62,750.
• You pocket $2,250 on the deal.
• If the price ticks down to $58.25, you would lose the same amount of money, $2,250, which is 24% more than you originally traded.

WTI stands for West Texas International. It’s an indicator of oil grade/mixture , and a price point of oil contracts and futures contracts on the New York Mercantile Exchange (NYME).

Oil Shares : Trading Oil Company Stocks

Shares are arguably the least complicated way to trade crude oil . You can trade equities in an oil company that you believe to become profitable at a future date.

There is usually a correlation between crude oil prices and oil company stock prices. But this is not always the case. And disasters as varied as pandemics and oil spills can make stocks plunge unexpectedly.

Interested in oil stocks ? Here are the biggest listed oil companies:

Oil ETFs : Buckets Of Oil Company Shares

Exchange-traded funds (ETFs) are also commonly used in oil trading.

Some oil ETFs are leveraged. The two types of leveraged oil ETFs are:

For a more detailed explanation of leverages see our broker page .

For example, CityIndex offers the following oil ETFs:

• ETFS 2X Daily Long Wti Crude Oil CFD
• ETFS 2X Daily Long Wti Crude Oil DFT
• ETFS 2X Daily Long Wti Crude Oil June 20 Spread, 1D
• ETFS 2X Daily Long Wti Crude Oil Sep 20 Spread, 1D
• ETFS Crude Oil CFD
• ETFS Crude Oil DFT
• ETFS Crude Oil Jun 20 Spread
• ETFS Crude Oil Sep 20 Spread

Speculating On Future Oil Prices With Oil Futures

A futures contract is an agreement to buy or sell a quantity of oil at a specified date for a specified price .

These are standardized instruments for WTI and Brent ; the standard contract is for 1,000 barrels of oil, so a $1 movement in price is equal to $1,000 in contract value.

Either party — the buyer or the seller — can draw up a futures contract to purchase or sell at a further date.

Here are a few important things to know about oil futures:

• Margin : Most oil futures contracts require about a 10% margin, which is relatively high given the cost of 1,000 barrels of oil, although margins can change depending on volatility — don’t be surprised to get a margin call on oil futures contracts.
• Physical Delivery : Futures contracts are settled by physical delivery of the crude oil, which is something most speculators don’t want to deal with. It’s important to keep track of delivery and expiration dates and to either roll the position over another month, or close it entirely before the contract expires.
• Complexity : Trading oil futures are typically for professional traders due to the high cost and complexity involved. However, CFDs provide a way to “access” the crude oil futures market.

Rolling over a futures position to a later date allows the owner of the contract to buy more time. This can be a tactical move to increase profit/decrease losses, or it can change the physical delivery of a commodity at a more convenient date.

Here are some examples of crude oil futures:

Oil Options : A Choice To Abandon The Trade

With oil options, a trader essentially pays a premium for the right (not the obligation) to buy or sell a defined amount of oil at a specified price, for a specified duration.

Crude oil options are the most widely traded energy derivative in the New York Mercantile Exchange (NYMEX), one of the largest derivative product markets in the world.

NYMEX is part of a group of commodity exchanges owned and operated by the Chicago Mercantile Exchange Group (CME) .

Despite their name, the underlying basis of these options is not crude oil itself, but crude oil futures contracts .

The cost of options contracts is determined by oil price volatility. Oil options traders often time market entry and exit strategies based on market volatility.

Start your research with reviews of these regulated brokers available in to find brokers offering oil futures, stocks, ETFs, CFDs, options, and more.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.

Oil trading comes with advantages and disadvantages, despite its popularity. Here’s a summary:

Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.

People may choose to trade crude oil over other commodities or assets. This depends on the trader’s experience and objectives. Some traders may choose to trade oil for:

• Diversification – Traders who want to add a highly volatile commodity to their portfolio may choose a high-risk, high-reward commodity like oil.
• Speculation – There are often wild swings in commodities prices; trading in oil futures and derivatives like CFDs can be a way to profit from notoriously volatile oil prices. Crude oil prices commonly move 5% in a single day. Traders must note that such volatility comes with an equal measure of risk.

