Crude Oil & Copper

Crude oil and copper are two of the most important raw materials in the world economy. Most of us never buy either directly, yet changes in their prices can reach our daily lives.

Crude oil

Crude oil is oil as it comes out of the ground. Refineries turn it into petrol, diesel, aviation fuel, cooking gas and the raw materials for plastics. Oil is traded in barrels, and well-known benchmark prices, such as Brent crude, are used as reference points for the price of oil around the world.

Why oil prices matter in India

India imports a large share of the crude oil it uses. When the oil price rises, the country pays more for its imports, which can put pressure on the rupee and push up fuel and transport costs. Higher transport costs can, in turn, raise the prices of many other goods.

Copper

Copper conducts electricity and heat very well, and it is easy to shape. That is why it is used in electrical wiring, motors, power lines, appliances and electric vehicles, as well as in plumbing.

Why copper is watched

Because copper is used so widely in construction, manufacturing and power, its price is sometimes seen as a rough gauge of how active the economy is. It is only a rough guide, since many other things, such as supply disruptions, can also move copper’s price.

What moves these prices

Both are influenced by supply and demand: how much is produced, how much is needed, how strong the world economy is, and events that disrupt supply. Currencies matter too, because both are priced in US dollars.

Key points

• Crude oil is refined into fuels and raw materials; Brent is a widely used benchmark price.
• India imports a large share of its oil, so oil prices can affect the rupee and transport costs.
• Copper is used in wiring, motors and electric vehicles, and is watched as a rough gauge of economic activity.
• Supply, demand, the world economy and the dollar all influence both prices.