Red Flags in Petroleum Trading: How to Identify Legitimate EN590 Diesel Suppliers

A supplier on LinkedIn offers EN590 diesel at $150/MT below market price, claims direct refinery access, and needs your SBLC within 48 hours to secure the deal. Another seller on WhatsApp has product "ready in tank" but won't let you verify with the terminal. A third demands a 2% performance bond from you before showing proof of product.

Which offers are legitimate? None of them. All three are classic petroleum trading scams that steal millions from buyers annually. The petroleum market attracts sophisticated fraudsters who've perfected their techniques over years. This guide will help you distinguish genuine suppliers from dangerous scams.

Why Petroleum Trading Attracts Scammers

Petroleum trading creates the perfect storm for fraud. Single orders range from $500,000 to $50,000,000+, meaning even small percentage scams yield enormous amounts. A scammer who steals just 2% of a $5 million deal walks away with $100,000.

The complex international procedures create natural confusion. Multi-step processes, technical jargon, and legitimate complexity provide cover for illegitimate requirements. New buyers struggle to distinguish normal complexity from fraudulent additions.

Desperate buyers need fuel urgently, creating pressure to close deals quickly and willingness to overlook warning signs. Meanwhile, the barrier to entry for scammers is remarkably low – anyone can post "offers" on social media, copy-paste procedures from real deals, and make claims without verification.

Understanding this landscape is your first defense.

Common Scam Patterns

Pattern #1: The Too-Good Price

The scammer offers EN590 at $100-200/MT below market, claiming "direct from refinery" or a "special relationship" that enables massive discounts. This attracts desperate or inexperienced buyers who think they've found a miracle deal. Once interested, the scammer requests upfront fees or banking information, then disappears.

Market reality: EN590 diesel trades at $530-580/MT depending on location and current market conditions. Legitimate bulk discounts might save you $5-20/MT maximum. Offers $50+ below market are red flags. Offers $100+ below market are definitely scams.

Protect yourself by checking current market prices on Platts or Bloomberg, comparing multiple offers, and questioning anything more than $30/MT below market. If it's too good to be true, it is.

Pattern #2: Payment Before Verification

The seller provides impressive-looking documents – often expertly faked – then demands payment or an SBLC before allowing you to verify the product actually exists. They claim "trust us, we're established" or pressure you with "product moving fast, pay now or lose it."

The industry standard is always: verify product FIRST, pay AFTER successful verification. Never wire money before seeing proof.

Red flags include demands for a 2% performance bond before verification, requiring an SBLC before allowing a dip test, requesting wire transfers to "show good faith," or any variation of "pay first, verify later."

Protection is simple: Insist on verification before any payment. Make "no verification, no payment" your unbreakable rule. Walk away from any seller who demands payment first.

Pattern #3: Fake Documentation

Scammers provide fake SGS reports, Tank Storage Receipts, VOPAK barcodes, Certificates of Origin, and authorization letters. The documents look professional – complete with letterheads, official-looking stamps, and convincing details – but they're completely fabricated and can't be verified with the actual issuing parties. When you try to verify, the seller blocks or delays direct verification attempts.

Common fakes include SGS inspection reports on copied letterhead, Tank Storage Receipts generated from generic templates, made-up VOPAK barcode numbers, Certificates of Origin not from real authorities, and authorization letters from non-existent entities.

Protection requires verifying ALL documents with the issuing parties directly. Call SGS with the report number. Contact the terminal with the TSR reference. Use official contact information from the company's website, not contact details provided in the documents themselves. If you can't verify it, assume it's fake.

Pattern #4: Banking Information Harvesting

The scammer requests an ICPO with full banking details, asks for Swift MT799 or MT760 documents, collects your banking information, then uses it for identity theft, fraud attempts, or future scams targeting you or your bank.

What they're really after: your bank account numbers, SWIFT codes, bank contact information, and credit capacity details – all valuable for fraud.

