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Dynamic Oil Trading, the new global trading company for marine fuels and lubricants, headquartered in Singapore, today highlighted the importance of developing close relationships as a means of managing counterparty risk.

“Liquidity and credit are the single biggest issues within the shipping industry when it comes to fuel supply,” said Lars Møller [pictured], CEO, Dynamic Oil Trading.

“Being able to provide the best credit terms is a considerable differentiator for a fuel supplier, but it has to be done based on a trustworthy relationship between the supplier and the customer. Due diligence as well as access to financial information is clearly vital, but the foundation for obtaining this is trust,” continued Møller.

As liquidity becomes tighter, Dynamic Oil Trading says ensuring the financial viability of those partners operating in the fuel supply chain is of paramount importance. However, the company believes there has to be a balance between forensic analysis that stifles deals at one end of the spectrum, versus a simple 'handshake', which could threaten business continuity.

“Dynamic Oil Trading is in a fortunate position, as we have the financial backing, liquidity and capital that enables us to provide customers with the best credit terms on deals. Understanding counterparty risk is critical, but we must be careful that it does not become too scientific, which threatens deals. Of course, where a company is not financially viable, you walk away, but in conjunction with sensible due diligence and financial analysis, we believe that building close, personal and trustworthy relationships must be the foundation of validating counterparty risk," said Møller.