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2019 may have been fraught with volatile oil prices, but the world’s largest oil traders made a killing last year, Bloomberg reported on Monday.
“By all accounts, 2019 was among the best years ever for the energy trading industry,” Marco Dunand, chief executive of energy trader Mercuria Energy Group LTD, said.
Mercuria is one of the world’s largest oil traders.
Other traders including Vitol and Trafigura reaped the benefits of a turbulent 2019 as well—but Shell and BP, which have in-house trading units, deal in even more crude oil, trading 13 million and 10.9 million barrels of crude oil per day.
BP and Shell raked in billions last year on their oil trading arms, with Shell reportedly making $1 billion off fuel-oil trading due to the IMO2020 changes.
Gunvor, who trades 2.5 million barrels a day, said that 2019 was “up there among the best years ever.”
Trafigura, who already reported its 2019 results as their fiscal year ended in September, saw a record year for gross profits of $1.7 billion, trading 6 million barrels daily. Vitol—the largest oil trader that’s not part of Big Oil, is expected to report nearly $2 billion in earnings.
The reason for the banner year in the oil trading business was, according to senior traders and top executives interviewed by Bloomberg, a rather fortuitous combination of oil market influences. Supply outages in Venezuela and Iran boosted premiums that traders could charge to refineries. Then came the Russian tainted oil debacle. Then, Saudi Arabia’s supply disruption in the wake of a terrorist attack on Aramco’s infrastructure that temporarily took offline 5 million bpd. Then, there was the IMO2020 rules.
All these disruptions created a perfect money-making storm.
For BP, Shell, and Total—the do-it-alls of the oil industry, including trading—the money made on the trading side is a welcome addition to the balance sheet as oil and gas prices falter.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.