Every market has its distinctions — oil is no different. To make the best of your time and money while trading this commodity, here are some things to keep in mind:

• Technical Indicators : Technical analysis tools are used to understand price charts and analyze historical price patterns to get a better idea of potential future price movements. For example, Fibonacci arcs are used to find the difference between price highs and lows within a particular time frame.
• Brent and WTI : The two primary grades and pricing benchmarks for crude oil are Brent Crude and West Texas Intermediate (WTI). The difference is the location of where their oil comes from – this affects the quality and disposition of the oil. Brent Crude oil comes from North Sea oil fields, while WTI oil comes from U.S oil fields.
• Trading Psychology : It is important to study the crowd psychology of oil traders. Understanding how oil traders act in certain situations will give you a better handle on prospective market movements.
• Supply and Demand : You can keep up to date with global supply and demand metrics by following selected news outlets like Forbes and The Economist .
• High liquidity : Oil is a highly liquid market with fast-moving prices; it’s a popular medium for day traders to speculate on fast movement, although it comes with just as much risk.

Crude Oil Prices – Historical

The below charts show you the Brent and WTI crude oil spot prices, both live and historical. To find out more, visit our guide on Brent and WTI crude oil prices .

Here are a few answers to help get you started if you’re considering trading crude oil.

How do I start trading oil CFDs?

The first step to trading oil CFDs is to understand how CFDs work and to find a reliable broker. Oil CFDs are complex, as well as high-risk. Traders would be wise to build a solid understanding of the CFD market, oil trading as well as technical analysis tools before considering trading oil CFDs.

What are the richest oil companies?

According to a January 2020 report by Statista, the largest oil company by revenue in the world is Sinopec at $432bn US dollars, followed by Royal Dutch Shell at $382.97bn, Saudi Aramco in third place at $356bn, and Petro China in a close fourth at $347.76bn. You can find the share prices, along with other oil giants in the oil shares comparison table .

What are Brent Crude and WTI oil?

Brent Crude and West Texas International (WTI) are both oil grades and acting pricing benchmarks in the world oil market. Earlier in the article, we explain the main differences between Brent Crude and WTI , one of them being the location the oil comes from.

What is OPEC?

The Organization of Petroleum Exporting Countries (OPEC) is an organization that serves as a market modulator and unifier of oil trade policies. OPEC’s main role is to regulate oil supply and prices worldwide. OPEC currently consists of the following 13 countries: Algeria, Angola, Congo, Equatorial Guinea, Iran , Iraq, Kuwait, Libya, Nigeria , Qatar, Saudi Arabia , the United Arab Emirates , and Venezuela.

• Learn More About Oil
• How to Find a CFD Broker
• Crude Oil Current & Historical Price Guide
• Commodity Trading Guide
• Largest Oil Producing States In The US
• The Highest Paying Jobs in the Oil & Gas Industry

Credits: Original article written by Lawrence Pines . Major updates and additions by Marko Csokasi with contributions from the Commodity.com editorial team.

Plus500 is not available in the US

Legitimate CFD brokers, like Plus500, cannot accept US clients by law

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How Much Does It Cost To Start A Crude Oil Brokerage Business? (In 2024)

Looking to start a crude oil brokerage business?

But curious about:

• how much it costs to start a crude oil brokerage business?
• what are the typical crude oil brokerage business startup costs?
• or the actual cost of starting crude oil brokerage businesses?

Well, we have the data to prove it, supported by real crude oil brokerage businesses and how much they actually cost to start.

Let's go over it.

Learn more about starting a crude oil brokerage business :

Where to start?

-> Pros and cons of a crude oil brokerage business

Need inspiration?

Other resources

Business Formation Fees

There are a few key costs associated with forming your business entity, such as setting up an LLC and getting trademarks, copyrights, and patents sorted.

Software Expenses

Your crude oil brokerage business needs software to run efficiently!

