Europe’s oil majors reap up to $4.75bn from trading on Iran war volatility

{"text":[[{"start":10,"text":"Europe’s three biggest oil companies reaped as much as $4.75bn from the turmoil in global energy markets as the Iran war caused violent swings in prices, presenting huge opportunities for their trading desks. "}],[{"start":24.05,"text":"Shell, BP and TotalEnergies’ trading units earned between $3.3bn and $4.75bn extra in the first quarter, compared with the final three months of last year, according to estimates from five analysts. "}],[{"start":40.35,"text":"The estimates suggest that the trading divisions, for which the companies do not disclose profits, were responsible for between 48 per cent and 69 per cent of the $6.9bn increase in the groups’ total earnings since the previous quarter. "}],[{"start":54.95,"text":"The boost came as the Middle East conflict and US intervention in Venezuela disrupted energy flows, showing how the trading desks of Europe’s oil majors distinguish them from their US rivals ExxonMobil and Chevron, whose profits remain more closely tied to production. "}],[{"start":70.35000000000001,"text":"The strength of BP, Shell and TotalEnergies’ trading desks in a time of crisis is an “important differentiating factor” for the European companies, and a “competitive advantage”, said Kim Fustier, an analyst at HSBC."}],[{"start":84.9,"text":"Trading teams tend to perform best during volatile periods when they can profit from buying and selling oil and refined products at different prices across markets and when more customers seek to hedge against price moves. "}],[{"start":null,"text":"

"}],[{"start":97.85000000000001,"text":"During the Iran war, oil prices have regularly swung sharply and normal trade routes have been redrawn as the Strait of Hormuz shipping route has been shut and Asia ran short of supplies from the Middle East. "}],[{"start":111.05000000000001,"text":"Brent crude, the international oil benchmark which was trading at below $60 in January, hit a record high in April when physical barrels were changing hands for more than $144 each. "}],[{"start":124.15,"text":"Among Europe’s oil majors, BP’s traders appear to have been the biggest beneficiaries from the volatility. "}],[{"start":130.25,"text":"An average of estimates from four analysts suggested that the company’s trading division earned $1.75bn more in the first quarter than in the final three months of 2025, equivalent to almost a quarter of the company’s entire adjusted profit last year. One analyst, however, estimated BP’s gain at closer to $800mn. "}],[{"start":153.05,"text":"Shell generated an additional $1.6bn from trading in the quarter, according to an average of five analyst estimates, while TotalEnergies earned about $800mn more. "}],[{"start":165.25,"text":"BP operates one of the world’s largest oil trading networks, employing more than 2,000 people across London, Singapore and Houston. It trades more than 4bn barrels of crude a year, several times its own production, and at any moment has more than 300 tankers transporting crude oil and fuels around the globe. "}],[{"start":null,"text":""}],[{"start":184.55,"text":"Executives at all three companies pointed to the strength of their trading businesses as they reported first-quarter earnings. "}],[{"start":191.5,"text":"Shell’s chief financial officer Sinead Gorman said the group had benefited from “significantly higher trading and optimisation contributions” as it reported profits of $6.9bn, about a quarter higher than a year earlier."}],[{"start":205.2,"text":"BP’s chief executive Meg O’Neill said she wanted to “really highlight the value that we see of our trading organisation”, as the group reported its total profits had more than doubled from the same period a year ago. "}],[{"start":217.14999999999998,"text":"Total’s boss Patrick Pouyanné said his traders were “generally quite happy when they see a volatile market”."}],[{"start":223.99999999999997,"text":"In one of the quarter’s most lucrative trades, Total’s traders made more than $1bn from bets on Dubai and Oman crude, buying up every available cargo. "}],[{"start":234.39999999999998,"text":"Investors have rewarded the European majors’ trading strength. Since the conflict began in late February, BP and Total shares have risen 12 per cent and 21 per cent respectively. Shares in Shell, which was more exposed to a fall in Gulf production as facilities were attacked, are up 9 per cent."}],[{"start":251.45,"text":"By contrast, Exxon shares have fallen more than 4 per cent over the same period, while Chevron has risen just 2.7 per cent. "}],[{"start":null,"text":""}],[{"start":259.75,"text":"The divergence partly reflects accounting differences. Unlike their European peers, Exxon and Chevron were forced to report first-quarter losses tied to hedging positions because US accounting rules require them to mark derivatives to market rather than holding them at a stable value until the associated physical oil cargoes are delivered."}],[{"start":279.2,"text":"“This is just timing,” said Exxon’s chief executive Darren Woods. “We book one-half of the deal and not the other half. When the physicals get delivered and you actually bring those into your earnings, it will offset the paper.”"}],[{"start":292.05,"text":"Some analysts cautioned that investors are unable to price the long-term benefit of trading because of its volatile returns, and because the oil majors’ accounts do not break out the performance of their trading divisions. "}],[{"start":304.6,"text":"“Perhaps you factor it in if you are a hedge fund looking at the short term. But in the long term, investors are more focused on who has [production] growth. Trading is a lot more uncertain than having a good hopper of [oil and gas] opportunities,” said one analyst. "}],[{"start":320.40000000000003,"text":"Exxon and Chevron have both expanded their trading desks in recent years but still lag behind the Europeans. One analyst estimated that much of the $800mn increase in Exxon’s refining margins this quarter may have come from trading activity. "}],[{"start":335.95000000000005,"text":"But another said the US groups do not have the same appetite for risk. “If you look at the $1bn Oman trade that TotalEnergies made, I can’t see Exxon or Chevron putting that on,” they said. “It is not in their culture.” "}],[{"start":350.15000000000003,"text":"Total said trading activities “are not risk-free” and can generate losses as well as gains, and should be assessed as part of its wider portfolio and in the longer term."}],[{"start":360.50000000000006,"text":"Shell and BP declined to comment."}],[{"start":372.4000000000001,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778480674_2425.mp3"}