The quiet rise of trading desks

Oil and gas giants made significant use of their trading desks in the first quarter, shedding light on a commercially sensitive and often overlooked unit that tends to outperform during periods of market volatility.

Europe’s oil giants Total Energies, Shell And blood pressure They all cited strong trading results as they reported stronger-than-expected profits for the first three months of the year.

The gains followed a period of extreme volatility in oil prices, particularly in March, as energy market participants closely monitored serious disruptions in the strategically vital Strait of Hormuz during the Iran war.

Oil trading desks are specialized departments that buy, sell and move physical oil and gas while managing price risks. These units aim to generate income beyond upstream production, especially in volatile markets. But oil majors generally do not disclose the profits they make from their trading divisions.

TotalEnergies CEO Patrick Pouyanné in question Crude oil and petroleum products trading activities delivered a “very strong performance in March,” generating quarterly net revenue of $5.4 billion, up 29% from the previous year.

Shell Chief Financial Officer Sinead Gorman marked While there were “significantly higher trading and optimization contributions” during the first quarter, BP highlighted There are “extraordinary” oil trade contributions to the results.

Shell increased its adjusted earnings in the first quarter to $6.92 billion from $5.58 billion in the previous year, while BP announced a net profit of $3.2 billion, more than doubling its profit compared to the same period in 2025.

TotalEnergies, Shell and BP stand out among integrated oil companies that have been particularly successful in establishing large trading units for oil, gas and liquefied natural gas (LNG), said Maurizio Carulli, an equity research analyst at Quilter Cheviot Investment Management.

“It is important to emphasize that oil majors engage in trade supported by hydrocarbons that they produce or physically hold, and that they can physically transport such hydrocarbons around the world through ships and terminals that they own or contract with,” Carulli told CNBC via email.

“In other words, this is ‘appropriate, long-term activity’ and not financial speculation,” he added.

U.S. oil companies may also consider creating large trading units, Carulli said, “especially given that oil market influence has increasingly shifted away from OPEC and toward the United States in recent years.”

The trading units of TotalEnergies, Shell and BP are estimated to have earned between $3.3 billion and $4.75 billion in extra earnings in the first quarter compared with the final three months of 2025, according to The Financial Times. reported On Monday, estimates from five analysts were cited.

Along with the jump in first-quarter profit, the trading results underscore a trans-Atlantic divide and reveal a rare competitive advantage for Europe’s top three oil giants, which have long struggled to narrow the valuation gap with their U.S. peers.

Allen Good, director of equity research at Morningstar, said it is well understood that having large trading organizations helps European integrated oil companies distance themselves from their U.S. rivals. ExxonMobil And Strip.

“During periods of high volatility, such as when Russia invades Ukraine in 2022 or in the midst of the U.S.-Iran war this year, European integrated oil firms benefit more than U.S. firms because they are able to take advantage of higher commodity prices as well as trade opportunities,” Good told CNBC via email.

“Given that it has developed in times of volatility, the contribution of trade is inconsistent and therefore not necessarily fully credited by the market,” he continued. “But most companies estimate that trading adds several hundred basis points to capital returns over the cycle.”

BP for its part well known Because we have one of the most competitive trading businesses in the world, with over 2,000 people serving 12,000 customers in over 140 countries.

AJ Bell head of markets Dan Coatsworth said Big Oil’s trading desks are in the spotlight because they are significant contributors to quarterly earnings.

“Large price swings create more opportunities to make money, and we’ve seen frequent up and down movements in oil and gas prices since March,” Coatsworth told CNBC via email. he said.

“In a calmer market, these companies could still make money from trading, but would be secondary to income from core activities,” he added.

But while oil trading desks played a huge role in the first quarter, some analysts warned that a period of such dramatic price swings was not necessarily representative of a changing business model.

Alastair Syme, Citi’s head of global energy research, warned that it would be “somewhat unfair” to focus solely on crude oil price volatility in March and conclude that the trend was representative of their business.

“After all, these businesses are there to support the integrated business, right? So their priority is to supply customers, and the refining and marketing businesses have to work to supply customers,” Syme told CNBC via video call.

“If they were making a bunch of money from trading and there was a shortage at the pump, that would be a huge political issue, right? So I definitely feel like they’re going to have a little bit of a hard time capturing margin trying to meet customer demand in Q2,” he added.

Away from Big Oil’s headlines, energy giants took on significant short-term debt and reduced cash reserves in the first quarter, said Clark Williams-Derry, an analyst at energy think tank IEEFA.

For oil’s big five, this has resulted in cash flow from operations falling to their lowest levels since the coronavirus pandemic, Williams-Derry said.

“All of this points to trading and hedging being a double-edged sword. Trading can be a source of long-term profit, but it can also create volatility and difficulty in cash management,” Williams-Derry told CNBC via email.

“And as oil companies got deeper into business, they also took on more debt,” he added.