Why spend money on software? Because it can help you save time and automate certain parts of the business, so you can focus on the most important matters. Software and technology can help you grow your business, and save you from expensive personnel costs.

Office Space Expenses

It will be your call to determine if you need office space. It is not a requirement but may be necessary as your crude oil brokerage business grows.

Employee & Freelancer Expenses

Website Costs

Every business should have a website, and it's worth spending a bit of money to set it up right.

Advertising & Marketing Costs

• 39 Pros & Cons Of Starting A Crude Oil Brokerage Business (2024) 1 of 1

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Oil & Gas Business Plan Template

A successful oil and gas business is based on a solid business plan. To help you out, we've designed a business plan template PDF specifically for your oil & gas business.

Get your copy today!

Download The Template  

For help completing your oil & gas business plan, read our guide .

How can an oil & gas business plan template help you?

• A solid oil & gas business plan acts as your strategy guide for building a successful business.
• Whether you're an existing oil & gas business or just starting out, a business plan helps you get organised.
• Use a oil & gas business plan to help secure funding for your business.

Get your free oil & gas business plan PDF!

Created by tradify - the easiest way to manage your plumbing, oil & gas business..

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Best Crude Oil Trading Brokers

Crude oil trading brokers provide services for contracts for difference (CFDs) or futures contracts. Since CFD trading isn't legal in the U.S., this article focuses on brokers that support trading in crude oil futures. Take a look at the best crude oil brokers to get started.

• Quick Look at the Best Crude Oil Brokers:
• Best for Trading Software: TD Ameritrade
• Best for High-Volume Traders: Interactive Brokers  
• Best for Research: E*TRADE
• Best for Simulated Trading Strategies: NinjaTrader
• Best for Free Mobile App: Discount Trading

The Best Crude Oil Brokers

• Trading Crude Oil 
• See All 6 Items

Determine your needs to find the best online brokerage for trading in crude oil. You can find our picks for the best crude oil futures brokers for U.S. traders below. 

TD Ameritrade

TD Ameritrade gets our top spot for excellent execution that includes oil futures. The broker’s trading software and the thinkorswim platform give serious traders an edge. You'll get access to advanced research and analysis tools. Automatic features and market scans will help you generate trading ideas. 

TD Ameritrade also provides a web-based platform and a mobile option for Android and iOS devices. The broker can trade the 3 standard CL, QM and BZ crude oil futures. Trading hours for crude oil futures start on Sunday at 5 p.m. EST and run until 4 p.m. EST on Friday (with a 1-hour break from 4 p.m. to 5 p.m. each weekday). 

TD Ameritrade doesn’t require a minimum deposit. But you must deposit at least $2,000 as margin to be considered for a futures and options account. Commissions for oil futures are a standard $2.25 per contract plus exchange and regulatory fees. 

Interactive Brokers

Interactive Brokers aims at more advanced high-volume traders. You can trade a myriad of tradeable assets, including U.S. oil futures. Interactive Brokers also offers execution services in more than 125 world markets. 

Its trading platforms include the easy-to-use Client Portal and the web-based IBKR WebTrader. More advanced traders will also appreciate the more sophisticated IBKR Pro Trader Workstation (TWS) desktop and mobile platforms. The broker also has an application programming interface (API) if you want to get your own trading algorithm software written. 

Interactive Brokers has tiered and fixed commission schedules. The tiered schedule lowers commissions as your trade volume increases, while the fixed schedule charges a mere $0.85 per U.S. futures and futures options contracts plus exchange and regulatory fees. 

Interactive Brokers charges inactivity fees on inactive accounts, so keep that in mind if you plan on taking trading breaks. It also requires a minimum deposit of $10,000 to open an account. 

E*TRADE gets our number 3 position for its impressive research center powered by the CME Group — the world’s largest futures exchange. E*TRADE also offers a comprehensive list of options on oil futures.  

