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Fuel Trading Nov 29, 2026 8 min read
How to Build a Safe Long-Term Diesel Supply Contract
Structuring pricing, delivery schedules, and penalty clauses in long-term fuel procurement agreements.
Sarah Al-Fayed
Technical Director
Spot purchasing diesel exposes operations to price volatility and supply shocks. Long-term contracts (12-36 months) provide stability but require careful structuring.
Contract Structuring
- Pricing Mechanism: Peg prices to a recognized index (e.g., Platts Arabian Gulf) plus a fixed premium (Alpha).
- Volume Flexibility: Define a baseline volume with a +/- 10% operational tolerance per month.
- Force Majeure: Clearly define supply interruption protocols and alternative sourcing obligations.