The oil industry has spent more than a century pushing into new frontiers. Its engineers pulled crude from beneath deserts, oceans and frozen tundra. Its traders built markets that turned oil into\u00a0the world\u2019s most actively traded commodity.<\/p>\n
Now a small crypto startup is trying to persuade the industry to experiment with a different kind of frontier: putting a barrel of oil on a blockchain.<\/p>\n
The company, Energy Substantiation, wants oil suppliers to help support a digital token tied to physical crude. For decades, ownership of real-world barrels\u00a0has largely been the preserve of producers, traders and large institutions.<\/p>\n
Energy Substantiation is seeking to open up the market to anyone with a crypto wallet and\u00a0a small outlay.<\/p>\n
Read: The genesis of cryptocurrency<\/p>\n
\u201cIt is remarkable to me that people can own dollars and people can own gold,\u00a0but they\u2019ve never been able\u00a0to own oil,\u201d\u00a0JP Thieriot, who is spearheading the idea as Energy Substantiation\u2019s co-founder, said in an interview.<\/p>\n
His startup is borrowing from a familiar playbook. Stablecoins digitised claims on dollars, growing from a fringe experiment into a system that settles trillions of dollars a year. Energy Substantiation is betting something similar can be done with oil \u2013 a far messier asset than the currency behind stablecoins.<\/p>\n
Its WTIC token is designed to represent one barrel of West Texas Intermediate crude. Unlike oil ETFs or crypto perpetuals, the product is being pitched as a token backed by physical oil rather than\u00a0futures or other derivative contracts.<\/p>\n
Investors can also trade it around the clock. Today, benchmark WTI and Brent crude futures trade primarily on CME Group Inc and Intercontinental Exchange Inc, with markets closed on weekends.<\/p>\n
That has become a growing source of frustration for investors as developments in the Iran conflict occur before trading resumes, driving recent interest in products that lean on crypto\u2019s always-on infrastructure to facilitate 24\/7 oil trading.<\/p>\n
Read: Crypto\u2019s institutional buyers retreat in double blow to bitcoin<\/p>\n
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But even if speculators are ready for it, an oil-backed token may be a tough sell to an industry built around physical assets. Thieriot recalls one early investor meeting where the idea was dismissed as an uneasy mashup of Texas business culture and crypto: \u201cBubba meets Bitcoin \u2013 it\u2019s never going to work.\u201d<\/p>\n
For now, the vision remains far larger than the market. The on-chain value of WTIC currently stands at about $80 000, though the token is expected to debut on LMAX and receive an additional $1 million in liquidity down the road.<\/p>\n
Thieriot said the startup is working with about a dozen commodities firms and oil suppliers, including one major trading house, and is in talks with other exchanges and market makers.<\/p>\n
How it works<\/span><\/strong><\/p>\n WTIC is designed to track the price of West Texas Intermediate crude. Suppliers feed oil\u00a0into the system through a reverse Dutch auction, which entails offering barrels at a discount to the day\u2019s market price.<\/p>\n The company says the tradeoff lets producers monetise operational inventories, including pipeline line fill and tank bottoms, that would otherwise generate little revenue. Investors can then buy and sell the tokens on blockchain networks, while new ones are created through a daily minting process.<\/p>\n Holders can redeem WTIC at the daily spot closing price, though the company does not expect many investors to take physical delivery of crude.<\/p>\n<\/blockquote>\n Energy Substantiation says the structure allows the underlying oil to be treated as a spot commodity rather than a derivative, which the company says would subject it to lighter regulation.<\/p>\n Read: Stocks near record high as crude oil drops on Iran: Markets wrap<\/p>\n \u201cLaunching a token is easy. The challenge is building a liquid market,\u201d said Javier Molina, a crypto analyst at eToro. \u201cSuccess will depend on if they can attract energy participants and not just crypto players.\u201d<\/p>\n There is clearly demand for round-the-clock oil exposure,\u00a0though much of it is already being met. On Hyperliquid, tokenized WTI and Brent perpetual futures have become the two most actively traded commodity products on the platform, with activity surging in the grip of the\u00a0Middle East conflict.