E*TRADE’s trading platform is easy to navigate for traders at all levels. The company also offers a high-tech custody platform for financial advisors, as well as a top-rated stock plan administration platform. 

The 3 standard CL, QM and BZ crude oil futures contracts traded on U.S. exchanges can be traded. E*TRADE charges $1.50 per futures contract plus exchange and regulatory fees. Oil futures can also be traded in an IRA account.

Another selling point is its associated bank and extensive educational resources like daily video market commentary. You can get $600 when you open and fund a new futures trading account with $250,000. 

NinjaTrader

NinjaTrader has an excellent trading platform for novice and advanced traders alike. You can access unlimited simulated forex trading, unlimited support and daily training sessions and a free 24-hour emergency desk. 

NinjaTrader features more than 100 technical indicators, advanced charting features and thousands of 3rd-party applications for automating your trading. The platform also gives you control of your own data feed to test your trading strategies.

You can even trade micro-sized futures contracts for a $50 margin, while E-mini contracts require $500 for margin. You only need $400 to open a futures account with NinjaTrader.

NinjaTrader has a number of educational resources and a news and blog section. You can try the broker’s futures trading platform at no charge for 2 weeks in a demo account powered by live market data.    

Discount Trading

Discount Trading made our list for its low commissions and the variety of trading platforms for traders at all levels. Discount Trading’s commissions are among the lowest in the industry, so it's perfect for day traders and high-volume or high-frequency traders. 

If you trade more than 50,000 contracts a month, for example, you pay only $0.19 per contract. For less active traders, futures commissions are $0.49 per side — so buying and selling 1 futures contract would cost you less than $1 after exchange and regulatory fees.

Discount Trading features 20 different trading platforms that include eSignal, barchartTrader, CGQ Trader, CGQ Integrated Client, Trading Technologies, Firetip, TradingView and Sierra Chart.  

You can also get a free mobile app for Android or iOS devices or access the broker’s web-based application. It offers 5 different redundant routing solutions to meet the needs of advanced traders. 

Trading Crude Oil 

Like the stock market , the crude oil market is made up of different participants that include both investors and speculators. But the crude oil market differs because it is more prone to volatile swings due to geopolitical forces. 

The 2 main types of oil that futures contracts are based on are West Texas Intermediate (WTI) and North Sea Brent. WTI is a lighter and sweeter type of oil better for gasoline production with a low sulfur content of around 0.24%. North Sea Brent is heavier and best for diesel fuel production. It has a sulfur content of roughly 0.37%. In the oil industry, crude oil with a sulfur content below 0.5% is considered “sweet.”

The modern history of the crude oil market began in the 1970s. Then crude oil prices spiked to more than $100 per barrel after Saudi Arabia imposed an embargo on the commodity. Oil prices declined in the 1980s as supplies increased. The price of crude oil had fallen below $10 per barrel by 1998, which marked a major low point at the time. 

Prices then exploded higher, and the price of crude oil hit its all-time high of $145.31 per barrel in July 2008 to coincide with the global financial crisis. Since 2008, oil prices tended to fluctuate between $32 and $112 per barrel. The commodity has gone as low as $0 during the COVID-19 pandemic, and it’s currently trying to recover ground, but as of March 2023, oil has not gotten close to $100 per barrel again. The price difference is known as the Brent/WTI spread. 

Trading Crude Oil in the U.S.

If you can't trade CFDs because you live in the U.S., trade crude oil via the U.S. futures markets and use exchange-traded funds (ETFs). FOREX.com offers crude oil CFD trading outside the U.S. for a 1% margin fee on the MetaTrader 4 or FOREX.com trading platforms.

An important oil futures contract is the WTI crude oil contract that trades on the New York Mercantile Exchange (NYMEX) under the symbol CL. It represents 1,000 barrels of oil.

Another is the NYMEX’s Brent crude oil contract that trades under the symbol BZ — it's also based on 1,000 barrels of oil. The smaller CME Group’s E-mini crude oil futures contract trades under the symbol QL and represents 500 barrels per contract.

