According to the World Oil Outlook report of 2016, OPEC Member Countries implemented a production adjustment with a target of 32.5 million barrels a day (mb/d) with effect from 1 January 2017. Moreover, the subsequent OPEC and non- OPEC Declaration of Cooperation through the Ministerial Meetings in Vienna (10 December 2016 and 25 May 2017) embraced a production adjustment of 1.2 mb/d for OPEC, together with a production adjustment of around 0.6 mb/d from participating non-OPEC producing countries. The decisions were focused on accelerating the ongoing drawdown of the stock overhang, which is now well underway, as a means to help bring the oil market rebalancing forward.
Through the use of smart contracts, we can now replace paper and complex legal agreements that are cumbersome, difficult to transfer and can be hard to track for the average person and even for sophisticated investors. Our solution for commodity investing (mainly in oil) would be to switch to a digital system along the lines of Bitcoin but linked to an asset. This solution is the PERMIAN Token (XPR). Imagine a vault of oil barrels. The oil barrels are owned by ""Oil-owner Inc."" and the vault is owned by ""Vault Inc."" Vault Inc. has a spectacular reputation and third-party auditors who verify the amount of oil barrels in its vault. Oil-owner Inc. could offer a digital token to the public that represents ownership of the oil barrels and through a smart contract with Vault Inc. maintain a public off-chain registry that relates fractional interest in the gold with the tokens. For every token sold, Oil-owner Inc. transfers ownership to Vault Inc., who holds it on behalf of the token owner. Vault Inc. guarantees redemption of the value price of oil barrels by anyone who can prove ownership through a digital signature. Oil-owner Inc. can take advantage of the fact that Vault Inc. is trusted (and audited). Owners of the tokens rely on Vault Inc.'s representations and not on Oil-owner Inc. (even though Oil-owner Inc. is the token issuer). One of the main advantages would be that buyers of the tokens could know that they are the only person who has received the token, whereas a buyer of a paper certificate has no way of knowing that the same certificate hasn't been sold to multiple people.