FOB vs CIF: Which Delivery Term is Best for Petroleum Buyers?

When buying petroleum products like EN590 diesel, Jet Fuel A1, or LPG, you’ll see two common delivery terms—FOB (Free on Board) and CIF (Cost, Insurance, Freight).

This guide explains:

• The exact meaning of FOB and CIF
• The pros and cons of each for petroleum deals
• Common mistakes buyers make
• How to choose the right delivery term for your business

What Does FOB Mean in Fuel Trading?

FOB = Free on Board

Under FOB:

• The buyer takes responsibility once the product is loaded onto the vessel.
• The buyer arranges the shipping vessel, insurance, and customs clearance at the destination port.
• The seller’s obligation ends when the fuel passes the ship’s rail at the loading port.

FOB is common when:

• The buyer has established shipping/logistics partners
• The buyer wants full control over freight costs
• The terminal is a major hub like Rotterdam or Fujairah

Example: Buyer lifts 100,000 MT EN590 from Rotterdam FOB, arranges their own vessel to West Africa.

What Does CIF Mean in Fuel Trading?

CIF = Cost, Insurance, Freight

Under CIF:

• The seller arranges the shipping to the buyer’s destination port
• The seller covers marine insurance during transport
• The buyer still handles customs clearance on arrival

CIF is common when:

• The buyer has no shipping partner or wants door-to-door delivery
• The buyer prefers seller-managed logistics
• Deliveries go to smaller ports without easy freight access

Example: Seller ships 50,000 MT Jet A1 from Fujairah CIF to Mombasa Port, including insurance.

Pros & Cons for Buyers

FOB Pros:
✔ Cheaper base price (no freight markup)
✔ Full control of logistics & insurance
✔ Flexible for experienced buyers

FOB Cons:
✘ Requires shipping contacts & expertise
✘ Buyer bears risk once loaded

CIF Pros:
✔ Easier for first-time buyers
✔ Seller manages freight & insurance
✔ Predictable door-to-port delivery

CIF Cons:
✘ Higher total cost (seller adds logistics margin)
✘ Less control over shipping timeline

Common Mistakes Buyers Make

• Assuming FOB is always cheaper → Not true if you don’t have good freight rates
• Not checking marine insurance coverage → CIF sometimes has minimal insurance
• Misunderstanding risk transfer → FOB transfers risk earlier than CIF
• Skipping terminal verification → Always verify Tank Storage Receipt before loading

How Saurin Inc Helps Buyers

We structure both FOB & CIF petroleum deals depending on your needs.

• ✅ FOB from major hubs like Rotterdam, Fujairah, Houston
• ✅ CIF to Africa, Asia, Europe with vetted logistics partners
• ✅ Clear SPA terms outlining cost, risk, and responsibility
• ✅ SGS Q&Q inspection at loading terminal

Need FOB or CIF Fuel Supply?

📧 sam@saurininc.com
📱 +1 706 587 6182 (WhatsApp)