Screening an offer is not an accusation. It is an hour of work that decides whether the next three weeks are worth spending, and every one of the five checks can be done from your own desk.

Volumes of enquiry are not the problem in petroleum trading; the problem is that the real ones and the fictitious ones look identical in the first email. Both arrive with a grade, a volume, a price and an urgent timeline. The difference only appears when you ask for things a genuine seller has and an intermediary chain does not.

None of the checks below requires the other party to do anything unusual, and none of them commits you. If an offer cannot survive them, it was never going to survive a bank.

The five checks

One: who holds title. Ask for the name of the title holder and the instrument that authorises this party to sell on their behalf. A mandate, an agency agreement, or a direct statement from the producer or refiner. If the answer is a description of a relationship rather than a document, you are dealing with a relayed offer.

Two: where the product is. A real parcel sits somewhere — a named terminal, a named tank, a vessel with an IMO number. Confirm the position with the terminal on contact details you find yourself. Storage receipts and authorisations to verify are not evidence until the terminal says so.

Three: whether the price is possible. Locate the offer against a published benchmark and the normal spread for that grade, that location and that parcel size. A discount well outside the range the market supports is the strongest single indicator that no product exists.

Four: whether the payment structure banks. Take the proposed instrument to a bank before drafting. Confirmable letters of credit, standby credits and documentary collections behave differently, and instruments from institutions without correspondent relationships will not be confirmed at any price.

Five: whether the parties clear compliance. Screen the counterparty, the beneficial owners, the vessel and the origin against the sanctions lists that apply to you. This is not optional and it is not a formality — it is the check that protects your banking relationships, which are harder to replace than any cargo.

• Title holder named, with a mandate you can read.
• Product position confirmed by the terminal itself.
• Price located within a defensible benchmark spread.
• Payment instrument pre-cleared with a confirming bank.
• Counterparty, owners and vessel screened for sanctions.
• One named decision-maker on the other side.

What to do when an offer passes

An offer that clears all five is worth moving on quickly, because so few do. Convert it into a term sheet the same week: grade and specification with test methods, quantity with tolerance, delivery term with the risk transfer point, laycan, inspection regime, payment instrument and governing law. Anything left vague at that stage becomes a negotiation later, under time pressure.

It is equally worth writing down why an offer failed. Chains re-offer the same fictitious cargo repeatedly, and a short internal note saves the next person on your desk from spending the same three weeks on it.

We run this screen on every enquiry that reaches us, including ones from parties we already know. It is not scepticism about people; it is the recognition that in a market where the same parcel can be offered through twenty hands, verification is cheaper than optimism.

About the author

Regi Atlantic Trading Desk

Regi Atlantic Energy Limited

Notes from the people who source, trade, store and ship the cargo — written to answer the questions counterparties actually ask us before a contract goes firm.