What’s Going On Here?Commodity trader Trafigura reported record half-year profits on Friday. What Does This Mean?Trafigura makes its money by selling and shipping metals, oils, and other commodities globally, so it's been raking it in while lingering supply shortages – brought on by the pandemic and war – push commodity prices higher and higher. The firm’s been trading more by volume too, especially after customers flocked to reinforce their supply networks when war broke out in Europe. In fact, Trafigura traded more of all its main commodities between last October and this March compared to the year before, even notching record volumes in its key oil and metal segments. Case in point: Trafigura handled a record 7.3 million barrels of oil a day on average, equalling about 7% of total global supply. That really made a difference to its bottom line: the trading giant made a record $2.7 billion in profit, up 27% from the same period last year (tweet this). Why Should I Care?Zooming in: So long, partner.
Trafigura might be trading less oil soon, mind you: Russia made up around 6% of the company’s business before war broke out, but the trading firm’s since cut most of its ties with the country. That has some major implications: Trafigura’s no longer Russian state-backed Rosneft’s biggest oil trader, and it’s also planning to sell its nearly $2 billion stake in Russia’s Vostok Oil project – the country’s biggest oil development in post-Soviet times.
The bigger picture: More oil, please.
Still, it’s not all bad for Trafigura: it thinks oil could hit new highs later this year, and a laundry list of banks – including Goldman Sachs and JPMorgan – seem to agree. After all, there’s likely to be even more demand next quarter: China – the world’s biggest oil importer – is estimated to use 12% more oil as lockdowns ease, and American “driving season” will be upon us too. That, at a time when supply of the slippery stuff is still too low to keep up. | 