Glossary of Terms

ADNOC: Abu Dhabi National Oil Company.
Aframax: A medium-sized vessel with a typical dead weight tonnage between 80,000 and 120,000 mt.
ANS: Alaska North Slope crude oil.
API Gravity: Represents the density of crude petroleum and products, with higher values representing less dense oils. An API Gravity of 10 represents equal density to water.
ARA: Abbreviation commonly used to represent the ports of Amsterdam, Rotterdam and Antwerp.
Aramco: The world's largest oil company, short for Saudi Aramco.
Assay: Chemical testing method to determine quality. For crude oil, API density and sulfur content are key indicators.
Backwardation: A market in which the price for prompt delivery is higher than that for less prompt delivery.
BAPCO: Bahrain Petroleum Company.
Barge: A flat bottomed vessel used primarily for the bulk transport of goods and materials along rivers and canals.
Barrel: A unit of measurement for crude petroleum and products equal to exactly 42 US gallons and around 159 litres.
Basis: The difference between a cash price and the underlying future price. Usually quoted as a premium or discount versus the futures contract. Can also refer to the price differential between different grades of a product or delivery locations.
Basis Risk: A risk that arises from hedging a position with a mis-matched index.
BFOE: North Sea Benchmark crude basket consisting of the grades Brent, Forties, Oseberg and Ekofisk. Troll was added in 2018 and WTI Midland is currently under consideration for inclusion in summer 2022.
Blendstock: A component combined with others to produce a finished refined product, for example gasoline or biodesel.
BOE: Barrel of oil equivalent conversion for natural gas. One barrel of oil is equal to 6,000 cubic feet of natural gas.
BOL / BL; Bill of Lading: A document given by a carrier to acknowledge receipt of a cargo which also serves as title to the goods.
Brent Blend: A blend of crude oils produced in the North Sea. One of the two most commonly traded oil benchmarks in the world, the other being WTI.
Bunkers: Heavy fuel oil or gasoil used as marine fuel.
Cash Market: A market for physical goods, used particularly in reference to those which are the underlying for a derivative contract such as futures, swaps or options.
Cash settled futures: Futures contracts which are financially settled against a recognized benchmark. Examples include ICE Brent, Dubai crude and Mont Belvieu propane and butane.
Catalytic cracking: Refining process which yields a higher percentage of gasoline.
CDM: Clean Development Mechanism - a UN-supervised carbon offset scheme that issues carbon offsets to companies and governments that invest in emission reduction projects in predominantly non-OECD countries.
CDU: Crude distillation unit.
CER: Ceritifed emission reductions - carbon offsets generated by the Clean Development Mechanism.
Cetane Number: A measure of the ignition quality of diesel fuels, with higher numbers representing a shorter ignition delay and more complete combustion of the fuel.
CFD/Contract for Differences: A swap contract based on the differential between dated Brent and the forward market for Brent crude.
CFPP: Cold filter plugging point. A measure of the cold weather property of diesel fuels representing the lowest temperature in centigrade at which the fuel will flow correctly through a fuel system.
CFR: Cost and Freight. Incoterm used for cargoes transported by water in which freight costs for delivery to a destination port are included within the sales price.
CFTC: U.S. Commodity Futures Trading Commission
CIF: Cost, Insurance and Freight. Incoterm used for cargoes transported by water in which both freight and insurance costs for delivery to a destination port are included within the sales price.
Clean Products / Cargoes: Middle distillates, gasoline and other light petroleum products.
Clearing House: Acts as an intermediary between the buyer and seller, usually of a derivative contract, guaranteeing financial performance for both sides.
Cloud Point: A measure of the cold weather property of diesel fuels representing the temperature below which wax in the fuel forms a cloudy appearance; waxes cause problems with fuel filters.
CME: Chicago Mercantile Exchange. Also the owner of NYMEX.
Coker unit: A refining processer which converts heavy residual oil to lighter refined products such as diesel.
Contango: A market in which the price for prompt delivery is lower than that for less prompt delivery.
Corsia: Carbon Offsetting and Reduction Scheme for International Aviation. As international travel was not covered by each countries' pledge under the Paris Agreement, ICAO established its own system to cut emissions. Pilot phase runs from 2021-2023, with a first phase from 2024 through 2026. Over 80% of the growth in emissions will be offset, estimated to be in excess of 150 million mt of CO2 per year.
