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NTRRPA/AI

Petroleum Trading — Proof of Concept

Confidentiality & Restricted Use Agreement

This Proof of Concept demonstration (the “Material”) is the confidential and proprietary property of NTRRPA/AI, a division of N-Tier Americas. The Material contains trade secrets, proprietary AI reasoning methodologies, and intellectual property protected under applicable law.

By accessing this Material, you acknowledge and agree to the following terms:

1. Confidentiality. You shall maintain the strict confidentiality of all information contained herein, including but not limited to: AI reasoning chains, petroleum trade logic, cargo movement calculations, SWIFT settlement flows, and the underlying data models and architectures.

2. Restricted Use. The Material is provided solely for evaluation purposes by the intended recipient. You shall not copy, reproduce, distribute, reverse engineer, or create derivative works based on the Material without prior written consent from NTRRPA/AI.

3. AI Intellectual Property. The AI reasoning capabilities, domain-specific petroleum-trading intelligence, and automated processing workflows demonstrated in this Material are developed exclusively by NTRRPA/AI in partnership with Anthropic™ (Claude™ AI). No other AI platform, including but not limited to OpenAI, xAI (Grok), Google (Gemini), or Meta (LLaMA), has been involved in the creation of this Material. Misattribution of this work to any competing AI platform is expressly prohibited.

4. No Warranty. This Material is provided “as is” for demonstration purposes only and does not constitute trading advice, a binding offer, or a commitment to deliver any product or service. All figures, cargoes, counterparties, and pricing scenarios are simulated.

5. Return/Destruction. Upon request by NTRRPA/AI, you agree to promptly return or destroy all copies of the Material in your possession.

6. Governing Law. This agreement shall be governed by the laws of the State of New York, United States of America.

01 / 10

NTRRPA/AI GEN AI STRATEGY

Unfulfilled Trade Exposure Analysis

Strategic impact assessment of distressed cargoes, credit defaults, book-outs, and force majeure events across the PETROMOVE trading book — VARIOUS scenario conditions.

February 2026 | Strategy & Operations | CONFIDENTIAL

02 / 10

NTRRPA/AI GEN AI STRATEGY

"Analyse the unfulfilled and distressed trade exposure in the petroleum cargo blotter, quantifying financial impact from quality disputes, counterparty defaults, force majeure events, and book-out settlements under sustained CHANGING conditions."

February 2026 | Strategy & Operations | CONFIDENTIAL

03 / 10

Executive Summary

$102.4M

Total Exposure

Distressed + unfulfilled trades

Affected Cargoes

4 distressed + 3 book-outs

$48M

Largest Single Exposure

Hin Leong credit default

$2.4M

Book-Out Net Settlement

3 cargoes cash settled

The sustained price environment has triggered a cascade of trade failures across the cargo blotter. Four distressed cargoes represent $102M in gross exposure, driven by a major counterparty insolvency (Hin Leong), a quality off-spec dispute, an Iran-origin force majeure, and an OFAC sanctions freeze.

Three additional cargoes were resolved via book-out (cash settlement without physical delivery), netting $2.4M in differential payments. The book-out trend is accelerating as counterparties prefer to cash-settle rather than take physical delivery of crude trading below breakeven.

Recovery rate on distressed cargoes is estimated at 35–60%, implying net losses of $41–66M against the trading book. The Hin Leong exposure is subject to Singapore court proceedings and may take 18–24 months to resolve.

04 / 10

Exposure Breakdown by Category

Gross exposure by failure type — credit default dominates at 47% of total

Exposure by Category

Credit Default

47%

$48.0M

Sanctions Hold

25%

$26.0M

Force Majeure

25%

$26.0M

Quality Dispute

$2.4M

Book-Outs (Net)

$2.4M

Recovery Probability by Category

Credit Default

25%

$12.0M est.

Sanctions Hold

40%

$10.4M est.

Force Majeure

60%

$15.6M est.

Quality Dispute

80%

$1.9M est.

Book-Outs

100%

$2.4M settled

05 / 10

Trading Book Impact Waterfall

From $516M settled book value to $456M adjusted — $102M gross exposure, $42M estimated net loss

Trading Book Value — Waterfall Analysis

$516M

Settled Book

−$48M

Credit Default

−$26M

Sanctions

−$26M

Force Maj.