Things to Consider Before You Invest in Crude Oil

Many influences can affect the price of crude oil. Geopolitical event s in the Middle East, North Sea, Russia, Canada, Nigeria and Angola generally impact the oil market. Factors that influence demand from the European Union, U.S., Japan and other Western economies that import oil also have an effect. 

• Trade with a plan. Outline your strategy with sound risk and money management. Include the parameters for entering and exiting trades, the amount of risk you plan to take and your objective for exiting the trade. You can source a trading plan from another trader or use a social trading service if needed. 
• Test your plan . Many online brokers give you the option of opening a demo account to practice trading. You can test your plan in the demo account before you commit any funds to a live account. 
• Pick a broker . You'll probably have a feel for the oil market and the best brokerage for you after you trade in some virtual accounts. Make sure to carefully consider your needs before opening an account.
• Start trading. Open and fund your account, research your plan and get started. Make sure that you carefully assess and manage the risk involved in each trade. Set some safe stop-loss levels to avoid blowing out your account. 

Next Steps 

You’re ready to move on to live trading once you've tested your plan in the demo account. Oil futures can be extremely volatile, so they're the perfect vehicle for day and high volume traders. 

Be aware that the price of oil has traditionally been a function of the big world producers, so any disruptions in the supply lines can directly affect the price quickly and substantially. Moves of 2% to 3% and even as much as 10% to 20% occur often, so trade with stop loss orders at all times to prevent excessive losses. 

Crude oil prices react to many variables, which is why oil traders keep an eye on the news. Make sure you watch world events closely when you trade oil futures.   

Frequently Asked Questions

What is the total number of barrels in an oil futures contract.

One futures contract represents 1 thousand barrels.

What is the spread in oil futures trading?

The spread is the difference between the WTI and Brent futures prices.

What are the best crude oil traders?

Find Benzinga’s recommended crude oil traders on the list above.

About Jay and Julie Hawk

Jay and Julie Hawk are a married financial writing and authorship team who co-founded TheFXperts, a notable financial writing services provider. The Hawks each worked professionally in the financial markets and have more than 40 years of trading experience among them. Together, they write books, trade forex online for their own account and others, mentor traders, and have worked actively as professional freelance writers specializing in financial topics for over 15 years.

Sample Oil and Gas Business Plan

This article will be providing you with an oil and gas business plan guide or template.

The energy sector of every economy is huge and offers enormous investment opportunities. Whatever your niche area or interests are, starting a business can be very challenging.

However, having a plan makes the process a lot less difficult and helps with better coordination.

Need to write a plan for your venture? Download a FREE Business Plan PDF Sample to develop a template for your own startup.

Here, we aim to help entrepreneurs who, though being experienced in the oil and gas sector have no idea how to launch their business operations.

OIL AND GAS BUSINESS PLAN SAMPLE

To better organize your plan, there are basic sections that cannot be left out. They touch on the different aspects of running a successful oil and gas business.

They include the executive summary, the company description, and the products & services sections.

Other crucial sections include the market analysis section, strategy & implementation, organization & management team as well as the financial plan & projections sections.

So, how do you develop each of these sections? You’ll want to read on to find out.

i. Executive Summary

As the introductory section of your plan, the executive summary gives a concise overview of your oil and gas business plan. What you should seek to do with this section is make and keep your audience interested by learning about your business.

The basics about your company should be known here.

The executive section always appears first in a plan. While this is true, it should be written last. The reason is this; it should capture all the key aspects of the business plan.

Consider adding certain sections like your business name & location, your services & products as well as your mission & vision statements. Also, the specific purpose of your plan should be added.

Business Name & Location

One of the first things you’ll need to include in your business name as well as its location. Introducing your business is paramount and gives your reader or a starting point on what the business is about.

How does your location positively impact your operations?

Services & Products

Here, you’ll need to give a breakdown of your oil and gas products and services . What specific niche area you involved with and how are your products and services beneficial to your clients.

People only pay for value and you should briefly discuss what value your services offer to your clients.

