The hidden cost of multi-broker chains in petroleum trade

If you operate a tank farm, run a refinery sales desk, or buy refined products as a distributor, you already know the pattern: an unsolicited email arrives with a “hot offer” for 100,000 MT of EN 590 diesel at $20 below benchmark. By the time you read it, that offer has passed through five, six, sometimes seven brokers. Almost none of these chains close. This post is about why — and what to ask before responding.

The shape of a typical chain

A real seller controls a tank lot at a refinery or independent terminal. Their authorized mandate sends a quotation to a network of approved buyers. So far, so normal. The problem starts when the quotation gets forwarded.

Each forward adds a margin: $1/MT, $2/MT, $5/MT — sometimes more. By the seventh forward, the price has drifted $20–$40 above the original quote. Worse, every broker in the chain expects an Authority to Verify (ATV) as proof the chain is real, and many demand to be on the “deal closing call” before sharing tank coordinates. The chain becomes a bureaucracy that prevents the deal it claims to enable.

Five reasons these chains do not close

1. The price has drifted past market

Refined product margins are tight. Add $20/MT of broker fees on a 100,000 MT cargo and you are asking the buyer to absorb $2,000,000 in middleman cost. No serious buyer accepts that, especially when they can call the original mandate directly the next morning.

2. The seller does not know the chain exists

By the time the offer reaches a real buyer, the seller’s mandate has no record of the brokers in the middle. When the buyer opens an LC, the bank requires named seller and beneficiary — not a chain of intermediaries. The deal collapses at the documentation stage.

3. Procedure mismatch

Each broker in the chain has their own preferred procedure. ICPO first vs. SCO first. POP before LC vs. LC before POP. Performance bond from buyer vs. seller. The chain spends three weeks arguing about procedure while the cargo stays in tank, accruing storage costs the seller eventually walks away from.

4. ATV demand spirals

Each broker insists on receiving an ATV from the buyer to prove they can pay. The buyer, sensibly, refuses to issue ATVs to seven different brokers across three jurisdictions. The chain breaks at the first refusal — usually after the buyer has invested two weeks of legal review.

5. The product is fictional

Sometimes the original “mandate” never had product to sell. They were testing whether they could find a buyer first, then locate product after. By the time the chain reaches a real buyer, the seller has already decided to sell elsewhere — or never had the cargo in the first place.

The longer the chain, the lower the probability of closing. We tracked 1,400 multi-broker offers in 2025: chains with 4+ intermediaries closed 0.7% of the time. Chains with 1–2 intermediaries closed 17%.

What to ask before responding

If an offer lands in your inbox, three questions will tell you within five minutes whether it is worth pursuing.

1. Who is the original mandate, and can I see their authorization letter? A real mandate has a notarized authorization from the principal. If the broker cannot produce one, you are looking at a chain.

2. What is the tank coordinate or refinery, and who issues the dip test authorization? Real product has a real tank. The tank has coordinates. Storage company issues the DTA. If your counterparty cannot provide these in 48 hours, the “product” is hypothetical.

3. How many parties are between you and the seller? If the answer is more than two, walk away. A real refinery sales desk does not need six brokers to find a real buyer.

Doing it the other way

Closed petroleum cargoes look very different from the inbox noise. Three counterparties, maximum: principal seller, principal buyer, optional first-tier mandate from one side. Procedure is standard: ICPO → SCO → SPA → POP & Q&Q → LC → loading → discharge.

Compliance happens before commercial. Both sides screen each other against OFAC, EU and UK sanctions lists before exchanging product details. Storage and inspection are confirmed independently. The whole closing process — from ICPO to B/L — takes 3–6 weeks for a clean deal, not 12 weeks of broker-chain debate.

How Antisya runs petroleum brokerage

We only work with verified principals or first-tier mandates with signed agency agreements. Sanction screening happens before quotation. We share the underlying tank coordinate, refinery and storage company at the SCO stage — not after a chain of ATVs. And we politely decline the “7-broker chain” offers that hit our desk weekly.

The trade-off is fewer offers shown to buyers. The reward is a closing rate that keeps both sides coming back. If you have a real ICPO and a real destination, send it to us and we’ll come back within one business day with an SCO and tank coordinates — or politely decline if the deal is not for us.