The majority of petroleum enquiries fail long before a vessel is discussed. The causes are consistent enough to be listed, and almost all of them are visible in the first exchange of documents.

A trading desk sees the same pattern every week. An enquiry arrives with a large volume, an aggressive discount to benchmark, and a chain of intermediaries between the sender and whoever is said to hold the product. Nobody in the chain can produce a mandate. Weeks are spent circulating documents that cannot be verified, and the trade dies without anyone having lied outright.

This is not fraud in most cases. It is the structure of the broker market, in which the same fictitious cargo can be re-offered through dozens of hands, each adding a margin and none holding title. Recognising it early is a commercial skill, not a suspicion — and it saves the weeks that would otherwise be spent on an offer that was never real.

The failure modes, in order of frequency

Unmandated chains come first. If the party offering cannot show a written mandate or an agency agreement from the title holder, they are relaying an offer they do not control. The test is simple and non-confrontational: ask who holds title and ask for the instrument that authorises this party to sell on their behalf. A genuine seller answers in a sentence.

Unverifiable documents come second. Tank storage receipts, allocation letters and authorisations to verify circulate freely and are trivially altered. A storage receipt that cannot be confirmed directly with the named terminal is not evidence of anything. The confirmation must come from the terminal, on the terminal's own contact details, not from a number supplied in the offer.

Payment instruments come third. A great many trades die at the bank rather than at the desk. Instruments are offered that no confirming bank will touch — from institutions without correspondent relationships, or in formats that fall outside UCP 600. Testing bankability before the contract is drafted, rather than after, removes an entire class of late collapse.

Pricing is the fourth signal, and the clearest. Physical petroleum trades at a spread to a published benchmark. Discounts far beyond the range the benchmark supports do not indicate a bargain; they indicate that the party quoting has no access to real product and is competing on the only number they control.

• Written mandate or agency agreement from the title holder.
• Storage documents confirmed with the terminal directly.
• Payment instrument tested with a confirming bank first.
• Price located against a published benchmark spread.
• Counterparty and vessel screened against sanctions lists.
• A single, named point of contact on each side.

What a real trade looks like instead

A trade that will complete tends to be quiet. There is one counterparty, not a chain. The seller can name the terminal and the terminal confirms the position. The specification is issued as a certificate of quality with a test method against every line. The delivery term is stated with a risk transfer point, and the payment instrument is one a confirming bank has already indicated it will handle.

None of that requires trust. Every element is verifiable by a third party — a terminal, an inspector, a bank, a published benchmark. That is the point: a well-structured petroleum trade replaces trust with verification at each step, so neither side has to rely on the other's good character.

At Regi Atlantic we run this sequence before we quote, not after. It costs us some enquiries we might otherwise have pursued, and it means the offers we do put forward can be taken to a board or a bank without further qualification. For a counterparty, that is the difference between an indication and a commitment.

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.