Oud is an oil that has been used for centuries throughout Asia and the Middle East but today it is recognised as being one of the most expensive perfume ingredients and oils in the world. This oil has a rich history and the way in which it is produced is extraordinary but this natural product offers a unique opportunity for investors and perfume manufacturers throughout the world.
What Is Oud?
Oud oil is formed from the resin that is found in the wood of the Aquilaria tree, which is also known as Agarwood, of which there are 15 species. The tree has a history that suggests it originates from the Assam region of India but now it can be found in many areas of South East Asia. The wood chips from the tree are often used as an incense and they are often used during religious celebrations and ceremonies throughout the majority of Asia.
However, this fascinating oil is created when the tree becomes infected with Phialophora Parasitica which is a parasitic mould, this then produces Oud which is a fragrant resin that is dark in colour. The way in which the oil is produced is more than amazing but it is rare for a number of reasons with the first being the fact that it is only created when the mould is produced, therefore, only around 2% of the trees produce it. This results in the price of the oil increasing but also, the cost of the wood makes it one of the most expensive on the market, proving that this is a tree that has many wonderful properties.
How Oud Has Been Used Throughout History
The history of the use of Oud oil in North East India is prehistoric and there are mentions of it being used in the ancient kingdom in the region of Assam which existed from 350 CE to 1140CE. In the 13th century, the distillation of Oud oil was also apparent and from ancient Assam, the product was exported to the Middle East along the silk route.
Throughout history, Agarwood has been used as an offering by Buddhists, Taoists, Catholics and Christians as well as Islamists. It is a wood that is used in meditation, wedding ceremonies and prayers.
The Oud Market
The way in which Oud oil is made makes it unique. A process of distillation or melting the resin creates the oil, turning it into a product that has proven to be extremely valuable and in some instances, it can cost around €5,000 per pound. 5-10 grams of Oud can sell for around €500/$600 proving just how rare and expensive it is, highlighting why it is now more valuable than gold. The price of Oud oil is driven by its rarity as well as the high demand and the difficulty that comes with harvesting it. Therefore, it is estimated that the Oud market is worth around US$8 billion, with its value being around one-and-a-half times the value of gold.
Due to high demand and scarce supply, prices increase at a significant rate, with investors now able to benefit from an average increase of 35% in its value over a two year period.