Mercuria Energy Group and Gunvor Group are experiencing a significant profit boom, driven by market volatility stemming from the war in Iran and other commodity shocks. Mercuria's first-half profits jumped 88%, placing it on track for one of its best-ever annual results. Gunvor reported first-quarter profits equivalent to its entire previous fiscal year, with industry analysis indicating $1.63 billion earned in Q1.
This surge in profitability for commodity traders, who are typically privately owned by top executives, mirrors their performance during the 2022-2023 period following Russia's invasion of Ukraine. The current disruption, particularly the near-closure of the Strait of Hormuz, has led to substantial premiums on immediately available oil and fuel cargoes. One executive, speaking anonymously, noted profits of $20 to $30 per barrel on some crude oil trades, a significant increase from the typical cents per barrel.
Mercuria's CEO, Marco Dunand, stated the company is aiming for a return on equity at the high end of its historical 25% to 50% range, implying profits between $2.3 billion and $3.2 billion. Vitol Group, another industry leader, informed banks of approximately $2 billion in first-quarter profits. Trafigura Group also experienced two of its best-ever quarters in the six months ending March, benefiting from rising copper and gold prices. Trafigura's CEO, Richard Holtum, acknowledged the high risk and volatility in the current market.
These profits have also translated into a financial windfall for the Swiss government, with record trading profits from commodity houses in Switzerland expected to convert a planned budget deficit into a surplus. Mercuria is projected to contribute $147 million (CHF 132 million) in taxes, nearly double its prior-year payment, while Trafigura is estimated to pay $538 million (CHF 485 million), three times its 2025 payment. The Federal Finance Department now anticipates a budget surplus due to this increased tax revenue.
Beyond the war in Iran, traders also capitalized on other events, including a cold snap in the U.S. earlier in the year and soaring metals prices. Mercuria, for instance, has been expanding, engaging in prepayment deals for metals, acquiring an oil refinery and petrol stations in Argentina, and securing agreements to purchase bulk commodities from Venezuela. The value of its advances and loans on its balance sheet increased by 75% to $5.09 billion during the first half of its financial year.
