Oil and Petroleum Products Perfomance Review

For a second consecutive year, Trafigura's Oil and Petroleum Products Trading division recorded record profit and total volumes traded, further cementing the Group's position as one of the world's leading independent traders of energy products.

Oil and Petroleum Products volumes traded (mmt)

2021 2020
Biodiesel 0.6 0.5
Bitumen 0.3 0.1
Condensates 1.7 1.9
Crude oil 156.0 127.5
Fuel oil 38.4 27.0
Gasoline 24.8 21.6
Liquefied petroleum gas (LPG) 8.3 5.9

Liquefied natural gas (LNG)2

14.0 12.7
Middle distillates 46.7 40.0
Naphtha 16.2 12.0

Natural gas (2018)2

23.2 20.5


(1) 2020 LNG and natural gas volumes have been restated to be in accordance with recognised revenue line in the income statement.
(2) Million metric tonnes of oil equivalent

Performance overview

As significant dislocations continued to affect global markets for the entire energy complex during 2021, Trafigura’s Oil and Petroleum Products Trading division saw a continuation of the strong performance recorded in the previous financial year. This performance was driven by growing trading both volumes and turnover, which delivered a substantial increase in market share at a time when the global market has not yet recovered to 2019 total volumes.

Key to this performance, which amounts to a comprehensive rebasing of the company’s position in the oil market, was a relentless focus, even in the toughest market conditions, on customer relationships and reliable service. Coupled with a financial flight to quality that has seen Trafigura continue to expand its access to liquidity, this has enabled us to build and cement quality, long-term relationships with upstream and downstream customers around the world, who have appreciated our support during the volatile conditions arising from COVID-19.

Our global footprint and ready access to market infrastructure puts us in a strong position to manage integrated supply chains on behalf of our clients as well as to help rapidly close arbitrage and inefficiencies in the market. We have continued to diversify the trading book to reflect a changing global market. We expanded our bunkering, gasoline and biofuels books into new markets for the Group during the year and continued to invest in infrastructure, including continuing to build out our crude oil and refined products tankage and pipeline capacity in the Texas market.

We also invested in Sawtooth Caverns, the largest natural gas liquids storage facility in the Western US, located near Delta, Utah. On the upstream side, we acquired a ten percent stake in Vostok Oil LLC, a major new Russian oil and gas company operated by Rosneft which is expected to have a carbon footprint approximately 75 percent lower than that of other major new oil projects internationally.

These investments underline our belief that, even as the energy transition gathers pace, the world’s rapidly growing population and energy needs will continue to require the more traditional forms of energy for many years to come.

As is evident from our Vostok Oil investment, we are focusing on lower-carbon oil and gas resources and will continue to ensure that we can meet global demand for these products throughout the transition, providing energy equitably for all society.

Carbon intensity is another key factor of the energy transition and is set to become a major new specification for commodities, including oil and gas. Through our recently established and expanding carbon trading team, we are also putting efforts into helping our customers and suppliers calculate, verify and reduce carbon emission from cradle to gate, including transportation.

Crude oil

The global crude oil market was in shallow backwardation, meaning spot prices were slightly higher than futures for much of the year, making for challenging trading conditions. Volumes traded in 2021 grew in every region, thanks to global coordination across the Group, and physical margins remained strong by comparison with most recent years.

Core to our crude oil strategy is the Midland shale oil basin in Texas, where we continued to invest in infrastructure such as pipelines, tanks and dock facilities, enabling us to ship US crude oil to world markets. Another highlight of the year was a major supply arrangement to source all the feedstock requirements of the UK Prax Lindsey Oil Refinery, a significant expansion of Trafigura’s relationships with refiners and a sign of new opportunities opening up as some of the oil majors reduce their downstream commitments. We also secured new offtake agreements in Canada, Latin America and West Africa.

Trafigura is one of the few crude oil trading houses positioned to operate an integrated supply chain from wellhead to refinery, based on close cooperation between the crude desk and the in-house shipping team and the use of Trafigura-owned vessels or long-term charters.

The protracted stock drawdown that created a backwardated market in 2021 is now complete; prices have been rising accordingly and we expect this trend to continue into 2022, underpinned by general under-investment in new crude oil production. We expect our services in supply chain management and connecting supply and demand to be in even greater demand. Rather than releasing oil to the market in aggregate as takes place in a backwardated market, we are focused again on serving customers along the forward price curve. We are optimistic about performance for 2022 and expect to maintain growth on the strength of our global network and diversified trading model.