Mission & Vision Statements

The mission and vision statements of your oil and gas business should shed light on your company’s purposes, goals and values. Your mission statement should tell about why the business exists as well as the purpose it serves.

Also include information on what your business offers.

You should focus on what you seek to ultimately achieve with your oil and gas business for the mission statement. In a nutshell, the vision statement gives purpose to the existence of your business.

It’s important when writing this statement to never leave anything open to interpretation.

Specific Purpose

Every serious business has a purpose. What’s yours about? By clarifying your purpose or aims, your chances of achieving your goals are increased.

ii. Company Description

The company description section seeks to further reveal details about your oil and gas business. Basically, you want to explain who you are, your mode of operation as well as the goals you wish to achieve.

Details to be included are the legal structure of the company, as well as its brief history.

Being an oil & gas business, you’ll have to provide details on the needs or demands you intend to fill or meet.

The company description should give an overview of your services & products while also identifying your target market and your suppliers.

Also, include a summary of company growth backed by financial or market highlights.

Of course, this won’t be complete without a summary of your long and short-term goals including how you intend to make a profit.

iii. Products & Services

While this was covered in the executive summary section, only a summary of it was given.

This section takes a more detailed look at the products and services being offered by your oil & gas business with a focus on the benefits being derived by customers.

Here, you’ll also need to explain the market role of such products & services.

What edge or competitive advantages do your products & services have over those from competitors. Are there new products in the works? Provide information on such.

Here is a sample plan on crude oil refining .

iv. Market Analysis

A lot of work in the form of research is required to demonstrate your understanding of the oil and gas industry.

Your research should provide a detailed sketch of your target market with a focus on key aspects such as its size and demographics.

Have an industry description and outlook with statistics serving as proof. What more? There should be historical, current, and projected marketing data for your oil and gas business.

Also, include an evaluation of your competitors with a special focus on their weaknesses and strengths.

v. Strategy & Implementation

Strategy and implementation have a lot to do with sales and marketing. This is basically an operating plan on how you wish to sell and distribute your oil & gas products and services.

It focuses on market entry, pricing, costs, promotion, and distribution details.

What are your operational plans in regards to the operational cycle of the business? You also want to include information on labor sources as well as the number of employees you’ll need.

vi. Organization & Management Team

The organization & management team section discusses the organizational structure of the oil and gas business.

You want to provide a description of key departments as well as employees by providing an organizational chart.

There should be information about the owners, their level of involvement as well as percentage ownership. Also, profiles of your management team will be necessary.

vii. Financial Plan & Projections

Under the financial plan & projections section, you’ll need some expert help. The services of a professional accountant will suffice.

The key areas analyzed under this section include the historical financial data, realistic prospective financial information, and brief analysis of financial data.

With these points covered, your oil and gas business plan should be ready for implementation. You also stand the chance of getting the much-deserved financing required.

1 thought on “Sample Oil and Gas Business Plan”

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Crude Oil Price Forecast: Consolidates with Potential for Upside Breakout

Crude oil faces resistance amidst a consolidation phase, with an expanding triangle pattern and potential for an upside breakout once the consolidation is complete.

In this article:

Crude oil remains stuck in a tight consolidation range formed near recent trend highs. It crept a little higher today to reach a new trend high of 82.46 before pulling back. The consolidation range takes the form of an expanding triangle where the two boundary lines of the pattern are pointed away from each other. As the pattern develops the price range expands slowly to new highs and new lows but fails to follow through.

This makes the pattern a little more challenging to navigate as there will be false breakouts, both up and down. Today, is one example where a new trend high was triggered but quickly encountered resistance that turned price back down. The bottom of the pattern is at yesterday’s low of 80.50, which was a false breakdown below the earlier low of 80.59.

