Big Oil’s Trading Desks Drive Q1 Earnings Beat
CNBC reported Tuesday that Europe’s three largest oil companies owe much of their first-quarter earnings strength to an often-overlooked internal unit — their oil trading desks — which capitalized on extreme market turbulence to generate outsized returns.
Trading Arms Take Center Stage in Q1
Shell, BP and TotalEnergies each flagged their oil trading desks as a material contributor to results that surpassed analyst expectations. Shell’s first-quarter adjusted earnings reached $6.92 billion, up sharply from $5.58 billion in the same period last year. BP more than doubled its net profit year-on-year, posting $3.2 billion. TotalEnergies reported quarterly net income of $5.4 billion, a 29% jump from a year earlier.
Shell CFO Sinead Gorman pointed to “significantly higher” trading contributions during the quarter. BP called its oil trading performance “exceptional.” TotalEnergies CEO Patrick Pouyanné said crude and products trading delivered “a very strong performance in March” specifically.
Analysts at five firms estimated the three majors collectively generated between $3.3 billion and $4.75 billion in additional trading revenue versus the prior quarter, according to figures cited by the Financial Times.
What Oil Trading Desks Actually Do
Oil trading desks are internal divisions that buy, sell and physically move crude and refined products across global markets while hedging price risk. They are distinct from financial speculation — the positions are backed by hydrocarbons the companies already produce or control.
Maurizio Carulli, equity research analyst at Quilter Cheviot Investment Management, told CNBC the key advantage lies in the physical infrastructure. These firms own or contract ships and terminals, allowing them to route barrels globally as price differentials shift. Carulli described the activity as a “proper and long-term” commercial operation rather than opportunistic trading.
A Competitive Divide With a Long History
The outsized trading results throw fresh light on a persistent valuation gap between European and U.S. oil majors. Companies like Exxon Mobil and Chevron have historically operated smaller trading functions. Allen Good, director of equity research at Morningstar, noted that large trading organizations have long helped European integrated majors differentiate themselves — particularly during high-volatility years such as 2022, when Russia’s invasion of Ukraine roiled energy markets.
Carulli suggested U.S. majors could eventually build comparable units, especially as American producers gain greater influence over global oil supply relative to OPEC.
The backdrop for Q1 was unusually turbulent. Energy markets closely tracked disruption around the Strait of Hormuz during the Iran conflict, creating the spread dislocations that trading desks are designed to exploit. Clark Williams-Derry, energy finance analyst at IEEFA, noted that while trading can be a durable profit source, its inconsistency makes it easy for investors to underestimate its contribution.
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