TotalEnergies Secures Major Profits from Middle East Oil Trades During Gulf Crisis
TotalEnergies' Strategic Moves Amid Gulf Tensions
By America Hernandez
Background: Rising Tensions in the Gulf
PARIS, May 28 (Reuters) - French oil major TotalEnergies made the decision to buy large amounts of Middle East crude in March after its traders noticed the U.S. Navy amassing ships near the Gulf in February, its CEO told French newspaper Le Figaro in an interview published on Thursday.
Trader Insights and Market Response
"Our oil traders — and it's their job — noticed that the U.S. Navy was massing ships around the Persian Gulf in February. They decided to take a position counter to the market, which was trending down at the time, and to buy, saying something was about to happen," CEO Patrick Pouyanne said.
The Onset of Conflict
The Iran war broke out on February 28 when the United States and Israel launched large airstrikes on Iran.
TotalEnergies' Market Actions and Financial Outcomes
Securing Crude Amid Supply Disruption
Total was the sole buyer in March of Middle East crude as the Iran conflict drastically cut supply, snapping up around 70 Oman and Murban cargoes, or about 35 million barrels, trade data showed, which helped send the benchmark Dubai price to a record high of nearly $170 per barrel.
Profits and Financial Instruments
The Financial Times reported in March, citing sources, that Total made more than $1 billion on the trade by using financial instruments such as futures, options and swaps to bet prices would rise.
Regulatory Scrutiny
The Wall Street Journal reported on May 19 that the U.S. Commodity Futures Trading Commission was scrutinizing a surge in oil futures trading that occurred moments before U.S. President Donald Trump postponed strikes on Tehran in March, and was interested in at least three firms, including Total Oil Trading SA.
A spokesperson for Total said on May 20 that the company was not aware of an investigation and that the company had strict compliance rules. Total did not respond to a request for comment on Thursday.
Impact on TotalEnergies' Financial Performance
Quarterly Results Driven by Strategic Trading
TotalEnergies reported last month a 29% jump in first-quarter net income, driven by March trading around oil price spikes due to the closure of the Strait of Hormuz amid the Iran war.
Risks and Strategic Advantages
"It could have turned out badly, because had the Strait of Hormuz been shut immediately we would have been physically prevented from filling up our cargoes in the region," Pouyanne told Le Figaro, referring to Total's big oil purchases in March.
Pouyanne said that because Total is a vertically integrated company, it was able to leverage its assets to take delivery of the oil at the Fujairah terminal in the United Arab Emirates, located just outside the Gulf.
(Reporting by America Hernandez in Paris; Editing by Makini Brice and Susan Fenton)
