The Role of a Crude Oil Buyer Mandate: Responsibilities, Verification & Trading Procedures

Introduction

Crude oil is the backbone of the global energy sector, and trading it requires high-level compliance, financial credibility, and security. Because of the complexity involved, many buyers appoint a Buyer Mandate—a legally authorized individual or company—to conduct negotiations and secure real supply.

This blog explains the responsibilities of a crude oil buyer mandate and how they facilitate legitimate, successful deals.

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What Is a Crude Oil Buyer Mandate?

A Buyer Mandate is an authorized representative who has the legal authority to negotiate on behalf of a real buyer. This role bridges the gap between oil buyers and credible sellers, ensuring all documentation and procedures flow smoothly.

Key Responsibilities of a Crude Oil Buyer Mandate

1. Verifying Real Sellers

The mandate ensures that any seller claiming to supply crude oil actually has:

• Verified refinery or terminal access
• Legal allocation
• Proven export rights
• Current SGS inspection reports
• Authentic POP (Proof of Product)

2. Protecting the Buyer From Fraud

Over 80% of “offers” online are fake. A mandate helps avoid:

• Fake refinery allocations
• Fake tank farms
• Bogus POP docs
• Unrealistic pricing
• Brokers with no direct access

3. Handling Documentation

The mandate ensures proper submission of:

• LOI
• ICPO
• POF
• CPA / SPA
• Operational documents
• Bank-to-bank communications

4. Negotiating Procedures

A buyer mandate negotiates key terms such as:

• Delivery location (FOB/CIF/TTT)
• Spot vs. contract volume
• Payment terms
• Pricing (Platts, OPEC, Brent)

Why Crude Oil Requires Elevated Due Diligence

Crude oil trading involves massive quantities and high financial exposure. Verifying sellers through corporate registry checks, government licensing, refinery certificates, and bank instruments is essential.

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Trading Process Managed by the Buyer Mandate

1. Buyer issues LOI
2. Seller sends SCO
3. Buyer issues ICPO
4. Seller provides draft SPA
5. Both parties finalize contract
6. Bank instruments submitted
7. Logistics plan finalized
8. Delivery begins

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Conclusion

A crude oil buyer mandate is a crucial player in international petroleum trading. They protect buyers from fraud, ensure proper documentation, and maintain compliance—all leading to safer and more successful transactions.