Why Is Oud Counted Among the Most Expensive Woods in the World?

Oud is often described as among the most precious of the aromatic materials that nature produces, and is frequently compared — by way of approximation, not statement — with the precious metals or described as "liquid gold." But what makes a particular wood reach this standing? In this article we answer the question from the angle of the economic value: what factors transform the natural scarcity of oud into a high price in the market. And it is a part of the complete guide to oud which gathers all the axes of the subject.

1. Why is oud precious? An overview

Before entering into the details, it is well to set a clear framework. The high value of oud is not the result of a single factor that can be pointed to with a finger, but the outcome of the concurrence of a set of factors that begin from the tree in the forest and end in the hand of the buyer. Every link in this chain adds to the scarcity or to the cost or to the demand, and their sum is what raises oud to the ranks of the most expensive of the traded natural materials.

And oud has been connected in the Arab and Asian cultures to a symbolic standing that made some name it "the wood of the gods" in ancient heritages, or liken it to gold. And these are rhetorical descriptions that express the appreciation more than they state a fixed price fact; for the price of oud is not a single number, but a wide range extending from grades within the reach of many to rare pieces that the enthusiasts acquire. What concerns us here is not the number but the reasons that make the whole range higher than most of the other woods.

We will present in what follows eight complementary factors: the natural scarcity at the source, the slowness of the formation of the resin, the difficulty of finding it and extracting it, the pressure of the demand against a limited supply, the international regulation surrounding the trade, then how quality, grade, and origin multiply the value, and finally the essential difference between value and price from the angle of the buyer. And we avoid in all of that mentioning decisive figures or ratios, because they vary and change with the change of the markets, and we content ourselves with explaining the factors a qualitative, honest explanation.

And it is important that we distinguish from the beginning between two questions that are often confused: the question "why do some trees produce oud and not others?" which is a question about the biological scarcity in its origin, which we detail in why do some trees produce oud; and our question here which is "why does this scarcity transform into a high price?" which is a question about value and the market. The first explains the scantness of the material, and the second explains how this scantness itself translates into value.

2. The natural scarcity

The first and deepest factor is that oud is scant from its source. For it does not arise in every tree, but in only a limited proportion of the Aquilaria and Gyrinops trees, and even those that are injured do not all produce abundant resin of value. The tree may live its whole life without forming an oud to mention, for the material in its origin is an exceptional response, not the product of an accustomed natural growth.

This biological scarcity is the cornerstone of all that follows it of the factors of value. For if oud formed in every tree regularly, the cause of its scarcity would collapse from its roots. And we detailed the mechanism of this selectivity — why one tree and not another, and why one spot and not another within the same trunk — in why do some trees produce oud and not others, and we do not repeat here its details but build upon it: what is rare in nature tends to be expensive in the market.

And added to the scarcity of the producing tree is a more precise internal scarcity: for even in the resinated tree, the resin does not distribute equally, but concentrates in dark veins and spots interspersing a lighter wood of no aromatic value. For the truly precious part may be a small fraction of the whole mass of the tree. And this concentrated resin is the essence of the value, and we devoted to it what is oud resin which explains why the resin makes the value, not the wood carrying it.

3. The slowness of formation

The second factor is time. For the resin that grants oud its value does not accumulate all at once, but forms slowly and deepens gradually over the course of long years, and may extend in the high-density pieces to decades. And the more the time that the resin spent accumulating and intensifying lengthens, the more its density increases and its scent deepens and its value rises. Time here is not a marginal detail, but an authentic component of the components of value.

And because time is costly by its nature, what needs long years in order to mature carries in its price the price of its waiting. For the piece that reached a high density did not reach it in a season, but rather is the yield of years in which there was no hastened return for the tree nor for the supplier. This long waiting — and what corresponds to it of capital and patience — is reflected upon the value of the final material a direct reflection.

And we avoid here mentioning a specific number of years, because the durations vary a wide variance according to the tree, the environment, the degree of the injury, and the density of the resin required, and it is not valid to reduce it to a single number. And we devote in this guide an independent axis to the question "how long does the formation of oud take?" for whoever wants the detail of this temporal matter. As for here, it suffices us to establish the rule: the slowness is a part of the value, and what matures at leisure grows costly.

4. The difficulty of the gathering and the extraction

The journey of the value does not end at the formation of the resin in the tree, but rather at it another costly stage begins: finding the material and separating it. For the resinated part inside the trunk is often not apparent to the eye from the outside, and determining it requires an accumulated expertise possessed by the skilled oud extractors who read the signs of the tree and distinguish the probable sites of the resin from the light wood surrounding them.

And historically, the oud extractors used to cross long distances in the forests searching for trees that may carry oud and may not carry it, so some of them return with no yield to mention. Then separating the resin from the light wood surrounding it is a precise work that requires skill and patience so that nothing of it is wasted. This human effort and specialized skill — not the machine alone — form an additional layer of the cost that is added to the scarcity of the material itself.

And we at Oud Treasure clarify the supply chains and the transparency of the origin that connect us with these extractors on the oud sources page, for the knowledge of who gathered the oud and from where is no less important than the material itself. And we traced how this gathering developed historically in Indonesia specifically in the history of gaharu in Indonesia, from the gathering in the forests to the global trade.

5. The pressure of the demand against the limited supply

Until now we have spoken of the side of the supply: a rare material, slow in formation, difficult in extraction. But the value is not completed except by the meeting of the supply with the demand. And here enters the fifth factor: oud is a material whose demand intensifies in large, established markets, foremost among them the region of the Gulf and the Arab world where oud has been connected to perfuming, hospitality, and social standing a deep connection, alongside venerable Asian markets from India to East Asia.

