The world’s largest energy traders enjoyed one of their best ever years in 2019 as pipeline outages, dramatic changes in ship fuel regulations and Middle East conflicts shook up the global oil market.
The bonanza extended beyond the independent traders like Vitol Group and Trafigura Group Ltd. to the in-house units of oil giants Royal Dutch Shell Plc, Total SA and BP Plc, which made billions of dollars in profits.
“By all accounts, 2019 was among the best years ever for the energy trading industry,” said Marco Dunand, the chief executive of Mercuria Energy Group Ltd., one of the five largest independent oil traders.
For the independents, the bumper year all but guarantees a fat bonus season for a group of companies that’s largely owned by their executives and senior staff. For the European oil companies, the trading boom will help Shell, BP and Total to weather a tough year in other parts of their business.
First, a series of supply outages boosted the premiums that oil refiners pay over the benchmark price for some crudes. Early in 2019, Washington imposed sanctions on Venezuela, disrupting flows. Then, Russian shipments into Europe via the key Druzhba pipeline were halted after oil was tainted with a corrosive pollutant. And in September, Saudi exports were hindered after a terrorist attack against the country’s most important petroleum facility.
Some traders also profited from the so-called IMO2020 rules that force the world’s merchant shipping fleet to use fuel with a lower sulfur content. The rules have upended the oil-refining and maritime industries, causing gyrations in the price of fuel-oil and marine diesel.
The trend was already clear in the results of Trafigura, which reports earlier than others due to a fiscal year ending in September.