Crack Spread: A spread used to represent the margin between crude oil and refined products, usually quoted in dollars per barrel.
Crude Distillation Unit/Tower: A unit within an oil refinery which allows crude oil to be distilled into a range of different products based on their boiling points.
Crude Oil: Crude oil, sometimes referred to as petroleum, is a mineral oil of natural origin consisting of hydrocarbons and some impurities. It is the main feedstock for gasoline, diesel, aviation (jet) fuel, heating oil and a number of other refined products. Also the ultimate feedstock for petrochemical products such as plastics, solvents and many other commonly used industrial and consumer products.
CST: Centistoke. A measure of the viscosity and flow rate of fuel oil, with higher values representing greater viscosity.
Cushing: Storage and pipeline interconnector in the state of Oklahoma in the United States. The delivery point for the NYMEX WTI crude contract.
Dated Brent: Cargoes carrying Brent/BFOE crude oil with a specified laycan usually within approximately two weeks from the current date. Also refers to the spot physical market for Brent crude.
DDP: Delivered Duty Paid. Incoterm used for shipments delivered to a named destination with all charges and duties paid.
Demurrage: A delay in loading or unloading a vessel past the agreed-upon time, which usually attracts charges related to the delay.
Derivative: A purely financial instrument for which the value is derived from another underlying asset. In commodities markets, a derivative's value is usually related to the price of an underlying physical commodity and will gain or lose value in line with changes to the price of the physical commodity.
Diesel: Fuel designed to be used in diesel engines, which requires good compression ignition properties (primarily represented by Cetane Number).
Differential: Represents the difference between two other prices and can also be known as a spread. When the differential for one price versus another is positive it is referred to as a premium; when it is lower it is referred to as a discount.
Dirty Products/Cargoes: Dirty products refers to petroleum products with a low specific gravity and high viscosity, such as heavy fuel oil. Vessels carrying these products, as well as crude oil, can be referred to as dirty cargoes or vessels.
Downstream: Refers to all activities after the process of refining crude oil into petroleum products including the distribution, marketing, and shipping of the products.
Draft: A mesaure of the distance from the bottom of a ship to the surface of the water, or more simply the depth of the ship in the water. Terminals often have restrictions on the maximum draft of vessels which may enter.
DWT: Deadweight tonnage.
EIA: U.S. Energy Information Administration.
ENOC: Emirates National Oil Company.
ETBE: An oxyegnate gasoline blending product with a high octane value and relatively low reid vapour pressure (RVP). Uses ethanol as a feedstock, which when from sustainable sources allows ETBE to count towards renewable mandates in many countries.
Ethanol: An alcohol with many industrial and consumers uses, which can also be used as an oxygenate gasoline blending product with a high octane value and also a high reid vapour pressure (RVP). Most often produced from natural sources, after which it is known as bioethanol and allows its usage to count towards renewable mandates in many countries.
ETS: Emissions Trading System. Typically a cap-and-trade scheme that sets a cap on greenhouse gas emissions, issues or sells allowances and allows covered entities to trade those allowances.
EXW Ex-Wharf: Incoterm in which the seller is required only to make the goods available at the seller’s premises. The buyer bears the full costs and risks of loading and moving the goods from there.
FAS: Free Alongside Ship. Incoterm used for delivery at a terminal and placed next to the buyer's vessel, with all export duties paid.
FCA: Free Carrier. Incoterm used for delivery by the seller with all export duties paid, to a carrier at a specified place.
Feedstock: Raw material which is processed into a finished product.
FERC: U.S. Federal Energy Regulatory Commission
FGD: Flue-gas desulfurization - technology to remove sulfur dioxide from the exhausts of power plants and ships.
First Month/Front Month: The next futures contract month set to expire.
FOB: Free on board. Incoterm used for delivery by the seller with export duties paid to a buyer's vessel at the specified port.
Force majeure: Circumstances beyond control that allow the breaking of a contract.
Forward contract: Similar to a futures contract enabling buying or selling at a predetermined price for delivery or settlement at a specified time in the future. Transacted on an OTC basis, although since 2008 forward contracts are usually cleared.
