Petroleum Pricing Red Flags: When the Deal is Too Good to Be True

Amazing prices in petroleum offers often mean amazing problems. Here's how to spot unrealistic pricing and avoid scams.

Market Reality: Petroleum Prices Follow Benchmarks

Petroleum products are commodities:

• Prices tied to global benchmarks (Brent, WTI, Platts)
• Market transparency
• Similar products have similar prices globally
• Regional variations are small ($10-30/MT typically)

You can't buy EN590 for $300/MT when market is $540/MT - if someone offers this, it's fake.

How to Check Market Prices

Resources:

Platts - Industry pricing standard

• Subscription required
• Most authoritative

Free alternatives:

• Oil Price Information Service (OPIS)
• Bloomberg (if you have access)
• Industry news sites
• Trading forums (with caution)

Quick reality check:

• Google "EN590 diesel price Platts"
• Check industry news for recent prices
• Compare multiple offers you receive

Current market price ± $20/MT = Realistic range

Typical EN590 Pricing (Example)

This varies constantly with market, but example:

FOB pricing by location:

• Houston: $540-570/MT
• Rotterdam: $550-580/MT
• Fujairah: $530-560/MT
• Singapore: $535-565/MT

CIF pricing:

• FOB price + shipping ($20-60/MT depending on destination)
• Example CIF Asia from Rotterdam: $580-620/MT

These are REALISTIC ranges (as market example, not current quote).

Price Red Flags

Red Flag #1: Far Below Market

Offer: EN590 at $400/MT FOB when market is $550/MT

Why it's a red flag:

• $150/MT below market = 27% discount
• No legitimate reason for this
• Either product doesn't exist or it's a scam

Maybe acceptable difference: $10-30/MT below if:

• Large volume discount (50,000+ MT monthly)
• Long-term contract
• Seller has specific reason (distressed inventory, etc.)
• But $100+ below? No.

Red Flag #2: Same Price Everywhere

Offer: EN590 at $460/MT FOB at ALL locations (Houston, Rotterdam, Fujairah)

Why it's a red flag:

• Prices vary by location
• Different origins have different prices
• Same price everywhere = copy-paste offer
• Seller doesn't actually have product at all locations

Red Flag #3: Fixed Price Despite Market Changes

Offer sent March 1: EN590 at $500/MT
Same seller, May 15: Still $500/MT (but market moved to $570/MT)

Why it's a red flag:

• Petroleum prices change daily
• Real sellers update prices
• Fixed price for months = generic spam offer

Red Flag #4: "Special Relationship" Discount

"We have special relationship with refinery, can offer $100/MT below market"

Why it's a red flag:

• Refineries sell at market prices
• No "special relationship" gives huge discounts
• Even major buyers get $5-15/MT discounts, not $100/MT

Red Flag #5: Prices in Round Numbers Only

All offers exactly $400, $450, $500 (never $467 or $543)

Why it's a red flag:

• Real petroleum prices are specific: $542.50/MT
• Round numbers suggest made-up prices
• Not tracking actual market

Red Flag #6: No Price Justification

Asked: "Why is your price $80/MT below market?"
Answer: "We are direct from refinery" or "Trust us, it's real"

Why it's a red flag:

• Can't explain price difference
• No legitimate business reason
• Should have clear explanation

Legitimate Price Variations

Acceptable reasons for price differences:

✅ Transaction type

• FOB cheaper than CIF (no shipping included)
• TTT might be slightly cheaper (no vessel costs)
• Difference: $20-40/MT typically

✅ Volume discount

• 50,000+ MT monthly: $5-15/MT discount possible
• 100,000+ MT: $10-20/MT possible
• Not $100/MT discount

✅ Payment terms

• Cash upfront might get $5-10/MT discount
• Longer payment terms might cost $5-10/MT more
• Small difference, not huge

✅ Product specs

• Slightly off-spec might be discounted
• But should be disclosed
• And it's not EN590 anymore if off-spec

✅ Location/origin

• Different origins vary by $10-30/MT
• Fujairah might be $10-20/MT less than Rotterdam
• Regional variations are real but small

✅ Contract length

• 12-month contract might get $5-10/MT discount
• Commitment has value
• But still not $50+/MT discount

How to Evaluate a Price

When you receive an offer:

Step 1: Check current market price

• Look up Platts or industry sources
• Get ballpark for that product/location

Step 2: Compare to offer

• Is offer within $20-30/MT of market?
• Or way below?

Step 3: Ask about difference

• "Market shows $550/MT, you're offering $520/MT - why?"
• Legitimate seller explains (volume, terms, etc.)
• Scammer gets defensive or vague

Step 4: Verify explanation

• Does explanation make sense?
• Is discount proportional to reason?
• Can you verify their claims?

Step 5: Decide

• Realistic price + good explanation = Proceed with verification
• Too-good price + no explanation = Walk away

The Scammer's Playbook

How scammers use low prices:

1. Attract desperate buyers with amazing prices
2. Build excitement - "You found a great deal!"
3. Request upfront fees - "Pay 2% verification fee"
4. Or request SBLC - to get your banking information
5. Disappear after getting money/information

The low price is the bait.

When to Question Price

Ask yourself:

• Is price more than $30/MT below market? Investigate hard
• Is price more than $50/MT below market? Probably fake
• Is price more than $100/MT below market? Definitely fake

If it seems too good to be true, it is.

What to Say When Price Seems Wrong

Professional response:

"Thank you for the offer. I'm seeing market prices for EN590 FOB Rotterdam around $550/MT currently. Your offer of $450/MT is significantly below market. Can you explain why your price is $100/MT lower? I'd need to understand the reason before proceeding."

Good seller response:

• Clear explanation
• Verifiable reason
• Willing to prove product exists

Bad seller response:

• Defensive
• "Just trust us"
• "Act fast before price changes"
• Can't explain

The One Exception: Distressed Cargo

Rarely, genuinely below-market prices exist:

• Cargo rejected by original buyer
• Seller needs to liquidate quickly
• Distressed seller (bankruptcy, etc.)
• Product approaching expiration (less common with petroleum)

But even then:

• Discount is $20-50/MT, not $100-200/MT
• Seller can explain situation clearly
• Product still verifiable
• Legitimate paperwork

And it's rare - if you see 10 "distressed cargo" offers per month, 9+ are fake.

Bottom Line

Petroleum prices follow global benchmarks closely

Realistic price range: Market ± $10-30/MT

Red flags:

• $50-100+ below market
• Same price everywhere/unchanging
• Round numbers only
• No explanation for low price
• "Special relationship" claims

Legitimate variations:

• Transaction type: $20-40/MT difference
• Volume discounts: $5-20/MT
• Regional differences: $10-30/MT
• Payment terms: $5-15/MT

When in doubt:

1. Check current market price
2. Compare to offer
3. Ask for explanation of difference
4. Verify explanation
5. If more than $50/MT below market, verify VERY carefully or walk away

Remember: In petroleum trading, if the price looks too good to be true, it is. Focus on realistic, market-rate pricing from verifiable sellers.

Take Action

Get transparent, market-based pricing from verified suppliers. Submit an RFQ on CommoditiesHub and receive realistic quotes you can trust.