What is a Dip Test in Fuel Trading? (And Do You Actually Need One?)
You're about to wire $500,000 for a petroleum shipment when the seller mentions a "dip test." Is this a necessary verification step or just another delay? Should you pay for it, skip it, or run the other direction if the seller refuses?
A dip test is exactly what it sounds like – physically verifying petroleum product exists in a storage tank before you commit to buying it. An inspector from a company like SGS goes to the tank, lowers a calibrated measuring tape (dip tape) into it, and verifies three things: the product actually exists, the approximate quantity matches what's being sold, and basic quality indicators look acceptable through visual inspection.
Think of it as a "proof of life" for the fuel you're planning to buy. It's not a complete quality analysis, but it confirms you're not about to pay for air in an empty tank.
What Does a Dip Test Cost?
Typical dip test costs range from $500 to $2,000 depending on the tank location, which inspection company you use, how deep the sample analysis goes, and whether you hire an independent inspector or accept the seller's choice. For a major petroleum purchase, this is cheap insurance.
When Do You NEED a Dip Test?
Do the dip test if you're making a large first-time purchase over $100,000, working with a new and unverified supplier, or paying before product transfer. Tank-to-tank (TTT) or tank-to-vessel (TTV) transactions almost always warrant a dip test because you're taking custody of product already in storage.
The simple question: does the purchase value justify spending $500-2000 on verification? For a $500,000 order, absolutely. For a $5,000 trial, maybe not.
When You DON'T Need a Dip Test
You can skip the dip test if you're using a Letter of Credit – the bank handles document verification as part of the LC process. Working with an established supplier who's delivered successfully before? Probably safe to skip it. Same goes for small trial orders where the dip test cost represents a significant percentage of the order value, or when you're using an escrow service or trading platform with built-in verification.
Red Flags Around Dip Tests
Watch out if the seller charges excessive dip test fees – $5,000+ for a basic inspection suggests they're padding costs or discouraging verification. Huge red flag if the seller refuses to let you use your own independent inspector. You should choose who verifies, not them.
Never pay the full amount before a dip test. That's backward – verification comes before payment. And if the seller won't allow a dip test at all, walk away immediately. No legitimate seller refuses product verification.
Be wary of rush pressure: "No time for dip test, product moving fast, other buyers waiting." That's a classic scam tactic to prevent you from discovering the product doesn't exist.
What a Dip Test Does NOT Prove
A dip test confirms product exists in a tank. That's it. It doesn't prove the seller owns that product – they might just have access to the tank. It's not full quality verification – you're getting basic visual inspection, not complete specification analysis. It doesn't guarantee the seller has the right to sell the product – you need an Authorization to Sell (ATS) document separately.
The dip test report isn't a legal document proving purchase rights. It's verification evidence, not ownership proof.
Quick Decision Guide
Ask yourself these questions: Is this my first time buying from this supplier? If yes, do the dip test. Is the order value over $50,000? Do the dip test. Am I paying before product transfer? Definitely do the dip test.
On the other hand, is the supplier verified on a trusted platform? Maybe skip it. Using LC or escrow protection? Probably safe to skip it.
Bottom Line
A dip test is cheap insurance for large or risky purchases. For a $500,000 petroleum order, spending $1,500 on verification is a no-brainer. For a $10,000 trial order with a platform-verified supplier, you might skip it.
The rule: When in doubt, dip test. The cost of verification is always less than the cost of getting scammed.
Take Action
Ready to start your petroleum procurement with verified suppliers? Submit an RFQ on CommoditiesHub and work with pre-vetted suppliers who understand professional verification procedures - whether you choose to dip test or not.