Tech

Oil trading in global stock exchanges 2022

How is oil traded in global stock exchanges? With the increase in geopolitical tensions in the Middle East, and after targeting a number of oil tankers in the Persian Gulf region, during the last period, and what is happening between the United States of America and its announcement of imposing a set of new sanctions on Tehran, as well as the trade war between the United States of America, prevailed Oil markets are in a state of instability between high oil prices and stability. The question that arises here is future contracts and how the oil-importing country secures its budgets in light of market instability and high prices.

In the beginning, experts and specialists say that oil futures contracts are contracts through which it was agreed to exchange a certain amount of oil at a specific price on a specific date. It is traded on futures exchanges, and is the most used method for buying and selling oil.

While oil importers and exporters use futures contracts as a form of insurance against the negative effects of oil price fluctuations, traders can use these contracts to speculate on oil without having to buy or sell the commodity itself, because oil futures prices will move higher. or lower oil value.

Oil trading on world stock exchanges
Experts pointed out that instead of buying oil, storing it and waiting for its prices to rise, then selling it and arranging how it will be delivered, you can buy a futures contract and then sell it before its term expires, pointing out this. In doing so, the buyer will benefit from the same price increase, without the same logistical effort.

The specialists followed oil trading on global stock exchanges, with regard to oil options contracts, that they are similar to futures contracts, noting that there is one main difference. With oil options contracts, you have the right to buy a specified amount of oil ahead of time at a specified price, options contracts also provide a way to trade on oil price movements without having to deliver the same commodity and those options are called short and medium term contracts.

Experts stated that oil futures contracts are traded on global stock exchanges, as is the case with stocks. However. It differs from it in that it is traded in the form of standard types of oil. Standard types of oil allow traders to quickly identify the quality of the oil they are selling and buying and the location of its extraction, noting that the most famous of these types are Brent crude oil and West Texas Intermediate crude oil, and they are traded on the Intercontinental Exchange. and the New York Mercantile Exchange.

The specialists added that with regard to clarifying spot oil prices, it is considered the cost of buying or selling crude oil and immediate delivery, rather than a specific date in the future, according to oil trading in global stock exchanges. They explained that futures prices reflect the extent of the prevailing belief in the market that the value of oil will be at the expiry of the future contract term, but spot prices show the current value.

CFD Oil Trading
As for CFD trading, CFD trading allows trading the price change that occurs on futures and options contracts, but without buying or selling the contracts themselves, and instead of trading on commodity exchanges.

There are accounts with a provider of leverage and returns. This provides oil traders with many benefits, including trading oil on world stock exchanges on spot prices for standard types of oil. As well as futures and options contracts, the ability to buy and sell in a wide range of oil markets, in one platform.

Regarding Egypt, experts and specialists said that importing crude oil to Egypt is through long-term contracts, pointing out that applying future contracts in the Egyptian public budget strategy was a wise decision by the general leadership to protect it from rising prices.

The budget deficit and the reduction of the import rate, which negatively affects the level of liquidity in foreign currency in the Central Bank, as well as the recurring deficit in previous budgets due to quick deals to import fuel to cover urgent needs.

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