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Physical Delivery

Fulfilment of a contract through actual transfer of the commodity rather than cash settlement.

Physical delivery is the transfer of actual commodity ownership, fulfilling contractual obligations in futures, swaps, or forward contracts.

In oil markets, physical delivery involves transporting crude or refined products to storage, terminal, or refinery locations. It contrasts with cash-settled derivatives.

Delivery obligations include quality, quantity, and timing specifications. Mismanagement can result in penalties or financial loss.

Physical delivery ensures real supply-demand alignment and underpins derivatives settlement integrity.

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