Oil and Petroleum Products Performance Review

A record performance for Trafigura's Oil and Petroleum Products Trading division for a third consecutive year.

Oil and Petroleum Products volumes traded (mmt)

2022 2021


0.7 0.6


0.2 0.3


2.0 1.7

Crude oil

149.0 156.0

Fuel oil

36.7 38.4


24.3 24.8

Liquefied petroleum gas (LPG)

7.8 8.3

Liquefied natural gas (LNG)1 

13.0 14.0

Middle distillates

41.4 46.7


13.6 16.2

Natural gas1

23.7 23.2

1 Million metric tonnes of oil equivalent.

Performance overview

The impact of the COVID-19 pandemic and the subsequent rebound in demand in most key economies placed further pressure on previously efficient global supply chains in the first half of our financial year. But these disruptions were eclipsed by the impact of Russia's invasion of Ukraine in February, which required a fundamental reworking of energy supply routes – in addition to the significant humanitarian impact of the war in Ukraine.

With an increased focus on security of supply, against a backdrop of heightened market volatility, our Oil and Petroleum Products division delivered a record result in 2022.

Key to this performance was a determination to help our customers adjust to changing trade flows, as well as close coordination between each of our trading teams. This allowed the division to identify supply bottlenecks, ensure we could manage significant risk and get oil and petroleum products to our customers as efficiently as possible.

A lack of liquidity in futures markets, which pushed up the cost of hedging, meant higher premiums were demanded by physical suppliers to move products and a period of market imbalance persisted as governments introduced new sanctions and rules.

Total volumes traded were slightly lower year-on-year following the termination of our long-term Russian crude oil and products contracts in advance of EU and Swiss sanctions being introduced.

Over the year, a combination of rising prices and a strengthening US dollar placed a greater emphasis on energy affordability. Utilising our size and scale, we were able to work with customers around the world to offer more flexible payment terms to ensure continued supply.

At the same time, we added a number of new commodities to our product offering including aviation gas, biofuels, base oil, petrochemicals and ammonia, a precursor to low carbon ammonia becoming a globally traded fuel source, in particular for the shipping industry and to transport hydrogen. These more specialised commodities are high value products that allow us to offer a wider service to customers and exploit synergies with other trading activities across the business.

Looking ahead, we expect the crude oil market to remain unsettled in 2023, as low global inventories and geopolitical instability run up against concerns of slowing global growth as central banks raise interest rates to fight inflationary pressures. Managing the repercussions from these changes will be the main priority for the division in 2023.

Crude oil

The global crude oil market was volatile in 2022, as demand remained strong but supply was pressured by the war in Ukraine and active market management by OPEC and its allies. This included a period of near record prices and backwardation1.

The sanctions levied on Russia following the full invasion of Ukraine changed long-established trade flows and forced consumers in Europe and a number of other countries to look further afield for supplies.

Our global footprint and experienced teams enabled us to adapt to these fast-changing market dynamics. Clear communication and decisive action were key in understanding disrupted markets and providing security of supply for our customers.

Volumes were slightly lower, in part due to the decision to terminate long-term contracts to offtake Russian origin crude oil.

During the year, we struck supply deals with a number of refiners and secured new offtake arrangements with producers in Canada and West Africa. The Crude oil team also continued to build on Trafigura’s long-established position in US shale oil, expanding its customer base and introducing Midland West Texas Intermediate to several end users that have not used the grade before. The decision to add US Midland West Texas Intermediate to the benchmark assessment for Brent should boost demand and customer acceptance.

1 A market structure where prompt contracts trade above later-dated ones in a sign of tightening supplies.


Demand for gasoline remained below its pre-COVID-19 levels in 2022, with the shift to homeworking, particularly in the US, continuing to affect commuter traffic levels.

Following the invasion of Ukraine, there were concerns that sanctions placed on Russian exports of vacuum gas oil would affect US refinery runs and a reduction in Russian naphtha supply would shrink global gasoline supply. Consequently, we witnessed a large increase in refinery margins.

Against this backdrop, our Gasoline team performed strongly and volumes remained consistent with the same period in 2021. The highlight of the year was the expansion of our European business, which will continue to be an important driver for the Gasoline team over the next 12 months.

In the year ahead, several themes will shape the gasoline market, including the trend towards working from home and a policy change in China to increase refinery runs. At the same time, supply chain disruptions caused by the Russia-Ukraine conflict will continue to create regional imbalances and periodic distortions.

