Set Sail

Image source: NorSob, Sanches11, vi73, Favebrush, fedir13 - Shutterstock

What's going on?

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 firms 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 companys business before war broke out, but the trading firms since cut most of its ties with the country. That has some major implications: Trafiguras no longer Russian state-backed Rosnefts biggest oil trader, and its also planning to sell its nearly $2 billion stake in Russias Vostok Oil project the countrys biggest oil development in post-Soviet times.

The bigger picture: More oil, please.
Still, its 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, theres likely to be even more demand next quarter: China the worlds 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.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Bout Time

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.