In 2021, the gasoline market continued to experience the impact of COVID-19 on demand, with a significant supply surplus giving way to a protracted stock drawdown and generally rising prices. With new mega-refineries coming online east of Suez, the global flow of gasoline is shifting, with more production coming from the east and the west relying more on this source, in a reversal of the traditional west to east flow. Market conditions put a premium on managing risks associated with tankage capacity, which becomes costly to hold in a backwardated market.

Trafigura’s gasoline team performed well, with volumes traded slightly up on the previous year. In more developed markets, as refineries shut down or convert to biofuel plants, and despite the expected long-term decline in gasoline demand, we expect there to be continued supply side shortages and increased volatility as the momentum from the energy transition continues to build.

Looking forward, we see the transition increasing in importance as a theme for gasoline trading and are actively looking for investment opportunities that this will generate.

Naphtha and condensates

Naphtha was in strong demand throughout our financial year, a situation underpinned by the recovery of the global petrochemicals industry and by the addition of new petrochemicals capacity in Asia. However, naphtha supply failed to keep pace, since refinery runs were constrained by weak retail demand for fuel. Consequently, the supply-demand balance remained tight and naphtha prices hit ten-year highs, with the rising price of LPG adding strength to the naphtha complex. In condensates, it was a challenging year as a result of poor refining margins.

Trafigura’s naphtha and condensates team reported a strong performance in 2021. Volumes were broadly similar to those in 2020 and diversification enabled us to benefit from volatility, while also being positioned to provide extra supplies under flexible contracts in response to market signals. Another highlight of the year was the team’s pioneering work on structuring the world’s first carbon offset naphtha and condensate cargoes, with Woodside and Braskem respectively. We are working with counterparties to calculate, reduce and potentially offset GHG emissions from cradle to gate.

The outlook for naphtha in 2022 is for increased supply, as the return of passenger mobility drives higher refinery runs. Meanwhile, rising energy prices are starting to eat into manufacturing margins and dampen economic growth, and industrial supply chains are suffering increasing disruption from the after effects of the pandemic. This could result in some erosion of naphtha demand. Condensates, however, are expected to continue to track crude oil prices higher. We are well positioned for these changes, by maintaining our tried-and-tested diversified portfolio approach.

Fuel oil

Bunker markets stabilised in 2021 after the readjustments that accompanied the IMO 2020 rule change reducing permissible sulphur content in maritime fuel. Fuel oil prices moved up in tandem with crude oil and by the end of the financial year were double the level 12 months previously. In the second half of the year, as the impact of COVID-19 faded, the market saw a significant pull of Asian demand driven by the use of fuel oil in power plants, which was caused by global shortages of coal and gas power.

Trafigura’s fuel oil trading desk performed well in challenging conditions, adapting arbitrage positions to the new pattern of specifications and requirements in different regions and optimising flows to match new market requirements. Traded volumes increased strongly during the year and despite intense competition, Trafigura maintained an elevated level of competitiveness in a much less volatile market compared to 2020.

The team was also in expansion mode, adding personnel and building out cooperation with the TFG Marine bunkering joint venture. The growth of TFG Marine has given Trafigura’s Fuel Oil desk a much larger trading platform and improved access to customers across the globe, especially in Asia where larger opportunities lie.

Looking forward, the key challenge will be understanding how supply and demand are likely to change in a post-COVID-19 world, with a number of large new refineries coming online and demand dynamics evolving fast as bio-bunker and alternative fuels enter the market. Liquefied natural gas, gasoil and crude oil prices will have increasing influence over fuel and feedstock markets, meaning exceptional inter-product communication at Trafigura will continue to provide a strategic advantage. We intend to grow our fuel and feedstocks business further through close customer relationships and cooperation with TFG Marine and its other trading partners, with a target to build a leading position in alternative fuels and to provide sustainable long-term solutions to customers.


COVID-19 remained the primary influencing factor of the distillate market in 2021, with continued high infection rates and restricted movement delaying the recovery of distillates demand for the first half of the year. However, as the vaccine roll-out gathered pace and global travel restrictions eased during the summer, the long-awaited boost to demand arrived.

