Trafigura Group, a commodity trading company, made a record profit thanks to choppy markets exacerbated by the Russia-Ukraine conflict. In the six months ended March 31, 2022, the privately held commodities merchant made a net profit of $2.7 billion on $170.6 billion in revenue. Profit increased 29% to $2.7 billion in comparison to the corresponding period in 2021.
Market Volatility: Bane to Boon?
The Russia-Ukraine conflict created an inconvenient situation for commodities merchants initially but became lucrative later. European and American buyers shunned Russian oil, while India snatched up barrels on the cheap. Since then, sanctions prevented most European dealers such as Trafigura from doing business with Russia's largest producer of crude, forcing Moscow to find new ways to sell oil. Global oil prices soared as a result of the interruption, with Brent crude oil prices reaching a 14-year high of almost $139/barrel in March 2022, while diesel and gasoline prices continued to touch new highs. While price volatility is increasing and physical market arbitrages are emerging, it is also bringing the focus on mostly private corporations that transport oil, gas, copper, and wheat, besides their ties to Russia.
Trafigura: Russian Ties
Before the invasion, Trafigura was the largest Western exporter of Russian oil, having formed a close collaboration with state-owned producer Rosneft PJSC. The company said that it plans to sell its investment in the Vostok Oil project, which is controlled by Rosneft PJSC. The company previously said it was decreasing oil shipments from Russia to comply with international sanctions.
Outlook
The turbulence in the oil and gas industry resulted in several difficulties. Trafigura, similar to other merchants, uses borrowed funds to finance the commodities it transports globally. Higher and turbulent pricing forced the corporation to take out new loans worth billions of dollars to fund oil, metal, and liquefied natural gas cargoes, as well as make larger down payments to exchanges. According to the company, the industry's cash crunch exacerbated the trading conditions in the futures markets and will make trading actual commodities more challenging in the future.
United States of America
China
United States of America
United States of America
France
Spain
China
Don’t wait - discover a universe of connected data & insights with your next search. Browse over 28M data points across 22 industries.
Access more premium companies when you subscribe to Explorer
Contact the team or request a demo to find out how our data can drive your business forward