Naphtha and condensates

Faltering demand and ample supply were the main drivers of the naphtha market in 2022, as the conditions that prevailed in the previous financial year were almost reversed.

In Asia, the petrochemicals industry struggled as strict COVID-19 policies took their toll on economic activity in China, while European producers were hit with rising costs and slowing growth, impacting their margins. On the supply side, refinery runs picked up. The result was an oversupplied market and naphtha was forced to reprice at a level where a lot more of it could be used in gasoline blending. In condensates, it was a year where heavier grades did significantly better as a result of their higher middle distillates yield.

Our Naphtha and Condensates team seized on these changing market dynamics to deliver a strong performance over the year, using its global reach and diversified portfolio to help balance supply and demand. However, volumes were down on 2021 as a result of reduced activity in Russia following the invasion of Ukraine.

Given our global footprint and access to storage and shipping, the Naphtha and Condensates team is in a strong position to help its customers adapt to changing trade flows and market dynamics and to keep sourcing products at competitive prices. We expect the disparity in condensate premia to persist, with heavier grades supported by strong gasoil refining margins, but lighter grades likely to lag as naphtha displaces condensate in splitters.

We expect the market to remain volatile in 2023 as the European Union embargo on Russian oil exports comes into force and the region's petrochemical industry seeks new sources of supply.

Fuel oil

High prices, low stocks and volatility were the key features of bunker and fuel oil markets in 2022. On the supply side, traditional trade flows were disrupted by the war in Ukraine and the subsequent sanctioning of Russian oil. At the same time, fuel consumption continued its post-pandemic recovery as reflected by increased bunker demand. There was also greater use of fuel oil in power plants as a result of soaring gas prices. Together, this led to heavily backwardated markets and record-high premia.

Our Fuel oil trading team performed exceptionally well in this challenging environment, stepping up as a stable and reliable supplier as many rivals struggled to access the finance or hedging tools needed to handle unprecedented market volatility. Although our traded volumes fell in Europe, we increased our presence in Asia and expanded our footprint in the Americas.

In addition to our strong performance in physical trading, we continued to expand our operations with TFG Marine, the bunkering joint venture between Trafigura Marine Logistics, Frontline and Golden Ocean, building our volumes and customer base year on year. We also established a new base oil trading book, a product used by refineries to make lubricating oil and greases, quickly finding synergies with our current customer base.

Looking forward, the key challenge for the Fuel oil team will be understanding and handling the impact on supply and demand of heightened geopolitical tensions, tighter monetary policy and a changing competitive landscape.


The distillates market in 2022, was a story of strongly rising demand as the post-pandemic economic recovery continued. Gas-to-oil switching provided a further demand kicker. The global refining system struggled to increase production fast enough, while supply chains had to be consistently rearranged amid complex web of sanctions on Russian oil and diesel flows. In addition to those factors, extreme weather events and significantly higher gas prices in Europe resulted in a large volume of diesel being used.

Against this backdrop, it was a highly successful year for the Distillates team. Lower volumes meant we were able to focus on core markets and help key clients make sense of an increasing complex supply picture.

The team was able to extend its reach into industries that had previously relied on gas but were looking for cheaper options to power their operations. This highlighted the ability of Trafigura to draw on a deep pool of expertise to help create new supply chains.

We made sure storage positions did not become over troublesome in a heavily backwardated market and we were alert to inflationary pressures in shipping and liquidity requirements to enable us to hedge price exposure.

The outlook for 2023 will depend on the balance between slowing global growth and the extent of gas-to-oil switching. The availability of cargoes as Europe’s embargo on Russian diesel comes into force will be another factor in determining the direction of the distillates market.


Commodity prices and high energy costs were the main influences on the bitumen market in 2022. The year started slowly, in terms of paving activity, especially in developing countries, which struggled with the rising cost of bitumen. COVID-19 lockdowns in China weighed on demand in the Far East for the third year in a row. As we progressed through the year and the roadwork season started in the US and northwestern Europe, consumption started to pick up, creating business opportunities mainly in the Atlantic basin.

On the supply side, production was ample because of a strong pickup in transport fuel demand, which triggered higher refinery runs globally.

Our Bitumen team was able to react quickly to these regional trends and deliver a stronger performance on a year-on-year basis, using storage capacity and our large fleet of bitumen carriers to win tenders and supply customers. Volumes were broadly stable across the financial year.