<\/p>\n ADVERTISEMENT:<\/p>\n CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n CME surprised industry participants \u2013 including its own regulator \u2013 with plans to offer 24-hour, seven-days-a-week trading in new, smaller crude oil futures by late August.<\/p>\n On top of pulling liquidity away from products that already exist, Energy Substantiation will have to ensure that blockchain ownership is legally enforceable in the offline world, said Christian Catalini, founder of the MIT Cryptoeconomics Lab.<\/p>\n \u201cFor the market to be truly efficient, the bridge between online and offline record should have minimum counterparty risk. Otherwise you\u2019re not trading the actual underlying asset, you\u2019re essentially trading an IOU.\u201d<\/p>\n In the making<\/span><\/strong><\/p>\n Thieriot first pursued the idea more than a decade ago after helping build one of crypto\u2019s earliest digital-dollar businesses. But unlike dollars or gold, crude posed major obstacles: storage is expensive, barrels differ in quality and oil moves constantly through a sprawling physical network.<\/p>\n The breakthrough came when Thieriot teamed up with financier and mathematician Donald Putnam, who developed a framework for converting different crude grades into a common energy unit measured in British thermal units. The model attempts to solve one of the industry\u2019s oldest problems: treating unlike barrels as a single tradable asset.<\/p>\n The system also relies on inventory that typically sits inside the machinery of the oil business itself. Pipeline line fill, tank bottoms and other operational inventories are often carried on company balance sheets but generate little direct revenue.<\/p>\n Energy Substantiation\u2019s model attempts to monetise those dormant barrels while using them to back digital tokens.<\/p>\n<\/blockquote>\n \u201cIt\u2019s the best beta you can get in the market,\u201d said Eric Melvin, chief executive officer of Mobius Risk Group and a member of EnSub\u2019s advisory board, referring to a measure of how\u00a0closely an asset\u2019s price tracks\u00a0the broader market.<\/p>\n Read: Bitcoin weakens as Trump\u2019s remarks raise fresh Iran war concerns<\/p>\n The idea remained largely theoretical until institutional acceptance of crypto, a friendlier regulatory environment and war in the Middle East pushed oil back to the center of investor attention just as Energy Substantiation prepared to launch.<\/p>\n ADVERTISEMENT:<\/p>\n CONTINUE READING BELOW<\/p>\n<\/p><\/div>\n<\/div>\n Boats and oil tankers anchored off Qaboos Port in Muscat, Oman. Image: Elke Scholiers\/Getty Images<\/p>\n<\/div>\n \u201cWe dramatically underestimated retail in oil,\u201d Thieriot said. In moments of geopolitical stress, the commodity \u201creally does become a ticker for global instability\u201d, he added.<\/p>\n Still, WTIC depends on producers maintaining sufficient inventories to back the tokens, something that is no longer a given\u00a0as war-driven supply shortages undercut reserves. Energy Substantiation says operational inventories are unlikely to fall to levels that would threaten the energy complex, even during periods of market stress.<\/p>\n The company\u2019s pitch has also\u00a0drawn scrutiny in other ways. Texas Railroad Commissioner Wayne Christian, a sitting member of the agency that regulates the state\u2019s oil and gas production, is a part of\u00a0Energy Substantiation\u2019s advisory board and personally emailed prospective investors ahead of the token\u2019s launch, the Texas Tribune reported in April.<\/p>\n Read: Dollar enjoys petrocurrency status as oil drives markets<\/p>\n Christian referred questions from Bloomberg to Energy Substantiation, whose spokesperson said he was invited to serve because of his \u201cextensive knowledge of the energy sector\u201d and does not direct the company\u2019s day-to-day operations or business decisions.<\/p>\n The startup plans to introduce tokens backed by Brent crude and Henry Hub natural gas later this year. Whether those products succeed may matter less than what they represent. Stablecoins transformed dollars into internet-native assets.<\/p>\n Projects like WTIC are attempting something similar with commodities, testing whether claims on physical resources can move as freely as digital money.<\/p>\n \u201cAt the end of the day, blockchain makes it all possible,\u201d\u00a0Thieriot said.<\/p>\n \u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n #crypto #startup #put #barrel #oil #blockchain<\/p>\n","protected":false},"excerpt":{"rendered":" The oil industry has spent more than a century pushing into new frontiers. Its engineers pulled crude from beneath deserts, oceans and frozen tundra. 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