Stuck in Expanding Triangle Consolidation

It is possible that trading continues to evolve the expanding triangle with trading contained within the boundary of the pattern. Last week crude encountered potentially significant resistance zone anchored by the 61.8% Fibonacci retracement at 82.10 and the convergence of two trendlines. Both an uptrend and downtrend lines converge around the same price area. Given the clear stall out that has occurred, the market has recognized the resistance zone. The fact that the retracement to date has been minor and resistance continues to be tested, as seen today, is reflecting underlying strength in demand for crude.

Pushing Up Against Key Pivot Zone

Notice that the downtrend line is the original line drawn prior to the false bull breakout on April 4. It is clearly being respected by the market, so it remains on the chart. However, the new upper trend resistance is at the top trendline connecting the April 12 swing high.

Since crude continues to challenge resistance following an aggressive advance of 13.2% from the June 4 swing low, it seems reasonable to anticipate a potential upside breakout once the consolidation phase is complete. Although bullish momentum has died over the past week, a weekly bullish trend continuation signal did trigger on Tuesday and then again today. Therefore, as it looks now, traders will likely be buyers overall on weakness.

For a look at all of today’s economic events, check out our  economic calendar .

Related Articles

Crude Oil News Today: Will Middle East Tensions Drive Crude Oil Futures Higher?

• Gold Price Forecast: Struggles Below Key Moving Averages
• Natural Gas Price Forecast: Bearish Trend Intensifies

About the Author

Bruce boasts over 20 years in financial markets, holding senior roles such as Head of Trading Strategy at Relentless 13 Capital and Corporate Advisor at Chronos Futures. A CMT® charter holder and MBA in Finance, he's a renowned analyst and media figure, appearing on 150+ TV business shows.

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How to Start a Cooking Gas Retail Company – Sample Business Plan Template

By: Author Tony Martins Ajaero

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Are you interested in doing business in the oil and gas industry? Do you need a sample cooking gas retail business plan template? Then below is an in-depth guide on how to start a cooking gas retailing business . Cooking gas (natural gas) is a clear, odorless gas that is used for cooking as a cheaper alternative to electric energy.

It is also a clean alternative to coal-based electricity and kerosene-fueled cooking. This explains why it is now the most preferred cooking fuel by homes and businesses. The huge and booming demand for cooking gas in virtually all urban settlements worldwide has created lucrative opportunities for smart entrepreneurs. If you have been looking to start a business of your own, a cooking gas retail business might just be the best option for you.

The cooking gas retail business involves buying huge quantities of cooking gas, storing it in tanks, and selling it to individuals that use it for domestic cooking as well as industries that require large quantities for fueling purposes. In this post, we will be looking at the steps involved in starting a cooking gas retailing business.

But before we get into that, you need to bear in mind or be reminded that cooking gas could be very dangerous if not properly handled. So, think twice before taking a plunge. Now, here are the steps involved in setting up a cooking gas retail business:

Starting a Cooking Gas Retail Company – Sample Business Plan Template

1. learn everything you can about this business.

• How is cooking gas measured?
• Where do you buy from?
• What are the common challenges cooking gas retailers face?
• How do you identify quality gas?
• How do you handle your gas cylinders?
• How do you refill a customer’s gas cylinder?
• What are the various types of cooking gas that exists and which is the best?
• What are the factors that affect the market price of cooking gas?

The questions above are important and you definitely need to answer them before investing a dime in the cooking gas retail business. This is why investing time to learn the intricacies of the cooking gas retail business is very important.

Knowledge is one of the keys to success in any business. You definitely cannot plunge into an unknown business terrain and hope to find success within the shortest period of time. So I advice you invest time to get the basic insider knowledge about this business. If possible, it is best you seek tutelage from someone established in this business.

2. Write a business plan

No matter how lucrative a business idea or opportunity might seem, writing a business plan is very important, as it reveals many important details that you may not have paid attention to. Writing a business plan will give you some insight into the feasibility of the business in your locale, the required start-up capital, the costs of running the business, the market and competition, and other very important factors.

