Oil and Gas Procurement: How Buyers Source Crude Oil and Petroleum Products

A crude oil purchase procedure provides a structured process for moving from an initial purchasing requirement to supplier selection, contract execution, inspection, and delivery. For international buyers, each stage should be clearly defined before a crude oil transaction proceeds.

1. Define the Crude Oil Requirement

The first step is to establish exactly what the buyer needs.

This normally includes:

• Crude oil grade or origin
• API gravity
• Sulfur content
• Required quantity
• Spot or recurring supply
• Loading or delivery period
• Destination port, refinery, or terminal
• FOB or CIF preference

A clear specification allows suppliers to determine whether the available crude is suitable for the buyer’s intended use.

2. Identify and Qualify a Crude Oil Supplier

Once the requirement is defined, the buyer can approach suitable suppliers or supply channels.

Supplier qualification should establish:

• Legal company identity
• Commercial role and authority
• Source of the crude
• Available volume
• Loading location
• Quality documentation
• Export capability
• Compliance information

Buyers should verify the counterparty before committing to a purchase.

3. Submit a Crude Oil Purchase Enquiry

The buyer should provide a structured commercial enquiry rather than a general request for price.

A purchase enquiry can state the required crude grade, volume, destination, delivery basis, timing, and buyer company information.

This gives the supplier enough information to assess the requirement and present a relevant offer.

4. Review the Crude Oil Offer

The buyer then reviews the supplier’s commercial proposal.

The evaluation may include:

• Crude specification
• Quantity
• Origin
• Loading terminal
• Pricing basis
• Differential to the relevant benchmark
• FOB or CIF terms
• Inspection arrangements
• Delivery schedule
• Contract conditions

The lowest headline price is not necessarily the best offer. Buyers should evaluate the complete delivered commercial cost and transaction structure.

5. Confirm Quality and Cargo Documentation

Before finalizing a purchase, the buyer should review available product and cargo documentation.

Depending on the transaction, this may include:

• Crude assay
• Certificate of quality
• Certificate of origin
• Quantity documentation
• Inspection arrangements
• Cargo or vessel information
• Export documentation

Independent inspection may also be required before loading or at another agreed point in the transaction.

6. Negotiate the Purchase Contract

Once the commercial offer has been reviewed, the buyer and seller can negotiate the purchase contract.

The contract should clearly define:

• Product and specification
• Quantity and tolerance
• Price and pricing formula
• Delivery terms
• Loading window
• Destination
• Payment terms
• Inspection
• Documentation
• Title and risk transfer
• Default and dispute provisions

Both parties should ensure that the contracting entity and transaction terms are clearly identified before execution.

7. Complete Buyer Compliance and KYC

Commercial crude oil transactions may require corporate and compliance checks before the transaction can proceed.

The buyer may need to provide:

• Company registration details
• Authorized representative information
• Proof of business activity
• Banking or payment information where required
• Compliance documentation

The exact requirements depend on the supplier and transaction structure.

8. Arrange Inspection and Loading

After the contract is finalized, the parties coordinate the agreed inspection and loading process.

For FOB transactions, the buyer typically has a greater role in arranging transportation from the loading terminal.

For CIF transactions, the seller’s delivery obligations include the agreed freight and insurance components to the destination port.

9. Complete Payment and Documentation

Payment should follow the contractual terms and agreed transaction procedures.

The buyer should ensure that required commercial, quality, shipping, and title documents are received and reviewed according to the contract.

Documentation should remain consistent with the actual transaction, cargo, and contracting parties.

10. Receive and Reconcile the Crude Oil

The final stage is delivery, receipt, and reconciliation of the cargo.

The buyer may verify:

• Delivered quantity
• Quality
• Shipping documentation
• Terminal records
• Inspection results
• Commercial invoice
• Final contractual charges

Any discrepancy should be handled according to the purchase contract.

Crude Oil Purchase Procedure Checklist

Before proceeding with a crude oil purchase, buyers should confirm:

Crude: Grade, origin, API, sulfur, and assay
Volume: Cargo quantity or recurring requirement
Supplier: Identity, authority, source, and capability
Price: Benchmark, differential, freight, insurance, and related costs
Delivery: FOB or CIF, loading point, destination, and timing
Inspection: Independent inspection and quality verification
Contract: Price, quantity, payment, documentation, and risk transfer
Compliance: Buyer and seller KYC requirements
Shipping: Cargo, vessel, terminal, and delivery documentation

Start a Crude Oil Purchase Enquiry

A successful crude oil purchase begins with a clearly defined requirement and a properly qualified supply channel.

Buyers seeking international crude oil supply can submit their grade, volume, destination, delivery terms, and timing for commercial review.

Submit Crude Oil Supply Request →

Oil and Gas Procurement: How Buyers Source Crude Oil and Petroleum Products

Crude Oil Procurement Guide for International Buyers

How to Buy Jet Fuel A1 in Bulk