Protect yourself by not providing detailed banking information upfront. Only share banking details after you've verified the supplier is legitimate. Use caution even with ICPO banking details. And never issue an SBLC or MT760 before verifying the product actually exists.

Pattern #5: The Endless Procedure

The procedure has 15-20 steps, each requiring fees, documents, or commitments. There's always "one more thing" needed before the deal can close. The buyer invests increasing amounts of time and money, but the deal never actually closes because it was never real.

Red flags include overly complex procedures (legitimate deals involve 5-8 steps, not 15+), frequent "additional requirements" that emerge mid-process, fees attached to each step, and no clear end point or completion criteria.

Protection starts with reviewing the entire procedure upfront. Question unnecessary complexity. Set firm limits on time and fees you're willing to invest. Walk away from endless requirements – legitimate deals have clear, finite processes.

Transaction Type Red Flags

CIF (Cost, Insurance & Freight)

Legitimate CIF includes product cost, shipping to your port, insurance, clear delivery timeline, and payment after arrival and inspection. That's what CIF means – the seller handles everything until the product reaches your port.

Red flags: CIF price is the same as FOB (shipping costs should be included, so CIF must be higher), "CIF but you arrange the vessel" (that's not CIF, that's FOB), no shipping timeline provided, or payment required before vessel arrival.

FOB (Free On Board)

Legitimate FOB means you arrange and pay for shipping, the product is delivered to your vessel at the origin port, and you handle all logistics from there.

Red flags: FOB with the seller arranging everything (that's inconsistent with FOB terms), FOB price higher than market CIF (backwards – FOB should be cheaper since you're paying shipping), or "FOB but includes delivery" (that's CIF, not FOB).

Tank-to-Tank (TTT)

Legitimate TTT involves product in the seller's tank transferring to your tank at the same terminal or nearby. It's the fastest transaction type, but requires you to have tank storage access.

Red flags: TTT when you don't have tank storage (how would the transfer work?), TTT from a distant location (how's it getting to your tank across the ocean?), or seller can't name the specific terminal.

Tank-to-Vessel (TTV)

Legitimate TTV means product loads from a tank directly onto a vessel, either you or the seller arranges the vessel, and vessel details are confirmed with specific information.

Red flags: TTV but no vessel information provided, claims of "instant loading" (loading takes time and scheduling), or inability to explain port and terminal logistics.

Tank Take Over (TTO)

Legitimate TTO means taking ownership of product already in storage through a title transfer of existing inventory, making it immediately available.

Red flags: TTO for product "arriving soon" (it's not there yet, so you can't take it over), inability to verify current storage, or no clear title transfer process explained.

Banking Instrument Red Flags

SBLC / MT760

Legitimate SBLC use: large transactions over $500K, issued after product verification, protecting the seller from non-payment through proper banking channels.

Red flags: Required before product verification, demanded for small transactions of $50K-200K (excessive for that amount), seller offers to "help you get" an SBLC for a fee (scam within a scam), demands for MT760 within impossible timelines like 48 hours, no explanation of why it's needed, or refusal to consider alternatives like LC or escrow.

Reality check: Getting an SBLC takes 2-4 weeks, costs 1-4% annually plus setup fees, requires significant collateral (often 100%+ of the SBLC value), and not all buyers can obtain one.

MT799 (Pre-Advice)

Legitimate MT799 use: bank-to-bank communication showing financial capability without committing funds, sometimes requested in large deals.

Red flags: The seller confuses it with actual payment or a guarantee (it's neither), requests it before basic product verification, doesn't understand what an MT799 actually is, or requires it for small transactions where it's unnecessary.

What MT799 is NOT: It's not payment, not a guarantee, not a commitment – just communication between banks.

Performance Bonds

Legitimate performance bonds: The SELLER provides one to the BUYER to guarantee seller performance, typically 2% issued by the seller's bank. It protects you from the seller failing to deliver.

