published in 'PublicMe' on Juptr.io

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The challenges a crude oil buyer and seller face 

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In the industry where it is believed that multimillion dollar deals are done every other day, the reality is quite different. The bonny light crude oil is higher in demand throughout the world and most the buyers seek sourcing by passing the conditions levied by the OPEC, since the Sulphuric consistencies are relatively lower in BLCO. However, making deals with the BLCO sellers is highly challenging and requires much effort which often times goes in waste

Several factors cause the BLCO buyers to fail in further transaction of crude oil, as at one point the prospect can be the seller and one time it can be a buyer, however, in most cases, a difference among both parties even if they are reliable and serious can cause the deal to cancel

In several reasons that can retard the success of an oil transaction, bringing to the most common reasons that can cause discounted crude oil marketing and trade among the buyers and sellers

Difference on the transactional procedures

This can be the major challenge in completion of nearly every crude oil market transaction. The buyers who wish to obtain the crude oil off the terms of OPEC put forward conditions that are sometime win loose and sellers are often hesitate to accept

The problems arise from the point, where the seller have limits to certain agreements since BLCO bought classifies the FOB terms and sold on the CIF terms. And hence it’s a bigger expense done twice along with posing risks to their investment

Moreover the buyers before proceeding asks for proofs of past transaction and samples of the products they promise to trade. Even buyers demand for the proof of performance bonds prior to signing any contract. The higher demands discussed discourages majority of sellers making the deal void

Officially the OFF-OPEC transactions are not documented and so the seller fail to prove the past performance due to legal restrictions. More over a number of sellers have a high risk of losing their reputation being involved in any deal with the buyer and hence give rise to potential differences among buyers and sellers. A majority of crude oil buyers force to strike a deal fulfilling their terms of agreement , hence they consider settling everyone’s interest as the waste of time

Never ending chains of brokers

If the middle agent is further a few steps deprived from the crude oil buyers and the sellers, then it’s of no use to continue with the transaction. Many crude oil buyers make deals with the broker with an impression made in lieu of sellers. These brokers drag the deals to assure the buyers that the seller have already informed them things openly and so are returning the buyers to them. Some times it’s interesting yet initially more interesting but when it comes to request information, the sale purchase agreement or even with a conference call sessions with the seller the broker starts making false claims

Additionally most of the crude oil broker at the point of getting sales purchase agreement, the buyers come to address several banking matchups for several bodies on the similar contract, with even the supposed brokers directly interfering into the buyer’s side of commission . As soon as you get such an agreement “Dump it ASAP”

Huge broker chains make the spreading of information quite difficult and often times the sellers are not even have an idea of any trade taking place. As the broker chains on seller parts can bring you much challenges the buyers part can also give you a tough time. Most of the third parties in lieu of crude oil buyers try to close the deal and when the time comes for SPA they start asking for heavy commissions. Walk away from certain transactions! 

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