This nascent demand recovery came at a time when Chinese government policy had a material impact on the market, through the introduction in May of a tax on imported light-cycle oil and other products and through a waning Chinese commitment to meet international petroleum product demand. These factors affected diesel supply, as did continued OPEC policy discipline and rising crude oil prices, driving up refiners’ costs of production. With the supply side facing impediments to growth and increasing demand, we saw a significant tightening of distillate balances and the return of sustained backwardation for the first time in several years.

The Distillates team performed successfully in a year of heightened volatility, identifying and capitalising on numerous growth and investment opportunities without losing focus on attendant risks. For example, we systematically looked to reduce costs across our global portfolio to ensure that the storage positions that had proved so profitable during the pandemic did not become overly burdensome in backwardated markets.

We closed the year with increased volumes and successful entries into numerous new markets. While backwardation will likely prove challenging to some physical markets in the coming year, we remain confident that the team is well positioned to navigate these headwinds while supporting our customers to secure product in volatile markets.


The biodiesel market experienced significant disruptions throughout 2021, pushing prices higher. Extreme crop shortages set the tone for most vegetable oils markets, generating unprecedented tightness and volatility on oils and biodiesel complexes.

In 2021, the reconfigured Trafigura biofuels business became an integral part of the division’s refined products book. This included successfully penetrating the European market, offering key customers tailored biofuels solutions to reduce their greenhouse gas footprint and contribute towards sustainability requirements.

Trafigura was able to explore unique supply opportunities across the biofuel spectrum and deploy its global network and logistics capabilities to move these products to new markets. The team is now active in various biofuels supply chain segments, ranging from road transportation to maritime bio-bunkering. We are also leveraging our existing global Trafigura and Puma Energy UK infrastructure as a natural outlet for our biofuels origination in Asia.

In 2022, we expect the biofuels market to remain volatile and become increasingly fragmented as sustainability requirements become more stringent globally. Looking ahead, we expect the desk’s continued growth for 2022 with further integration of bioproducts into the current refined products mix.

Liquefied petroleum gas

The liquefied petroleum gas (LPG) market in 2021 was defined by increased LPG export capacity in the US and propane de-hydrogenation capacity growth in China. The export infrastructure bottleneck that had limited flows from the US for most of the past ten years was alleviated and as a consequence, US exports hit a record high, while US inventories were drawn down to record lows. These factors, combined with the natural gas rally that resulted from increased LPG demand as a replacement fuel, drove LPG prices higher, especially in the US.

Trafigura continued growing its LPG business, with expanded flows from the Far East, Russia, the US and West Africa. Our analytical capabilities enabled us to predict market movements. We also invested in new projects promoting the increased use of LPG, including a number of dual-fuel LPG -ammonia powered ships.

Separately, we were instrumental in establishing LPG4SDG7, a coalition of companies, banks and development institutions to help bring cleaner cooking based on LPG to millions of households.

Looking ahead, we will continue growing our business to better serve our clients around the globe and we will continue to grow and diversify the business.

Liquefied natural gas and natural gas

The global liquefied natural gas (LNG) market was buffeted by extreme weather in 2021. The Far East experienced a severe winter shortage of LNG in January, Texas suffered from its big freeze in February and Europe suffered gas shortages in the latter part of the year. LNG supply would have been tight in any case as plants were subject to maintenance that had been delayed by COVID-19 and a number of facilities experienced greater than usual reliability issues. In Texas, gas prices hit USD400 per MMBTU in February, while in October, Europe and the Far East out-competed each other to attract US LNG, pushing the price up above USD35 per MMBTU as low inventories in Asia and Europe caused market concern.

Trafigura’s integrated LNG and natural gas team performed well, weathering the multitude of storms the gas market experienced during the year. Our business grew in all regions, especially strongly in Asia. We complemented our existing natural gas trading operations in Europe, Mexico and the US by acquiring licences to trade gas in other liberalising domestic markets.

In these extremely volatile times, simplicity of supply chains remains our guiding principle. This ensures robustness to withstand extreme weather shocks and operational excellence to provide safe and secure LNG supplies to our customers, and allows us to minimise carbon emissions from our modern LNG fleet.

Our goal over the next 12 months is to work with our customers to create solutions that protect them as much as possible against such price fluctuations in the future. Recent events have illustrated that natural gas is vitally needed to fuel baseload power supply alongside renewable power and, in some applications, as a transition fuel on the pathway to net zero.

Ben Luckock, Jose Maria Larocca, Hadi Hallouche

Co-Heads of Oil Trading