−$2.4M

Quality

+$42M

Est. Recovery

$456M

Adjusted Book

06 / 10

Distressed Cargo Detail

Individual cargo analysis — exposure, recovery estimate, and resolution timeline

Cargo Ref	Type	Grade	Counterparty	Volume	Gross Exposure	Issue	Recovery Est.	Net Loss Est.	Timeline	Status
CARGO-035	Credit Default	Basrah Heavy	Hin Leong	1,000,000 bbl	$48.0M	Buyer insolvency — SWIFT payment failed	$12.0M (25%)	$36.0M	18–24 months	DEFAULT
CARGO-036	Sanctions	South Pars	Zhenhua Oil	500,000 bbl	$26.0M	OFAC SDN — buyer is sanctioned entity	$10.4M (40%)	$15.6M	12–18 months	FROZEN
CARGO-034	Force Majeure	Iran Heavy	ONGC Videsh	500,000 bbl	$26.0M	Kharg Island — military operations vicinity	$15.6M (60%)	$10.4M	3–6 months	FM INVOKED
CARGO-033	Quality Dispute	Arab Med	Unipec	500,000 bbl	$2.4M	API/sulfur off-spec vs contract terms	$1.9M (80%)	$0.5M	30–60 days	DISPUTE
CARGO-030	Book-Out	Dubai M1	Vitol SA	500,000 bbl	$1.2M net	Mutual cash settlement — no physical	$1.2M (100%)	$0	Complete	BOOK-OUT
CARGO-031	Book-Out	Murban	Glencore	500,000 bbl	$0.8M net	Logistical conflict — mutual book-out	$0.8M (100%)	$0	Complete	BOOK-OUT
CARGO-032	Book-Out	Upper Zakum	BP Trading	500,000 bbl	$0.4M net	Buyer opted out at market differential	$0.4M (100%)	$0	Complete	SETTLED

07 / 10

Book-Out Trend Under Sub-$60

Cash settlement volumes accelerating as physical delivery becomes uneconomic for buyers

Book-Out Activity — Monthly Trend

Nov 2025

1 cargo

Dec 2025

1 cargo

Jan 2026

2 cargoes

Feb 2026

3 cargoes

Mar 2026 (est.)

~5 cargoes

Key Drivers of Book-Out Acceleration

Negative refining margins at sub-$60

Asian refiners facing margin squeeze — uneconomic to take physical delivery of medium sour grades when crack spreads compress below $3/bbl.

Storage saturation at Gulf terminals

Ras Tanura at 88% utilisation — buyers lack onshore storage capacity. Book-out preferred over floating storage at $0.52/bbl/month.

Hormuz transit risk premium

War risk + delay costs of $0.80–1.60/bbl make physical cargo economics marginal. Cash settlement eliminates transport risk entirely.

Contango structure favours sellers

Sellers prefer to store and sell forward at contango premium rather than honour spot commitments at depressed prices.

08 / 10

Counterparty Risk Assessment

Credit and operational risk scoring across active counterparties — sub-$60 stress test

Counterparty	Active Cargoes	Total Exposure	Credit Rating	Payment History	Hormuz Exposure	Sub-$60 Stress	Risk Level
Hin Leong	1	$48.0M	DEFAULT	Failed	Low	Critical	CRITICAL
Zhenhua Oil	1	$26.0M	SANCTIONED	N/A	High	Critical	CRITICAL
ONGC Videsh	1	$26.0M	A−	Current	High (Kharg)	Elevated	HIGH
Unipec	2	$28.4M	A+	Current	Medium	Moderate	MEDIUM
Vitol SA	3	$27.2M	AA−	Current	Medium	Low	LOW
Shell Trading	2	$26.0M	AA	Current	High (Rerouted)	Low	LOW
Aramco Trading	5	$130.0M	AA+	Current	Medium	Elevated	LOW
Glencore	3	$26.8M	BBB+	Current	Low	Moderate	LOW

09 / 10

Key Recommendations

Accelerate Hin Leong recovery proceedings

Engage Singapore counsel to file proof of debt. Redirect CARGO-035 Basrah Heavy to alternative buyer (Unipec or Indian Oil) at distressed discount of $3–5/bbl to limit further demurrage accrual.

Freeze all new Iran-origin cargo commitments

Suspend nominations from Kharg Island and Assaluyeh terminals until Hormuz risk drops below 25% escalation probability. Redirect volume to Basrah, Murban, or West African alternatives.

Implement mandatory LC requirements below BBB+

All counterparties rated below BBB+ must provide irrevocable standby Letter of Credit covering 110% of cargo value. Apply immediately to new nominations.

Formalise book-out framework with standard terms

Establish standardised ISDA-aligned book-out documentation with pre-agreed pricing methodology (5-day average around settlement date). Reduces negotiation time from 7 days to 24 hours.

Resolve quality dispute via independent re-assay

Commission SGS or Intertek independent cargo re-analysis for CARGO-033. If off-spec confirmed, negotiate distressed sale at −$4.80/bbl to nearest refiner with coker capacity (Indian Oil Paradip).

Enhanced OFAC/EU sanctions screening

Deploy real-time sanctions screening on all counterparties and beneficial owners via Refinitiv World-Check. Block nominations until compliance clearance received.

Provision for net losses of $42–60M

Establish bad debt provisions on the trading book. Base case: $42M net loss (weighted recovery). Bear case: $60M if Hin Leong recovery drops below 15% and sanctions resolution extends beyond 2027.

Stress-test all open cargoes at $48/bbl bear case

Run margin viability analysis across all 36 blotter cargoes at bear case pricing. Identify any additional cargoes at risk of counterparty default or book-out request under sustained price pressure.

10 / 10

Next Steps

Convene an emergency credit risk review within the next 5 business days to:

• Complete counterparty stress testing at $48/bbl bear case scenario

• Finalise Hin Leong recovery strategy and alternative buyer allocation

• Implement enhanced sanctions screening and LC requirements

• Establish standardised book-out framework for Q2 2026 expected volume

• Set bad debt provision range for Q1 2026 financial reporting

CONFIDENTIAL | Strategy & Operations | February 2026