FOB Pricing and How to Spot Fake Oil Trade Offers

In the world of oil and gas trading, understanding FOB (Free On Board) pricing is very important. It helps you avoid fraud, know who handles what, and make smart trading decisions.

Let’s break this down in easy terms so you can trade confidently and avoid fake offers.

What Does FOB Really Mean?

FOB stands for Free On Board. It tells you exactly when the product becomes your responsibility.

Here’s how it works:

• The seller pays for and handles everything until the oil is loaded onto the ship.
• The buyer takes over from that point — paying for shipping, insurance, customs, and other charges.

If you don’t understand this clearly, you could end up paying extra fees or facing disputes.

What Sellers Must Handle Before FOB Delivery

A real seller must take care of:

• Loading the oil onto the ship
• Export clearance
• Port charges at the loading terminal
• Getting all official documents ready (we’ll talk about these next)

They are responsible up to the loading point at the port.

The Buyer’s Job After FOB

Once the cargo is on board:

• You, the buyer, must handle all costs from there — freight, insurance, delivery to the destination, and import taxes.
• Any delays or damage during transport are now your responsibility.

That’s why many serious buyers want to inspect everything before the cargo is shipped.

Important Reference Ports Around the World

You may see offers that mention places like:

• Fujairah – for Middle East shipments
• Singapore – for Asia
• Rotterdam – for Europe
• Houston – for USA

These are major oil ports, and prices can change depending on the loading location.

Understanding How FOB Prices Are Calculated

There are two main ways sellers price oil:

1. Fixed price per metric ton – A set number, like $610 per MT.
2. Platts-based formula – The current Platts index price minus a discount, like “Platts minus $40.”

This keeps pricing fair and linked to the market.

Realistic Price Ranges You Should Expect

Most real FOB offers fall in the range of:

• $500 to $650 per metric ton, depending on the product and port.

If you see an offer for $320 or even $390 — that’s a red flag. Prices that low usually don’t match real costs and could be fake.

Documents Every Real FOB Deal Must Include

A real oil transaction must come with:

• Certificate of Origin – Proves where the product came from
• SGS Inspection Report – Shows the product’s quality and quantity
• Product Specification Sheet – Lists details like sulfur level, density, etc.
• Bill of Lading – Once loaded, proves shipping happened

Missing any of these? Be very cautious.

Fraud Warning Signs in Payment Terms

Here are some common tricks fraudsters use:

• Asking for advance payment before inspection
• Suggesting strange payment methods like “private escrow accounts”
• Avoiding Letters of Credit or standard banking tools

A serious seller won’t fear proper payment systems.

Watch Out for Unrealistic Volume Offers

Be careful when you see:

• “Unlimited quantities available”
• Very low minimum orders at cheap prices
• Sellers who say yes to everything without details

Real deals have real limits and terms. Fake deals often sound “too easy.”

How to Verify a Seller Properly

Before you go forward:

• Ask for their business registration
• Check their company website and physical office
• Ask for references from past deals
• Verify if they can show past successful shipments

Always take this extra step — it can save you from major losses.

You’re Ready for More? Join the Full Training

If this post helped you, imagine how much more you’ll learn in our complete training. Inside the course, you’ll learn:

• Real case studies of FOB deals
• How to verify prices and documents
• Step-by-step deal flow, from inquiry to delivery
• Time-saving tools using AI and ChatGPT
• How to stand out from other brokers and gain buyer trust

👉 Click here to join the Oil Trade Masterclass now

Start with facts. Trade with confidence. Grow like a pro.