Short answer: Under FOB, the buyer books and pays for sea freight and insurance. Under CIF, the seller pays freight and minimum insurance to the destination port. In both cases, risk passes to the buyer once the oil is on board at the loading port.
What FOB Means
FOB (Free On Board) means the seller clears the goods for export and loads them onto the vessel at the named port of shipment. From that moment the buyer carries the risk and pays for sea freight, insurance and everything that follows.
FOB suits buyers who already have a freight forwarder or a contract with a shipping line, and want control over routing and cost.
What CIF Means
CIF (Cost, Insurance and Freight) means the seller also books and pays for sea freight to the named destination port and buys cargo insurance for the buyer. Under the Incoterms® 2020 rules, CIF only requires minimum cover (Institute Cargo Clauses C), so many buyers ask for wider cover or arrange their own.
The important detail: risk still passes at the loading port, not at destination. If oil is damaged at sea, the buyer claims on the insurance policy.
Side-by-Side Comparison
| Item | FOB | CIF |
|---|---|---|
| Export clearance | Seller | Seller |
| Sea freight | Buyer | Seller |
| Cargo insurance | Buyer | Seller (minimum cover) |
| Risk passes | On board, loading port | On board, loading port |
| Import clearance and duties | Buyer | Buyer |
How to Compare Quotations Fairly
- Ask every supplier to quote on the same term and the same destination port.
- To compare a FOB price with a CIF price, add your own freight and insurance quote to the FOB price.
- Check the packaging basis: bulk flexitank and drums give very different prices per tonne.
- Confirm which documents are included, and what level of insurance cover a CIF price includes.
Key Takeaways for Buyers
- FOB gives you control of freight; CIF gives you a single delivered-to-port price.
- Under both terms, risk passes when the oil is loaded at origin.
- Always compare quotes on the same term, port and packaging.
This guide gives general trade information, not legal or financial advice. Check terms with your freight forwarder, bank and customs broker.