And we detailed how this demand took root culturally until oud became a symbol of generosity and standing in how oud became a symbol of hospitality and standing in the Gulf. And when a strong, stable demand like this meets a supply limited by its nature that cannot be expanded easily, a rising price pressure arises; since many compete over a scant material whose provision is not hastened by the desire of the buyer nor by the price of the market.

And the difference is essential between a good whose production the factory can multiply in response to the rise of the demand, and a material like oud whose supply no one possesses the ability to multiply in a foreseeable range because it is a hostage of nature and time. This limited flexibility in the supply makes the effect of the demand upon the value more intense than in the goods capable of abundant production. And the escalation of the demand upon a scant resource had a deep effect on the course of the whole industry, which we detailed in from wild oud to the farms.

6. The regulation and the protection

The sixth factor is of a different nature: for it does not relate to the tree nor to the demand directly, but to the legal framework surrounding the trade of oud. For the oud trees are listed within the Convention on International Trade in Endangered Species, known in brief as CITES, and it is a listing that reflects the concern for the conditions of the wild trees under the pressure of the intensive gathering, and imposes upon the legitimate trade a documentation and permits that guarantee that the material was gathered and exported in a legal, sustainable manner.

And this regulation is necessary and commendable from the angle of protecting the resource over the long term, but it at the same time adds a layer of compliance and documentation to the legitimate supply chain: permits, and procedures, and costs of conformity. And these regulatory burdens are a part of the reality of the serious trade of oud, and they are reflected by their nature upon the structure of the cost, unlike the materials that are not subject to such restrictions.

And we explained the reasons for oud's subjection to this convention and its details in the guide to the regulation of the oud trade and the CITES convention, and we also traced the transformation from reliance on the wild trees to organized cultivation — a transformation that intersects with this regulation — in from wild oud to the farms. And the conclusion is that the legal framework, though it is for protecting the resource, adds to the value of the legitimate, documented oud a dimension that we do not find in the unregulated goods.

7. Quality, grade, and origin multiply the value

The six preceding factors explain why oud is costly in its totality. But they do not explain why its price varies an immense variance between one piece and another. And here enters the seventh factor: the value is not determined by the material being oud only, but by its grade and the density of its resin and its origin. For these factors multiply among themselves to draw a wide price ladder within oud itself.

The most important determinant is the density of the resin: for the more the resin accumulated in the wood, the heavier the piece, the deeper its scent, and the more stable it is upon heating, and its grade rises accordingly. And the origin comes as a second factor, since each region within the range of oud has its character in the color, the density, and the layers of the scent, and some origins enjoy a special appreciation among the enthusiasts. Then supporting factors enter such as the size of the piece and its cohesion and its soundness.

And the history of oud did not know a unified global system of grading, but rather the customs multiplied between the markets and the eras, which we detailed in how was oud classified in the old days. And the complete guide presents the five-grade ladder that we adopt to arrange oud from the daily to the rare high-density, so that the buyer understands where the piece before him falls of this range.

As for the figures and the actual price ranges, we refer you in them to the oud wholesale prices page, for it is the practical reference for whoever wants to know how the grade, the density, and the origin translate into realistic price ranges. For the function of this article is to explain why the value is high and varied, and the function of that page is to present the price itself. And the conclusion is that the grade, the origin, and the density concur so they multiply the value within oud, exactly as the first factors multiplied its value in the face of the rest of the woods.

8. Value against price: the buyer's advice

After we have understood why oud grows costly, the most important practical conclusion for the buyer remains: the value is not the price. For the price is a number, whereas the value is what you actually obtain in return for this number of a density of resin, an honest scent, and a documented origin. And the more expensive oud may be better in value than the cheaper, and the opposite may be the case if the expensive is exaggerated in its pricing or of unknown origin. The honest judgment rests upon matching the price with what corresponds to it of real quality.

And among the most important of what ought to be beware of is the impossible cheapness: for high-density oud is not sold at trifling prices, and it is of the nature of the market that the very cheap oud is often diluted or adulterated or of unknown grade and origin. So when the price appears much lower than what the factors we explained impose, that is mostly a sign of warning, not a winning deal.

And the golden rule is that you buy from a transparent source that mentions to you the origin and the grade and makes it possible for you to verify before the commitment. And we clarify how we examine oud and classify it on the quality-control page, and we make it possible for you to begin with a small sample by which you test the scent and the density yourself on the samples page before you commit to a larger piece. For the nose and the senses are a truer judge of the value than any shiny commercial name.

And with this the answer is completed: oud is costly because its natural scarcity, the slowness of its formation, the difficulty of its extraction, the pressure of the demand upon it, the regulation surrounding it, then the variance of its grades and its origins — all concur to raise its value. But the awareness of these factors is itself what makes you a confident buyer who knows in return for what he pays, so a suspicious cheapness does not deceive him and a costliness with no return does not dazzle him.

Read also

For a wider deepening, begin from the complete guide to oud which gathers all the axes of the subject in one place. And to understand the root of the scarcity upon which the value was built, look at why do some trees produce oud and not others and what is oud resin. And we are working on devoting independent articles to interconnected axes such as: "how long does the formation of oud take?", and "where does oud grow?", and "the oud-producing countries" — we add their links here successively whenever they are completed.