European Oil Majors Outshine U.S. Rivals with Iran War Trading Bonanza
The trading desks of Europe's top three oil majors have reaped billions of dollars from the energy supply crunch caused by the Iran war, eclipsing their more cautious U.S. rivals and helping offset the conflict's impact on their production operations. This mirrors a pattern seen during the 1973 oil crisis, when European firms similarly capitalized on geopolitical disruptions to global supply.
The war launched by the United States and Israel in late February and Tehran's retaliation against its neighbors have damaged oil and gas infrastructure, disrupted shipping through the Hormuz Strait—through which roughly 20% of the world's oil passes—and kept a large chunk of Gulf production off the market. However, the resulting energy price volatility has also created opportunities for traders.
Together, the trading desks at British majors BP and Shell and France's TotalEnergies made at least $2.5 billion in the first quarter, according to Reuters calculations based on information from sources at each company. All of the sources asked not to be named as oil companies do not disclose detailed trading results, which they consider strategically sensitive.
European majors have spent decades building trading desks, employing hundreds of people who buy and sell crude, fuels, and gas to take advantage of price gaps across regions and time periods, while also taking positions in derivatives markets. Companies with large trading operations can turn volatility into earnings—a model that has paid off amid the Iranian crisis, which has created the largest global oil disruption since the 1990 Iraqi invasion of Kuwait.
U.S. majors Exxon Mobil and Chevron, by contrast, mainly use traders to optimize flows within their own networks of production, refineries, and fuel retail outlets. That approach prioritizes predictability but limits opportunities to profit from extreme market moves.
Europeans Score Trading Wins, Shares Surge
These divergent strategies have been reflected in the companies' stock performance in recent weeks. Shares in BP, TotalEnergies, and Shell have all gained significantly since the start of the conflict, while Exxon and Chevron have both slipped.
Without giving away details, the Europeans have flagged their trading windfalls in recent outlook updates. BP this week said its oil trading performance in the first quarter was 'exceptional'—language it has not used for oil and gas trading in its quarter-on-quarter comparisons since the peak of the Ukraine war-induced energy crisis in 2023, when Brent crude prices spiked to over $130 per barrel. Typically, BP limits its comments to weak, average, or strong.
'BP is not given to hyperbole. So calling its results 'exceptional' is telling,' said David Hewitt, senior consultant at Hewitt Energy Perspectives.
Via MarketScreener.
