Market Dynamics, Misconceptions, and Structural Problems in Petroleum Trading
The world’s leading refineries cooperate with selected trading companies to manage market share, pricing stability, and product distribution in global oil markets. These trading structures are often regionally segmented, particularly across Kazakhstan, Azerbaijan, Iran, and Russia, where different commercial and logistical models apply.
At the same time, many companies based in Dubai remain highly active in petroleum trading. They continuously seek new buyers and attempt to place products into the market using a wide variety of procedures—many of which do not reflect real refinery practices.
In recent years, Russian-origin products have frequently entered the market through Kazakhstan-based entities. This structure allows producers to test demand, balance prices, and maintain sales volume under changing market conditions, especially for products such as EN590 10 PPM.
Common Misconceptions About Petroleum Sales Procedures
Unfortunately, a large part of the market has become polluted by fake sellers, unqualified brokers, and fabricated sales procedures. This problem is particularly visible in major trading hubs such as Rotterdam and Fujairah, where some market participants attempt to sell non-existent products using meaningless documentation.
Below are the most common structural mistakes that prevent real trades from closing.
Condition 1: Obsessing Over Whether the Trader Has Money
One of the most widespread and illogical habits in petroleum trading is constantly questioning whether a trader company has funds.
Trader companies are intermediary structures, not end users. They do not trade with their own balance sheets. Instead, they operate using the financial capacity of their customers or end buyers. Even if a trader holds capital, it is neither realistic nor required for them to pre-finance refinery-scale volumes.
Therefore, asking trader companies to prove funds at an early stage is both meaningless and counterproductive. This practice should be abandoned immediately.
Condition 2: Demanding Tanks or Vessels Before Proof of Product
Another common misconception is the expectation that a buyer should arrange a tank farm or charter a vessel before verifying the existence of the product.
No serious buyer will:
- Rent a tank
- Charter a vessel
- Commit logistics
without first reviewing product documentation and confirming that the product actually exists.
Instead, some sellers or brokers demand TSA or CPA documents, which is one of the clearest indicators of non-genuine procedures.
No real tank terminal in the world circulates its contracts publicly. TSA and CPA documents contain sensitive commercial terms, including tank rental prices and operational details. Sharing such documents would create serious legal and commercial risks. For this reason, legitimate tank operators do not issue or distribute TSA or CPA for marketing purposes.
Condition 3: Misunderstanding the Role of SGS Testing
Another critical misunderstanding relates to SGS inspections.
An SGS report:
- Confirms product quality and quantity
- Reflects test results at a specific time
- Verifies compliance with specifications
However, SGS does not prove ownership.
Receiving an SGS report does not mean the product belongs to the party holding the report. Ownership belongs to the company in whose name the product is stored—either in a tank or on a vessel.
SGS testing simply allows a potential buyer to evaluate product quality. It does not grant sales rights, ownership, or control.
Condition 4: Working With Too Many Brokers
Trades that involve dozens or even hundreds of brokers rarely conclude successfully.
In any legitimate petroleum transaction, the seller’s first responsibility is to prove product existence. If a seller avoids this step, delays it, or complicates the process with unnecessary requests, this almost always indicates that the product does not exist.
A real seller wants to:
- Prove the product quickly
- Complete the transaction
- Move on to the next trade
However, excessive conference calls, document circulation, and unqualified intermediaries exhaust both buyers and sellers. As a result, many sellers withdraw from the market or stop engaging entirely.
Conclusion
Petroleum trading does not fail because of market conditions alone. It fails because of misguided procedures, unqualified intermediaries, and unrealistic expectations.
Real trades require:
- Proof of product before proof of funds
- Clear authority and limited intermediaries
- Proper understanding of inspection and documentation
- Simple, transparent execution
Until the market abandons these misconceptions, especially around EN590 10 PPM, genuine supply and demand will continue to struggle to meet efficiently.