Forward Price Curve: The current prices for delivery of a product at a series of specified points in the future, e.g. each month for the next 12 months.
Futures Contract: A standardised and freely tradeable contractual agreement to receive or supply a product at a fixed price and at a specified future time.
Futures Exchange: A marketplace where a diverse range of commodities futures contracts, index futures, and options on futures contracts are bought and sold.
Gallon / gal: Within oil markets refers to a US gallon. One US gallon is equivalent to 3.78541 liters, and there are 1.2 US gallons in an imperial gallon and 42 US gallons in one barrel.
Gasoil: A middle distillate product with a range of uses based on specification and further processing; e.g. diesel, heating oil, jet and marine fuel.
Gasoline: Fuel used for gasoline engines. Referred to as petrol in some locations. Produced to a local specification by blending together various components to produce the desired physical properties such as octane number and RVP.
Gasoline Blending Components: Components used to blend finished gasoline, e.g. straight-run gasoline, alkylate, reformate, benzene, toluene, and xylenes.
GPW: Gross Product Worth. A calculation of refining margins.
Heavy Crude Oil: Crude oil with an API gravity of less than 28.
Hedge: A financial transaction entered into in order to reduce risk and/or lock in a profit margin for a long or short physical position. For example, an airline buying a futures contract for jet fuel in order to lock in its cost.
Henry Hub: Storage and pipeline interconnector in the state of Louisiana, United States. The delivery point for the NYMEX natural gas contract.
HO: Heating oil.
HSFO: High sulfur fuel oil; usually 3.5% or more sulfur.
ICAO: International Civil Aviation Organization.
ICE: Intercontinental Exchange. An exchange providing marketplaces for the trade of various commodity futures and options, as well as for other assets classes such as equities and fixed income products.
IEA: International Energy Agency.
Incoterms: Incoterms are a group of globally recognised rules published by the International Chamber of Commerce (ICC), which set out the commercial obligations for and transference of risk between buyers and sellers in various types of transactions for physical commodities.
IOC: Internaitonal Oil Company. Also referred to as an Oil Major or Integrated Oil Company.
KPC: Kuwait Petroleum Company.
kt: One thousand metric tonnes (mt).
Laycan: A specified date range for the loading of a vessel.
Light Crude Oil: Crude oil with an API gravity greater than 33.
Light Ends: A set of petroleum products with the lowest boiling temperatures and which make up the top part of products produced by a crude distillation unit/tower. Includes gasoline and naphtha.
Liquidity: A measure of the level of trading activity within a given market.
LPG: Liquified petroleum gas, usually ethane, propane, butane and isobutane.
LSFO: Low sulfur fuel oil; usually 1% or less sulfur.
Mazut: Heavy Russian fuel oil.
Middle Distillates: Petroleum products made from the middle section of a crude distillation unit/tower; used to refer to a group of distillates including gasoil, diesel, heating oil, jet and marine fuel.
MMBtu: Measure of natural gas volume equal to 1 million BTU (British Thermal Units)
MOC: Market On Close; reflects values at a specified close of trading of a market. Typically 4:30pm local time for London and Singapore oil markets.
MOG: Oman's Ministry of Oil and Gas.
MON: Motor octane number. A measure of the octane number for a fuel at high engine RPM and temperature.
MOPAG: Mean of Platts Arab Gulf. Refined products Singapore.
MOPL: Mean of Platts London. Refined products Europe.
MOPS: Mean of Platts Straits (Singapore). Refined products Singapore.
mt: Metric tonne.
MTBE: Methyl tert-butyl ether. An oxyegnate and octane boosting gasoline component made from methanol and isobutylene, with a relatively high octane number and low RVP.
Naphtha: A light petroleum product with various uses including as a gasoline component and for processing into different gasoline components, or feedstocks for the petrochemical industry.
Netback: The price for a commodity at its origin, calculated by deducting the cost of shipping and other associated costs from the price of the commodity delivered to a destination.
NIOC: National Iranian Oil Company.
NOC: National oil company; for example Saudi Arabia's Aramco or Indonesia's Pertamina.
NWE: Northwest Europe.
NYMEX: New York Mercantile Exchange.
