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Market Risk

Exposure to potential losses arising from adverse movements in market prices, interest rates, or volatility.

Market risk is the potential for losses resulting from adverse movements in prices, interest rates, or volatility. In oil trading, market risk is driven primarily by changes in crude and product prices.

Factors influencing oil market risk include supply disruptions, demand shifts, macroeconomic trends, and geopolitical events. These drivers can produce rapid and large price movements.

Market risk is typically measured using metrics such as value at risk, stress testing, and scenario analysis. These tools help traders quantify potential losses under adverse conditions.

Managing market risk involves diversification, hedging, position limits, and continuous monitoring of exposure.

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