Over the past decade, scores of Big Oil companies have set up separate trading divisions that frequently rake in billions in profits that help pad their bottom lines whenever oil and gas prices fall. In fact, the oil majors typically handle more barrels than leading commodity traders such as Vitol, Trafigura, Glencore and Mercuria, according to Bloomberg. These companies usually view high volatility in the markets as a blessing, allowing them to make big bets and generate outsized profits.
To wit, giant commodity traders generated record profits during the pandemic thanks to their unique ability to leverage their global network of terminals, shipping fleets, and storage facilities to cash in on supply disruptions. In the same vein, low volatility is the bane of oil trading: Last year, we reported that commodities trading powerhouse Trafigura Group saw its net profit drop 73% to $1.47 billion, the lowest for the company since 2020, thanks to low market volatility.
However, not all market volatility is created equal.
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A recurring theme has emerged in the ongoing earnings season: Geopolitics-led volatility is bad for Big Oil crude traders, with Trumps military maneuvers, social-media posts and tariff threats making oil price swings too unpredictable to trade on. Shell Plc (NYSE:SHEL) reported mixed earnings on Thursday, with Q2 Revenue of $65.41B (-12.2% Y/Y) missing by $800 million but GAAP EPS of $1.44 beating by $0.17. The company saw its net income for the first half of the year clock in at $9.4B, good for a -30% Y/Y decline while net income fell -23% Y/Y to $8.38B mainly due to lower trading contribution in a weaker margin environment. In the earnings call, Shell CEO Wael Sawan pointed out that market turbulence not related to demand and supply dynamics is hard for Big Oil traders, who prefer to sit them out rather than chase every oil price swing.
We are much more of a fundamentals-based trader, so we chose to be a bit more risk-off, more of a prudent risk-management approach, Sawan said today during a Bloomberg Television interview . Previously, Sawan revealed that Shells trading desk had not lost money on a quarterly basis over the past decade.
Similar sentiment has emerged from TotalEnergies (NYSE:TTE) earnings call. The French oil and gas giant also posted a mixed report , with Q2 revenue of $44.68B (-9.2% Y/Y) beating by $1.76B while non-GAAP EPS of $1.57 missed by $0.02. Totals Q2 2025 adjusted EBITDA fell -11% Y/Y to $9.7B while net income declined -31% Y/Y to $2.7B. During the earnings call, TotalEnergies CEO Patrick Pouyanne declined to discuss the performance of the companys trading division, saying, Oil trading is a secret .
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Meanwhile, Norways national oil company (NOC) Equinor ASA (NYSE:EQNR) reported Q2 Non-GAAP EPS of $0.64 while revenue of $25.14B (-1.6% Y/Y) beat by $2.09B. Similar to its European peers, Equinor talked about a different type of volatility that has made it very hard to trade around. The companys net operating income for the second quarter was $5.72 billion down from $7.66 billion for last years comparable quarter. The company also took a nearly $1 billion hit due to regulatory changes in wind energy by the Trump administration. Specifically, CFO Torgrim Reitan said tariffs as well as the removal of tax credits for wind and solar energy had lowered the value of its large onshore terminal in South Brooklyn.
" It is those new offshore wind projects that drive the impairment, because we have a terminal, the South Brooklyn Marine terminal, where we had assumed two more developments than our own Empire Wind to pay for that. That is now unlikely ," Reitan told Reuters.
That said, U.S.-based oil majors will hardly be affected by the chaos in oil trading markets, usually dominated by their European peers. Exxon Mobil (NYSE: XOM) abandoned efforts to build a trading business to compete with those by Shell and Total after low oil prices forced it to make broader spending cuts. This left its traders with insufficient capital to leverage volatile oil markets. However, U.S. energy companies are expected to post yet another lackluster earnings season thanks to low oil prices.
Earlier in the week, we reported that the energy sector is expected to post the lowest profit growth amongst the United States 11 market sectors at -24%. Lower oil prices are mainly to blame for the subpar earnings, as the average price of oil in Q2 2025 ($63.68) was 21% below the average price for oil in Q2 2024 ($80.66).
By Alex Kimani for Oilprice.com
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