Octane Number: A measure used to represent the capability of finished gasoline or a component to withstand compression before it self-ignites. The greater the octane number, the more a fuel can be compressed before self-igniting. Gasoline engines rely on a precise relationship between the timing of spark plugs and piston position, and self-ignition of the fuel can lead to engine "knock". RON is the Research Octane Number.
OPEC: The Organization of the Petroleum Exporting Countries.
Options Contract: A contract which provides the owner with the right, but not an obligation, to buy or sell a commodity or other asset at a fixed price, either up until or at a specified future time.
Over-the-Counter (OTC): A transaction carried out directly between the buyer and seller, usually via an intermediary such a broker or bank, rather than via an exchange.
Oxygenates: Blending components containing oxygen which usually have a high octane number and help fuels to burn more cleanly and completely.
P&L: Trading term meaning profit and loss detailing a traders financial position. Also referred to as pnl.
PADD: Petroleum Allocation for Defense District. Five U.S. geographic areas in the US used in reference to petroleum distribution.
Panamax: A medium-sized vessel designed with specifications that allow it to travel through the Panama canal, with a typical deadweight tonnage between 50,000 and 75,000 mt.
Panamax: Oil tanker with a deadweight between 50,000 and 74,999 tonnes.
Pertamina: Indonesia's state oil company.
Petronas: Malaysia's state oil company Petroliam Nasional Berhad.
Physically settled futures: Futures contracts settled via the physical delivery of a commodity. Examples include WTI crude, Oman crude, INE sour crude, ICE low sulfur gasoil, NYMEX RBOB and NYMEX heating oil.
ppm: Parts per million.
PRA: Price reporting agency.
Price forecast: Prediction of future prices.
Primary stocks: Inventory held by producers, refiners, storage terminals and strategic reserves.
RBOB: Reformulated gasoline blendstock for oxygenate blending. Benchmark U.S. gasoline traded on NYMEX
REDD: Reduced Emissions from Avoided Deforestation. Most commonly used to identify certain types of VERs.
Refining margin: Difference between the cost of crude and the net value of refined products produced by a refinery.
Residual fuel oil: Heavy fuel oil, asphalt, bitumen.
RON: Research octane number. A measure of the octane number for a fuel at a medium engine RPM and temperature.
RVP: Reid vapor pressure. A measure of the volatility of gasoline or a gasoline component representing how easily it evaporates. The tendency of a fuel to evaporate needs to be within a set range to allow the engine to function properly and so either too low or too high RVP values are problematic. The desired value usually changes based on seasonality and the associated change in ambient temperatures.
SOMO: Iraq's State Organization for Marketing of Oil
Sour Crude: Crude oil with high sulfur content.
Spot Market: A market for goods to be delivered immediately. Can sometimes refer to the front-month futures contract.
SPR: State petroleum reserve.
Spread: Represents the difference between two other prices and can also be known as a differential. When the spread between one price versus another is positive it is referred to as a premium; when it is lower it is referred to as a discount.
Straight-Run: A petroleum product made directly by distillation without any further processing.
Suezmax: A medium-to-large vessel of the largest kind able to travel through the Suez canal, with a deadweight tonnage between 120,000 and 200,000 mt.
Swaps Contract: An over-the-counter contract in which one party pays a fixed price and the other pays a floating-price based on the value of an underlying commodity or other asset at a specified future time.
Sweet Crude: Crude oil with a low sulfur content.
Tertiary Stocks: Inventory held by end users.
ULCC: Ultra large crude carrier. Large vessels with a deadweight tonnage of at least 300,000 mt.
ULSD: Ultra-low-sulfur diesel. Refers to diesel with less than 50 ppm in Europe and with less than 15 ppm in the US.
Upstream: Refers to all activities prior to the process of refining crude oil, including exploration, appraisal and production of crude oil and natural gases.
VAR: Trading term, value at risk. A risk management measure used to estimate potential losses.
VER: Verified Emission Reductions - carbon offsets that were issued outside of the UN scheme. Typically used to meet US and voluntary commitments to offset carbon dioxide.
Visbreaking: Thermal cracking process to convert heavy molecules into light ends.
Viscosity: Measure of resistance to flow, or the 'thickness' of oil.
VLCC: Very large crude carrier. Large vessels with a deadweight tonnage of at least 200,000 mt.
WTI: West Texas Intermediate benchmark US crude, exported from the US Gulf Coast.