Financialization of oil: a geographical perspective on oil trading and production

Abstract

This thesis examines the significance and impacts of the financialization of oil on the global production network of oil by unpacking the socio-spatial dynamics of oil trading. Oil trading involves both the trading of material oil and oil derivatives. Oil derivatives are financial instruments that are derived from and reified through the quality, quantity and value of material oil. Although the trading of oil derivatives is an vital process in hedging against price risk exposures incurred during the trading and production of oil, it has also led to the rise of speculative activities. As much as the trading and production of oil are dependent on oil derivative trading for price risk management, the process of oil derivative trading and financial services as a whole are, in turn, sustained by the needs of the oil industry. I propose how the interdependence between these processes is deeply embedded within socio-spatial relations, information and knowledge networks and also grounded in distinct geographical locations such as Singapore. This research marks a humble contribution to the on-going academic perforations into the ¿black box of finance¿ (MacKenzie 2005) by instating the significance of finance within commodity production beyond the provision of credit loans.