Crude Oil Broker Business Ideas: How to Start a Crude Oil Brokerage Business

You don’t need huge sums to start a crude oil brokerage business. The job entails brokering a deal between buyers and suppliers.

The profit taking depends on margins or commissions based on supply. They work closely with independent marketers by helping to secure products.

Brokers buy and sell the commodity from trading platforms and a commodity exchange. Here are a few business ideas on how to launch your oil brokerage business.

Learn the Trade

To become an oil broker you need to get educated and learn the trade. You should understand the way a broker works.

The trade is facilitated in different ways such as buying a loaded tanker or transfer between tankers. Other methods involve drop shipment, loading a predetermined vehicle or ship.

You need astute business acumen, knowledge of changing prices of the products and insider information. The broker can gain knowledge through apprentice programs.

Study under a mentor or work in a oil brokerage firm. Other ways are attending seminars, workshops and joining related associations.

Lease an Office

Although you can work from home it is better to lease a small office. The office should be equipped with computers, printers, fax machines and a modem. You need a dedicated telephone number and a secretary to answer calls.

Registration

Register your business as a limited liability company and get a personal insurance and tax identification number. Open a separate checking account for the business and register a business name.

Make sure the business name reflects the kind of service you render.

Funding

You need very little money to start a brokerage business. The reason is that you operate as an intermediary and most expenses are borne by the buyer.  

Use target savings or borrow soft loans from friends and family. The location is not important however staying close to marketers could have some advantages.

Network with Marketers

The difficulty level in this business increase when it comes to finding genuine marketers. The broker does not deal only in crude oil but refined petrol, diesel and even kerosene.

You need to find good prices with profit taking and margins. Contact lots of independent oil marketers, major markets including tank farms for business.

With time you will build a network of reliable dealers and business sources. Find the ones that work with brokers, offer commissions and finders fees.

A note of warning; there are many fake and unscrupulous oil marketers in business. Therefore do lots of due diligence and fact finding.

Connect with Buyers

Once you have established contact and built a powerful network your next step are buyers. Without buyers of the products you are not in business.

Actively seek consumers of petroleum products such as petrol stations and deports. Due to sharp practices and fraudulent brokers, establishing a connection is a little difficult.

Develop a good reputation, company name and testimonials this will help in snagging contracts. The reason why buyers are cautious is because of the huge amount involved in a transaction.

Slowly build a reputation of good and prompt service delivery. Your major customers are large industries and independent petrol marketers.

Types of Petroleum Products Traded

The broker handles crude oil deliveries including refined petrol. They also deal with kerosene and diesel products. If you have the means invest in a haulage vehicle and driver to reduce costs.

You can add haulage business to your brokering enterprise to get regular income. This is a good strategy because running around for delivery contracts is difficult.

 Marketing

Once you have an established network of trusted marketers, advertise your company. Advertise your company through newspaper publications to attract buyers.

Once you have established the availability of a product and price offer it to buyers. You need to learn the trade very well before venturing into the business.

Do lots of market analysis, movement of commodity prices, sourcing and government laws. Understudy an existing brokerage firm to learn the tricks and get connections.

Do serious due diligence before brokering any deal to avoid monetary loss or fraudsters. The business is very lucrative however be very careful.

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