3. Find an ideal location

After the necessary homework, you need to find an appropriate piece of property for your business. Because of the hazardous nature of cooking gas, most federal and state governments have laid-down regulations concerning the site of a cooking gas retailing business. So it is very important that you find out the rules that apply in your state or country regarding property to be used for cooking gas retailing. A good idea is to consult an attorney.

Another factor you will need to bear in mind when choosing a location is your market. It is important that you locate your business close to where there are many potential customers. For instance, locating such business as cooking gas retailing in a rural area is a bad idea.

However, some good places to site your cooking gas retail store are residential areas (majorly dominated by the middle class), high institutions (students now prefer cooking with gas than kerosene because gas is odorless, smoke-free, cooks faster and last longer), entertainment centers such as hotels, restaurants and fast food outlets.

4. Install the needed facilities

Hire professionals to help you install the tanks, electronics, and other equipment and facilities that you will need to conduct your business safely. ( Remember, cooking gas could be dangerous )! After installation, it is important that you check all equipment and facilities and ensure that they have been well-fixed. You must also ensure that there are no leakages or loose fittings.

5. Make arrangements for transportation

If you would have to transport or distribute cooking gas to customers in fairly distant places, then you will need to get a truck or van that is capable of safely hauling cooking gas. But if you cannot afford to buy one, you can lease one each time you need it, pending when you would be able to procure yours.

Whether you have your truck or you would be getting one on lease, you must ensure that its conditions meet the requirements for vehicles hauling hazardous materials such as cooking gas.

6. Handle the legal aspect

You will need to have a standard service contract drafted by your attorney. If required, send a copy of this contract to your state’s regulatory agency and await the agency’s approval. After your contract has been approved, send the approval letter with your financial statement to the utility company you would be doing business with. Most utility companies require a bank statement to prove the credibility and financial strength of your business.

7. Insure your business

Sh*t happens in business, but when it comes to a cooking gas retail business; this sh*t could cost you your life or property, and even earn you a lawsuit. Mind you that you are dealing with a hazardous substance, an inflammable product; so please get an insurance cover, especially for fire accidents.

8. Start operations and marketing

With everything in place, you can launch your business. To attract customers, you can adopt aggressive marketing strategies and offer attractive discounts. Promise customers rewards for referring new customers, and you would attract many customers within a short period.

Additional tips for running a cooking gas retail business

a. Always handle cooking gas and all equipment with caution . Cooking gas is a hazardous gas that could cause a fire outbreak if not well handled. Never allow smokers and open flame in and around your business location.

b. Always respond promptly to any correspondence from your state or country’s regulatory agency, as faltering in this regard may attract huge fines or cost you your license.

c. Always keep in touch with your attorney to ensure that you remain compliant with current laws.

d. Always stay in touch with your suppliers, they will notify you of current trends and price changes. Remember that the price of gas fluctuates with respect to the price of other household cooking commodities such as kerosene and coal.

4 Challenges of Starting a Cooking Gas Retail Business

1. you will be dealing with an inflammable product.

Gas is a highly inflammable product and just one little mistake can result to an explosion; and a corresponding loss of lives and properties. So it is important you maintain a high safety standard in your premises and refill your customers gas tanks in open places. You should also place fire extinguishers strategically throughout your store and be sure to get insurance cover.

2. You are exposed to health hazards

In the course of refilling your gas tanks and those of the customers, you are bound to inhale at least a minimal dose of gas. This will not affect your health in anyway but when you inhale these small doses of gas over a long period of time, your health and life becomes endangered. A good way to protect yourself and your body is to buy gas masks and put them on when refilling the tanks.

3. The price of gas changes constantly

The price of gas rises and falls constantly, so you should always be on guard for this sudden price changes. The best way to tackle this challenge is to be well informed of industry developments.

4. Your sales is highly dependent on the economic situation of your region

If your business is sited in a region where the standard of living is poor and the inhabitants use more of firewood and kerosene stove, then your business is already a failure from the start. So try to site your business in a positive economic area with working class residents. You can also target restaurants, fast food outlets, etc; as these ones need a steady supply of gas.

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