How do oil majors like TotalEnergies make money from trading during a geopolitical crisis?

Trading desks exploit price volatility and supply disruptions by buying physical crude at lower prices before a anticipated crisis, storing it, and selling it at a premium when supply fears peak. They also use financial derivatives to hedge their positions and bet on the price spreads between different regional crude benchmarks.

Why is TotalEnergies' trading profit reported separately from its upstream production?

Upstream production refers to the physical extraction of oil and gas from the ground, which is subject to geological limits and regulated tax regimes. Trading is a service-based, asset-light activity that leverages the company's market intelligence and logistics to buy and sell third-party oil, making its earnings highly variable and distinct from traditional drilling.

Does a doubling of trading profits mean consumer fuel prices will rise?

Not directly, as trading profits are a result of capturing market inefficiencies rather than setting retail prices. However, the underlying geopolitical tensions and supply anxieties that enabled TotalEnergies to make these profits do drive up global crude benchmarks, which ultimately leads to higher prices at the pump for consumers.

Rigzone · June 17, 2026 (Jun 17) · 1 min read

TotalEnergies Doubled Oil Trading Profit in Q1

TotalEnergies SE

Analysis

AI-assisted analysis · reviewed by Yuri Kan

TotalEnergies capitalized on heightened geopolitical volatility in the Middle East by doubling its oil trading profits to approximately $1 billion during the first quarter of 2024. The French supermajor strategically accelerated its physical crude procurement ahead of escalating tensions between Israel and Iran, demonstrating the immense profitability of integrated trading desks during periods of supply risk. This performance underscores how European majors are increasingly relying on opaque but highly lucrative paper and physical trading divisions to buffer their bottom lines against fluctuating upstream margins.

Key Facts

TotalEnergies generated approximately $1 billion in net profit solely from its oil trading division during the first quarter of 2024.
The trading profit represents a 100% increase (doubling) compared to the baseline performance of the company's trading desk in previous normalized quarters.
Chief Executive Officer Patrick Pouyanné attributed the windfall to a strategic crude oil buying campaign executed in the run-up to the direct military escalation between Iran and Israel.
The company leveraged its massive global logistics network to secure physical barrels before geopolitical risk premiums spiked the price of benchmark crudes.
This trading surge occurred amidst a broader market environment of tight supply, driven by ongoing OPEC+ production cuts and shipping disruptions in the Red Sea.

Background & Context

Oil majors have spent the last decade transforming their trading desks from simple risk-management tools into aggressive profit centers that rival independent houses like Vitol and Trafigura. TotalEnergies, alongside rivals BP and Shell, routinely uses its vast global refining footprint, storage assets, and shipping fleets to exploit arbitrage opportunities and market dislocations. The first quarter of 2024 was characterized by severe geopolitical anxiety in the Middle East, particularly following the April escalation between Israel and Iran, which threatened the Strait of Hormuz—a vital transit chokepoint for 20% of the world's petroleum liquids.

Market Impact

This performance highlights the growing divergence between pure-play upstream producers and integrated supermajors, with the latter proving far more resilient to market shocks due to their trading capabilities. By aggressively purchasing crude ahead of the Iranian escalation, TotalEnergies not only secured cheaper feedstock for its own global refining system but also captured lucrative spreads on the open market as supply fears drove up spot prices. For shareholders, this mitigates the impact of softer natural gas prices during the same period, proving that trading acts as an invaluable hedge. However, it may also attract renewed political scrutiny from European regulators regarding the windfall profits generated by energy giants during geopolitical crises.

What to Watch

Market observers should watch whether TotalEnergies can sustain these trading margins in the second and third quarters of 2024 as Middle Eastern tensions remain elevated but somewhat priced into the market. Attention will also turn to the company's upcoming financial disclosures to see if this trading windfall will trigger increased share buybacks or be redirected into its growing low-carbon power portfolio. Finally, expect rival supermajors to face pressure from institutional investors to match TotalEnergies' transparency regarding the specific earnings contribution of their proprietary trading desks.

Frequently Asked Questions

How do oil majors like TotalEnergies make money from trading during a geopolitical crisis?: Trading desks exploit price volatility and supply disruptions by buying physical crude at lower prices before a anticipated crisis, storing it, and selling it at a premium when supply fears peak. They also use financial derivatives to hedge their positions and bet on the price spreads between different regional crude benchmarks.
Why is TotalEnergies' trading profit reported separately from its upstream production?: Upstream production refers to the physical extraction of oil and gas from the ground, which is subject to geological limits and regulated tax regimes. Trading is a service-based, asset-light activity that leverages the company's market intelligence and logistics to buy and sell third-party oil, making its earnings highly variable and distinct from traditional drilling.
Does a doubling of trading profits mean consumer fuel prices will rise?: Not directly, as trading profits are a result of capturing market inefficiencies rather than setting retail prices. However, the underlying geopolitical tensions and supply anxieties that enabled TotalEnergies to make these profits do drive up global crude benchmarks, which ultimately leads to higher prices at the pump for consumers.

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