Major red flags: The seller asks the BUYER to pay a 2% performance bond (backwards – this is a major scam indicator), requests cash wire transfer instead of a bank guarantee, demands it before product verification, or calls it "non-refundable."

Remember: Performance bonds protect the buyer FROM the seller, so the seller provides it. If a seller is asking you for a performance bond, they've got it backwards – probably intentionally.

Verification Red Flags

Product Verification

Red flags: Seller refuses to provide Authorization to Verify, won't let you contact the terminal directly, blocks independent inspection, only allows the seller's chosen inspector, limits verification time unreasonably (like "you have 2 hours"), or gets defensive about verification requests.

Legitimate sellers welcome verification, provide ATV gladly, allow independent inspectors of your choosing, encourage you to contact the terminal directly, and are confident the product exists because it actually does.

Document Verification

Red flags: Documents can't be verified with the issuing parties, contact information is only from the seller (not from official sources), seller refuses direct verification, documents have inconsistencies in dates or details, generic templates with no specific information, or very old dates (months or years old).

How to verify properly: Use official website contact information, call SGS, the terminal, or chamber of commerce directly, provide reference numbers, confirm authenticity with the issuer, and check that all details match between documents and what the issuer confirms.

Pricing and Cost Red Flags

Unrealistic Pricing

Red flags: Pricing $50+ below current market (suspicious), $100+ below market (definitely fake), same price for all locations when Houston, Rotterdam, and Fujairah should have different pricing, prices unchanged for months when petroleum prices fluctuate daily, or only round numbers like $400, $450, $500 instead of specific market prices like $463.50.

Legitimate pricing: Within $10-30/MT of current market rates, varies by location, changes with market movements, and shows specific numbers that reflect actual market pricing.

Hidden Costs

Red flags: Vagueness about total costs, "additional fees" that appear later in the process, excessive bank fees, unexplained charges, or refusal to provide a detailed cost breakdown.

Legitimate sellers are transparent about all costs upfront, provide detailed breakdowns showing each fee, explain what each charge is for, and offer total costs that are competitive with market rates.

Communication Red Flags

Seller Communication Patterns

Red flags: Pressure tactics like "deal expires in 24 hours," defensive reactions when questioned, vague answers to specific questions, inability to explain their own procedures, changing story or terms mid-discussion, unprofessional communication, only communicating via WhatsApp with no business email, refusing to provide company information, or having no verifiable business presence.

Legitimate sellers are patient with questions, provide clear and detailed answers, understand their own procedures thoroughly, give consistent information across conversations, communicate professionally, offer multiple contact methods (email, phone, official chat), are transparent about their company, and have verifiable business history.

Geographic and Logistics Red Flags

Impossible logistics are immediate red flags: "Direct loading in Rotterdam from Kazakhstan refinery" (Kazakhstan is landlocked and thousands of miles from Rotterdam), "Product ships from Houston today, arrives Singapore tomorrow" (that voyage takes 20-30 days), not understanding basic geography, inability to explain shipping routes, or timelines that don't match logistics reality.

Knowledge gaps reveal fake sellers: They don't know their claimed origin's geography, can't explain how product gets from origin to delivery point, stay vague about terminals, ports, and routes, or give impossible timelines that defy physics.

Due Diligence Checklist

Before proceeding with ANY petroleum supplier:

Company Verification

• Company name and registration verified
• Physical address confirmed (not just PO Box)
• Business registration checked
• Online presence verified (website, LinkedIn, etc.)
• Years in business confirmed
• References from other buyers obtained
• Negative reviews or scam reports checked

Product Verification

• Current market price confirmed
• Offer price is realistic (within $30/MT of market)
• Product specifications match your needs
• Origin claim makes geographic sense
• Can verify product with terminal/inspector
• Seller provides Authorization to Verify
• Documents can be verified with issuers

Procedure Verification

• Procedure is reasonable (5-8 steps, not 15+)
• Payment AFTER verification
• Banking instruments (if required) are appropriate
• Timeline is realistic
• Costs are transparent and reasonable
• Terms are industry-standard

Seller Behavior

• Professional communication
• Patient with questions
• Welcomes verification
• No pressure tactics
• Consistent information
• Understands their own procedures
• Willing to work with your requirements

If more than 2-3 boxes are unchecked: High risk. Consider walking away.

