Fuel Procurement Explained
Fuel buyers encounter a wide range of terminology depending on fuel type, transaction size, and whether they're purchasing as a private company or government entity. This page breaks down the most common terms buyers encounter so you can navigate supplier conversations and documentation with confidence.
Fuel Procurement Explained
RFQ vs. RFP vs. ITB
A Request for Quote (RFQ) asks suppliers for pricing on a defined fuel volume and delivery schedule, typically used for straightforward commercial purchases. A Request for Proposal (RFP) is broader, inviting suppliers to propose an approach along with pricing, while an Invitation to Bid (ITB) is the formal solicitation format most common in government and municipal procurement.
Contract vs. Spot Pricing
Contract pricing locks in a rate and supply commitment over a fixed period, offering predictability for recurring fuel needs. Spot pricing reflects current market rates for one-time purchases, offering flexibility without a long-term commitment, though pricing can shift with market conditions.
LOI, SCO, and ICPO in Bulk Trading
In bulk cargo fuel trading, buyers may encounter a Letter of Intent (LOI), Soft Corporate Offer (SCO), or Irrevocable Corporate Purchase Order (ICPO). These terms apply almost exclusively to large-volume international cargo transactions and are not part of standard commercial or retail fuel purchasing.
Government & Institutional Terminology
Public sector buyers often use formal solicitation language such as standing offers, tenders, or Global Procurement Notices (GPNs), reflecting the structured bidding requirements unique to government and institutional purchasing.
Why Terminology Matters
Using the correct terms when reaching out to suppliers helps set accurate expectations and speeds up the sourcing process. See our glossary of fuel trading terms for a complete reference of terminology used throughout the fuel procurement process.