By Rhodri Morgan
Continued energy market turmoil has seen Vitol, the world’s largest commodity trading group, post another set of strong annual results.
The private firm said today it brought in $13bn (£10.2bn) in net profit in 2023, its second-highest profit in three years behind the $15bn (£11.8bn) made in 2022.
The trading house reported the profit in spite of a nearly 20 per cent year-on-year revenue drop, reported last month, due to weaker oil prices.
Vitol’s results are not announced publicly, but reports suggest that the group’s biggest windfall came from gas and liquefied natural gas volumes, which grew by 19 per cent and 24 per cent respectively. Oil and refined petroleum products reportedly remained flat at 7.3m barrels a day.
Russell Hardy, the group’s chief executive, noted in a statement last month that the energy markets have become “ever more important and ever more complex.”
“Business can be part of the solution, but the effective deployment of capital requires a pragmatic approach, long-term policy and regulatory clarity,” he added.
Vitol’s competitors have posted 2023 results that follow similar patterns.
Singapore-domiciled Trafigura made a net profit of $7.2bn (£5.7bn) in its last financial year, which ended in September, and fellow privately- held energy trader Gunvor said last week that it had made $1.3bn (£1bn) in 2023.
A report last week from consultancy firm Mcinsey showed that commodity trading generated more than $100bn (£79bn) in earnings before interest and taxes (EBIT) in 2023, equivalent to more than £118bn in gross profit.
Despite this, however, the commodity market tightened in 2023, due to harder-to-predict demand and supply changes, uncertain energy supply and high-interest rates weighing on project investments.
Mckinsey reported that innovation within the trading sector, with tech-focused trading houses and hedge funds benefiting from more powerful analytical tools, will likely see commodity markets become more competitive moving forward.
