Commodity Traders Reap a Profit Bonanza from War Oil Shock

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(Bloomberg) — The world’s biggest energy traders are reaping a fresh profit bonanza as the war in Iran causes unprecedented disruption to oil markets. 

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It’s too early to say if 2026 will rival the industry’s record haul in the wake of Russia’s full invasion of Ukraine in 2022-2023, but several of the biggest commodity traders are already seeing the highest profits since that time, according to executives and financiers.

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Industry leader Vitol Group told banks it made about $2 billion in the first quarter, Bloomberg reported earlier this week. Trafigura Group, the second-largest oil trader and leading metals trader, enjoyed two of its best-ever quarters in the six months through March, according to a person familiar with the matter, after it also benefited from soaring copper and gold prices late last year. A spokesperson for Trafigura declined to comment.

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Gunvor Group has said it made more in the first quarter than in all of the previous year, while Mercuria Energy Group Ltd. Chief Executive Officer Marco Dunand on Tuesday said his company was on track to make a return on equity at the upper end of a historic 25% to 50% range. That would imply profits of $2.3 billion to $3.2 billion, compared with a record $3 billion in 2022.

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The results are an early indication that the commodity traders, which are mostly owned by small groups of top executives and traders, will again be some of the major beneficiaries as war upends global energy markets. The industry recorded its most-profitable period ever in the years that followed Russia’s invasion of Ukraine, resulting in huge wealth creation across its senior ranks.

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Huge Dislocations

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The profits have been driven by huge dislocations across energy markets, with immediately-available cargoes of oil and fuel products trading at huge premiums after the near-closure of the Strait of Hormuz triggered a global race to secure physical oil. 

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One executive, who asked not to be identified discussing confidential details, said his company had made profits of as much as $20 to $30 a barrel on some crude oil trades. That’s highly unusual in a high-volume, low-margin business where profits are typically measured in cents per barrel.

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“You saw Dubai trade at $160 a barrel, you saw jet fuel trade over $200 a barrel,” Gunvor CEO Gary Pedersen said in an interview on the sidelines of FT Commodities Global Conference in Lausanne. “The physical businesses were able to manage that and help balance those markets.”

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To be sure, the war has also created major headaches for the commodity traders. Vitol suffered losses in its derivatives team when the war broke out, Bloomberg has reported. And the disruption of supplies from the Middle East has led to force majeure declarations from producers, hitting those who had contracts to buy from them. 

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Vitol CEO Russell Hardy described a period of “triage” in the first two to three weeks of the conflict, as the industry responded to the interruption of oil flows from the Middle East. 

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Still, “generally performance has been good — which I think is something that has been suggested with most companies,” Hardy added.

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Several executives cautioned it was too early to forecast the full impact of the crisis, with the outcome of the war still uncertain and oil prices vulnerable to wild swings on the back of social media posts from Iranian and US leaders.