SINGAPORE: Vitol, the world’s largest independent energy trader, found itself on shaky footing when the Middle East conflict broke out on Feb 28.
The conflict, which saw the United States and Israel launch an attack on Iran, disrupted the supply of crude oil, products and liquefied natural gas from the Gulf.
Vitol and other commodities trading houses – which serve as intermediaries between producers and consumers – are typically affected during periods of volatility. In this case, trading houses had made bets on falling energy prices and suffered heavy losses when prices surged on the back of supply disruptions from the oil- and gas-rich region.
Traders also had to make arrangements to replace cargoes stuck in the Gulf that were promised to clients.
Consultancy Oliver Wyman estimated that trading houses – including Vitol, which ships an average of around eight million barrels a day of crude oil and other products – saw early losses amounting to billions of dollars.
Still, ongoing volatility created trading opportunities for Vitol and its peers.
While Swiss-based Vitol does not publicly disclose its earnings, Bloomberg reported that the firm, in its briefing to banks, said it made around US$2bil in profits in the first quarter.
Vitol, which opened its office in Singapore that acts as its Asia-Pacific headquarters in 1979, reassured lenders that it remains financially resilient, even as ongoing volatility continues to create potential gains and losses across its trading positions, according to Bloomberg.
Bloomberg also reported that Singapore-headquartered Trafigura, a large oil and metals trader, enjoyed one of its best-ever quarters, while independent trader Gunvor Group, which counts the Republic as one of its main trading hubs, made more in the quarter than the whole of 2025.
The positive financial performances came as traders posted strong gains linked to the Iran conflict, reinforcing expectations that continued market volatility could boost their profits.
Agrocorp’s chief executive Vishal Vijay told The Straits Times (ST) that the Singapore-founded agri-commodities trader had to “absorb the increase in cost” for contracts it entered into before the Middle East conflict.
Even so, he added: “The conflict has introduced quite a bit of volatility in agri-commodity prices. The volatility naturally allows for some trading opportunities as well.”
The firm supplies staple foods and specialty crop products, such as wheat, pulses, cocoa, coffee beans and rice, to leading food manufacturers across the Asia-Pacific region and the Middle East.
Trading houses such as Agrocorp incur losses when they commit to supplying a commodity at a fixed price and its market cost rises afterwards.
However, they benefit when the price of acquiring the commodity falls after a contract is agreed upon, or if they have hedged sufficiently against potential losses.
Jay Ng, Vitol’s group chief financial officer and head of strategic business development in Asia, told ST that the company has been able to “navigate physical supply risks due to our strong global network and strong logistics platform, allowing us to continue supplying our various customers”.
This involves liaising closely with its customers and using its global network to seek alternative supplies.
Vitol also continues to make prudent credit decisions in line with its credit policies given this period of enhanced disruptions in the energy markets, Ng noted.
Ng of Vitol noted that Singapore’s stable political environment and strong governance and legal structure, as well as being a top financial centre, have benefitted Vitol’s operations.
Vitol estimates that the oil market will lose at least a billion barrels of crude oil and refined products because of attacks on energy infrastructure in the Gulf and the closure of the Strait of Hormuz, a waterway critical to the supply of oil and gas from the Middle East to Asia.
Vitol’s Ng said the loss of supply of oil from the Middle East is driving Asian refineries to look farther afield to markets like the United States and West Africa.
This means that oil is taking longer to reach refineries and consumers.
Ng believes longer transit times and higher shipping costs contributed to the 10% to 15% fall in crude oil processing rates at refineries across Asia in the month after the outbreak of the Iran war.
The effects are also felt further down the supply chain. Singapore commodity trader Sing Fuels, which mainly deals with bunkering or the supply of fuel to shippers, said bunker prices have risen from US$400 to US$1,000 a tonne.
The firm said this is “significantly increasing financing requirements and creating hesitation among buyers”.
In Asia, demand in key markets such as Singapore and China has softened as buyers adopt a more cautious approach, it said.
“Access to adequate and flexible financing remains critical, particularly for Singapore-based marine fuel players operating in periods of heightened volatility,” said Sing Fuels. — The Straits Times/ANN