The outlook for the year ahead is highly uncertain and dependent on the impact of tighter financial conditions as central banks raise interest rates and uncertainty over the rate of crude and fuel oil production next year.


Biofuel markets were rocked by extreme turbulence in 2022, with prices swinging from levels high enough to spark demand destruction to lows that made it a cheaper blending component than fossil fuels in some regions of the world.

Adding to the volatility, some countries in Europe also slashed their blending mandates to reduce prices at the pump for consumers and because of concerns about supplies of grain, vegetable oils and gas following events in Ukraine. As the war continues, other countries could do the same, placing a question mark over biofuel demand in the year ahead.

Notwithstanding these developments, we remain committed to continuing to find ways to grow and expand our customer base. The Biofuels team performed exceptionally well during the year, weathering a multitude of storms, while at the same time expanding our business in Europe, Latin America and Asia.

As we head into 2023, a strong focus will remain on any further changes to government policies and blending mandates. We will continue to look for synergies between our biofuels and the rest of our refined products business.

Liquefied petroleum gas

Unlike other parts of the oil industry, liquefied petroleum gas (LPG) experienced little impact from the war in Ukraine. The main driver of the market in 2022 was sluggish economic growth in Asia, and China in particular, as a result of strict COVID-19 policies and weakness in the property and petrochemicals sectors. This dented demand for LPG from the Chinese petrochemicals industry, which also had to contend with weak export markets in Europe.

On the supply side, we continued to see an increase in LPG exports, with strong flows out of the US and the Arabian Gulf. We expect production growth to continue in 2023, although infrastructure bottlenecks could crimp supplies from the US.

Over the financial year, our LPG business continued to expand its geographical reach and the scope of its operations. Our portfolio now includes ammonia, a fuel we expect to play a meaningful role in the energy transition.

While we expect more challenging conditions in 2023, large flows of LPG will still need to be moved between regions to balance the market. We expect to play a meaningful role in this process and also in helping Europe seek alternative sources of supply as trading flows of other products are further affected as a consequence of the war in Ukraine.

Liquefied natural gas and natural gas

In 2022, natural gas made headline news as prices rocketed to unprecedented levels deepening the energy crisis in Europe.

Over the past two years, Russia has been steadily reducing its sales to the bloc so that today they are now at a fraction of pre-pandemic levels.

To compensate, Europe has been forced to restart its fleet of coal-fired power stations, extend the life of ageing nuclear power plants and bid aggressively for every available cargo of liquified natural gas (LNG) on the market.

In this environment, our Integrated Gas and LNG team performed well. However, our immediate priority following Russia’s invasion of Ukraine in February 2022 was ensuring the safety of colleagues in Kyiv, who had built a successful domestic trading business.

Our LNG and Natural gas team also got to work helping customers adapt to the new market realities caused by the war and the reordering of global energy flows.

Using our network of leased pipelines, we were able to carry gas from the Permian Basin, which straddles West Texas and southeastern New Mexico, to liquefaction plants on the coast, then across the Atlantic to deliver it to our regasification slots in Europe.

From here, our LNG and Natural gas team was able to trade and deliver the molecules to where they were needed. In many instances, the gas went into leased storage ahead of the winter.

This cohesive approach allows us to increase efficiencies, reduce costs and meet demand wherever it appears in the supply chain.

Of course, the year was not without its challenges. The sharp increase in margining requirements by futures exchanges and clearing brokers substantially increased the cost of moving physical cargoes, which reduced liquidity in both physical and financial markets and exacerbated volatility. The explosion at the Freeport LNG terminal, where we have an offtake agreement, removed LNG and significant flexibility from our portfolio at a time when the market needed them most.

However the size and scale of our operations meant that we were able to substantially mitigate any issues for our end buyers relating to the lost Freeport volumes and we continued to ensure safe and reliable LNG supply.

Looking forward, we expect gas and LNG markets to remain volatile. While Europe should avoid a blackout this winter by drawing on inventories and cutting demand, it will need to import huge volumes of LNG in 2023 given the massive reduction in flows from Russia. For LNG to continue to flow to Europe as opposed to other demand centres, the price will need to remain elevated and we expect security of supply to remain paramount for customers in Europe through next winter and beyond.

Ben Luckock, Jose Maria Larocca, Hadi Hallouche

Co-Heads of Oil Trading 

Oil and Petroleum Products
Oil and Petroleum Products

Oil and Petroleum Products