ENTRY-LEVEL AND FALSE OIL TRADERS – HOW TO IDENTIFY THEM
We include this section to warn serious buyers who deal with unscrupulous “mandates” and new players and intermediaries who make real traders like us look bad. There are tell-tale signs of new or fake players:
- New or fake players always ask for a quotation first. A real buyer never asks such questions, and a real supplier will not quote you below prevailing market scan prices. If they do, they either have a rare connection (we advise you to grab this deal with no further delay), or just want to get your information to use in getting a deal with suppliers. But often this results in a signed contract but no deliveries, leaving the buyer extremely frustrated and distrusting of new suppliers.
- Buyers insisting on their banking procedures. Every veteran buyer knows that the petroleum trading business is the “seller’s call”. They know that no matter how much money they have in their bank, it is useless unless a seller is willing to sell. Every seller has a procedure that he/she wants followed, to protect the faithful intermediaries whose relationship with them has been at least a few decades old. A serious buyer will put up the required Bank Comfort Letter, knowing that there is nothing to lose should the supplier default on his/her commitment.
- Delayed compliance with documentation requirements. Every new or fake buyer or intermediary will cause a great delay in complying with procedures. Frequently this is because the buyer does not have real, available funding as he/she claims to have in the beginning. Those who have no word of honor will never close a deal in this trust-controlled business. The contract always goes to the buyer who complies without making it difficult for the seller and seller intermediaries.