MODULE 1. Physical Trading and Optimisation of Operational Issues
(4 - 8 January)


  • How crude markets work. Global supply and demand. Geopolitics and macroeconomics. OPEC, US shale oil, tight oil, new projects 
  • Pricing and benchmarks. The Brent Complex, BFOE, Dated, ICE Brent 
  • Pricing regional crudes – the Gulf, West Africa, US and Latin America, Russia and the CIS
  • Key production and refining centres, trade flows

                   Trading simulation:

    • buying and delivering various crudes cargoes (North Sea, Libyan, West Africa, Urals) to a refinery in North-West Europe. Pricing around B/L dates and monthly averages
    • hedging cargoes, entering into and getting out of positions


  • Refining economics.
  • Crude selection. Understanding Crude Assay. Assessment crude properties and differentials
  • Hedging refining margin
  • Various crack spreads: 3-2-1, 5-3-2, 2-1-1


    • Calculating a physical refining margin vs crack spreads
    • Hedging refining margin


  • Key product markets overview. Quality, supply and demand, key supply routes.
  • Regional markets and specifics
    • North West Europe
    • The Med
    • USA
    • Asia-Pacific
    • Other key regional markets
  • Refined product trading – key principles
  • Pricing, shipping, terminal handling, accumulation and storage
  • Hedging refined products
  • Use of exchange-traded and OTC instruments


    • Managing a product portfolio
    • Doing deals, lifting and delivering tanker parcels, hedging


Negotiations and chartering. Managing shipping risks

  • Marine Law and International Maritime Conventions
  • Role of B/L in trading operations
  • Freight rates and Worldscale
  • Vessel and cargo related risks
  • Analysing and negotiating Charter Parties, transhipment, sales contracts on FOB and CIF terms
  • Vessel and terminal vetting by majors
  • Handling quality and quantity claims
  • Dealing with incidents: piracy, collision, oil spills, vessel’s arrest
  • Optimisation of bunkering costs for time-charterers





Dealing with changes during voyage

  • changes to loading and discharge ports
  • changes to cargo sizes
  • vessel replacements
  • missing laycan
  • cargo non-readiness
  • trader’s request to change B/L date
  • falling freight rates and option to time-charter a tanker for 6 months to perform for a long term contract
  • selling the cargo in transit, B/L replacement and LOI production or ship-owners


  • Сharter Party analysis, analysing supply (FOB and CIF) and terminal contracts
  • Analysing SOFs and agent, shipper and terminal time-sheets, identifying current port and industry rules and practices, highlighting discrepancies and challenging claims
  • Dealing with “pro forma battles” - differences in explicit and implied terms and governing jurisdiction of supply contracts, General Terms and Conditions of majors and key oil traders, Charter-Parties, terminal contracts and GT & Cs
  • Analysing more challenging claims, working with lawyers on pre-trial settlement
  • Mediation, arbitration and litigation. Dealing with expert witnesses and lawyers
  • Tendering NOR and its validity, complexities and discrepancies in commencement of laytime
  • Stoppages to laytime
  • Making profit on demurrage


  • When commitments appear. Verbal agreements (in person and on the phone), agreements entered into in correspondence (email and instant messaging systems)
  • Elements and provisions of a contract
  • Terms of supply, INCOTERMS, variations on standard terms
  • Payments and payment guarantees
  • Important: unencumbered title and ownership covenants, no offset or counterclaim provisionsе
  • Dispute resolution: dispute and arbitrage clauses, jurisdictions, enforcement mechanisms


    • Breach of contract (supply, freight, service) and its treatment in different jurisdictions and law systems


  • Regional supply and demand imbalances and arbitrage opportunities. Arbitrage trading methods and strategies
  • Using transport and storage opportunities in arbitrage deal
  • Storage optimisation
  • Risks in arbitrage deals – lifting dates and B/L dates, impact on pricing


  • Using spreads to take advantage of a price difference between two or more geographical locations
  • Crack spreads and inter product spreads
  • Time spreads
  • Spreads in backwardation and contango


    • Using futures to hedge arbitrage risks
    • Monitoring positions and adjusting hedges as lifting sizes and B/L dates change


MODULE 2. Trading Techniques. Managing Trading Risks.
(9 - 12 January)


  • Price risks for traders and exporters – where do they appear? Identifying and assessing price risks when buying and selling on the same and different supply and pricing terms, long and short delivery periods
  • Risk acceptance options – mitigate or accept, partially or totally. Managing risks in bull, bear and bidirectional volatile markets
  • How do others do it? From risk aversion to risk-seeking, interim options – company philosophy and its risk appetite


Futures, swaps and CFDs

  • Contango / Backwardation / Carry trades with settlement tools/clearing houses 
  • Exchanging futures for physicals/swaps
    • EFP, separate pricing from physical supply 
    • Alternative methods to price physical 
    • EFS, convert a swap to a futures position
  • Margining futures transactions 
  • Speculative trading strategies

 Hedging physical arbitrage deals

  • Choosing the right hedging tool
  • Dealing with brokers and market makers  
  • Тrading Brent futures


    • Modelling price uncertainty. Selection of a hedging instrument in volatile environment – hedging tools and swaps to reduce impact of price swings


 The OTC Market and its specifics

OTC Instruments

  • Swaps 
  • Options 
  • Swaptions 
  • CFD

Characteristics of OTC Derivatives  

  • How they function 
  • Different types of swaps/options/CFD 
  • Pricing


  • Hedging 
  • Arbitrage

Comparison of exchange traded and OTC instruments 

  • Correlation between futures, swaps and physical 
  • Regulation 
  • Risk


Standardisation of OTC derivatives

International Swaps and Derivatives Association and its standard contracts. Clearing OTC derivatives through exchange settlement platforms.

Margining and settlement in OTC transactions

Zero cost schemes – TPAs with trade finance banks, zero cost option structures.

Choosing the right hedging tool

What is more suitable for your specific situation. Selecting the right tools in terms of reduction of the basis risk, liquidity, economics and margining efficiency. Recommendations from practitioners

                    Workshop and simulation 

    • Placing and removing hedges with swaps 
    • Margining calculations of the swap


The complex trading game which includes management and optimisation of physical positions in various crudes and products (diesel oil, gasoline, fuel oil, jet fuel), meeting commercial objectives which the teams have, generating speculative profit, deploying and unwinding hedges

Procuring crudes and feedstocks for refineries, configuring refinery operations and the product slate to meet the market demand, pricing and marketing products, trading, choosing the right hedging tools – these are some of the tasks the teams will be faced with in the game.

The results achieved in the game are taken into account for certification of the delegates together with the outcome of the written exam traditionally administered on completion of the course.

The participants are split into several teams, e.g.:

  • a UK refinery owned by a major oil company, 
  • trading houses/speculators 
  • a forecourt network from Eastern Europe, 
  • a Singapore based Chinese product importer 
  • a Middle Eastern NOC

Each team is given its own commercial objectives – generating speculative profit, securing crude and feedstock supply for its refinery, procuring diesel and mogas for its forecourt network, sale of surplus product to international markets 

The trading game is carried out in several stages and sessions:

  1. Evaluating quality and value of your portfolio
  2. Pricing of your portfolio using benchmarks
  3. Analysis of the nature and localisation of demand
  4. Is the arb open?
  5. Choosing a benchmark
  6. Freight analysis and calculation
  7. The physical trading session
  8. Choosing hedging tools, putting and unwinding a hedge (a separate assignment not related to the team’s physical portfolio, your physical portfolio can be hedged any time during the game)

The physical portfolio transaction will be supplemented with concurrent speculative operations with derivatives