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Glossary
2026-10-16 12:00

LOI (Letter of Intent) in oil trading

An LOI (Letter of Intent) is a non-binding letter in which a buyer states its interest in purchasing a specific product, in a specific quantity, on stated terms. In EN590 diesel deals it is usually the first document the buyer sends to a seller or broker.

At a glance

Issued byBuyer
Legally bindingGenerally no
WhenStart of the deal, before any offer
Typical contentsProduct and specification, quantity, Incoterms and port, price basis, payment instrument, company details, signatory
Usual answerSCO or FCO from the seller

How it is used in EN590 deals

An LOI shows that a real company wants product on realistic terms. Many sellers treat it as enough to send an indicative offer (SCO), but ask for an ICPO before issuing a full offer. A credible LOI is on company letterhead, signed and dated, and uses the same company name and signatory that will appear later in the SPA and bank documents.

Watch out for

  • LOIs without company registration details or from free email domains.
  • Unrealistic volumes or prices that do not match the market.
  • LOIs circulated through long chains of intermediaries with the buyer's name removed.

Related terms

ICPOFCO and SCOSPAPOFGuide: deal documents