Safer Alternatives for First-Time Buyers

Start with a Letter of Credit (LC) where the bank intermediates payment, documents are verified before payment releases, both parties are protected, and it's more accessible than an SBLC.

Use escrow services where a third party holds payment until verification is complete. This works well for one-time transactions and costs less than arranging an SBLC.

Start small with a trial order of 5,000-10,000 MT. Test the supplier's reliability, verify the process works, then scale up if successful.

Use verified trading platforms that vet suppliers, provide built-in verification, offer dispute resolution, and reduce risk through their vetting process.

Work through reputable intermediaries – established brokers with proven track records who've already vetted the suppliers, have experience navigating procedures, and whose commission is worth paying for your first purchase to reduce risk.

Questions to Ask Sellers

These questions expose scammers quickly:

"Can I verify the product directly with the terminal?" Legitimate sellers say "Yes, here's their contact information." Scammers get evasive, refuse, or block contact.

"Why is your price $X below market?" Legitimate sellers provide clear explanations. Scammers stay vague, get defensive, or say "trust us."

"Can you provide references from recent buyers?" Legitimate sellers provide verifiable references. Scammers make excuses, can't provide any, or give fake references.

"What's your company registration number?" Legitimate sellers provide it immediately. Scammers become evasive, change the subject, or provide fake numbers.

"Can we do verification before any payment or SBLC?" Legitimate sellers say "of course." Scammers insist on payment or SBLC first.

"Which specific terminal is the product at?" Legitimate sellers give specifics: "Tank #47 at VOPAK Rotterdam terminal." Scammers stay vague with "various locations" or can't be specific.

What to Do If You Suspect a Scam

Stop immediately. Don't proceed further, don't send any money, don't provide banking information, and don't issue any bank instruments.

Document everything. Save all communications, screenshot offers and procedures, keep email trails, and note all red flags you observed.

Verify your suspicions by searching the company name plus "scam," checking petroleum trading scam databases, asking carefully in industry forums, and consulting with experienced traders.

If it's a confirmed scam, report it to authorities in your country, report to petroleum trading associations, warn others in trading communities, and help prevent others from being victimized.

Learn and move on. Understand what red flags you missed, improve your due diligence process, find legitimate suppliers, and don't let one bad experience stop you from pursuing legitimate opportunities.

The Bottom Line on Petroleum Trading Safety

The petroleum market has both legitimate suppliers and sophisticated scammers. Your protection comes from five key principles:

Knowledge – Understanding proper procedures and red flags protects you better than any contract. Verification – Always verify product before payment, no exceptions. Skepticism – If it seems too good to be true, it is. Every single time. Due Diligence – Check everything, trust nothing without proof. Patience – Don't rush. Scammers create urgency because time reveals their lies.

Legitimate suppliers welcome verification. Real product can be verified with terminals and inspection companies. Pricing runs at market rates, not miracle discounts. Payment comes after verification, not before. Communication is professional, not pressure-filled.

Most importantly: When in doubt, walk away. There are legitimate suppliers out there – keep looking until you find them. Better to pass on a questionable deal than lose $500,000 to a scam.

Take Action Safely

Ready to source petroleum from verified, legitimate suppliers? Submit an RFQ on CommoditiesHub and connect with pre-vetted suppliers who welcome product verification, provide transparent pricing, follow industry-standard procedures, have verified track records, and respect professional due diligence.

Start your petroleum procurement journey with confidence, not fear – by working with suppliers who've already been thoroughly vetted.