Caught in the crossfire early in the Iran war: ships of top energy traders stranded, losses in derivatives

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In the early stages of the Iran war, the world’s largest energy traders not only failed to profit from the violent market fluctuations, but found themselves in trouble — with vessels stranded, cargoes damaged, and derivatives positions going the wrong way, these trading giants that usually thrive on volatility were caught off guard.

According to the Financial Times on Thursday, when the conflict erupted on February 28, top traders such as Vitol, Trafigura, and Mercuria held short positions in certain energy markets, which had long been seen as oversupplied.

After Iran blocked the Strait of Hormuz, several ships were stranded in the Persian Gulf and cargoes were unable to move, leaving the traders in a state of extreme uncertainty over their positions. Both Mercuria and Trafigura recorded losses in the early days of the war, although some of the losses have since been recovered.

Normally, the price surges and extreme volatility caused by war are ideal environments for trading houses to reap windfall profits. However, the sheer scale and complexity of this crisis has left market participants under pressure across the board. To cope with margin pressures, Vitol and Trafigura each secured an additional $3 billion in credit, while Gunvor received $1.5 billion.

Stranded ships: Physical trading hit first

As the world’s largest independent energy trader, Vitol was hit particularly hard due to its vast oil flows in the Middle East. At the outbreak of the war, Vitol had more than 10 cargoes stranded in the Persian Gulf. On March 12, two ships carrying Vitol’s naphtha cargoes were set on fire by Iran, resulting in the death of one crew member.

Trafigura had 10 ships in the Gulf, all chartered to other companies and not carrying its own cargo; Glencore had one ship stranded. For the ships still stuck in the Gulf, insurance and operating costs soared as the conflict dragged on — since the outbreak of the war, Persian Gulf vessel insurance costs (on a weekly basis) have risen by more than six-fold.

Vitol also had to evacuate staff from Bahrain and contend with operational disruptions at the Fujairah oil export port in the UAE. Vitol owns a refinery and storage facilities in Fujairah; the port’s infrastructure has been repeatedly targeted by Iranian attacks, but Vitol’s own facilities have so far escaped direct damage.

Wrong-way derivatives positions, rumors of losses denied

Beyond the hit to physical trading, Vitol also took losses on some derivatives trades. According to sources, ahead of the war several trading houses held short positions in energy markets long considered oversupplied, and the war-driven price surge hit these positions.

Rumors circulated in the market that top traders lost several billion dollars, but people close to the companies say this is not true and likely exaggerated the extent of actual losses.

In addition, several junior derivatives traders recently left Vitol, but according to sources it is unclear if this was directly related to wrong-way market bets — departures after the spring bonus season are common anyway.

Credit lines expanded, awaiting 2026 opportunities

Jean-François Lambert, head of commodities consultancy Lambert Commodities, said that in the current environment, getting goods to their destination is "extremely difficult, a complex and delicate task." But he also noted that this round of volatility presents "tremendous opportunities," adding that "2026 could very well be an excellent year from a profit perspective."

This crisis differs fundamentally from the energy shocks after the Russia-Ukraine war in 2022-2023. Back then, Vitol, Trafigura, Mercuria, and Gunvor all made hefty profits. This time, whether cargoes can physically be delivered as scheduled has itself become a major challenge — for goods that traders have already bought and hedged, delivery remains an open question.

To cope with wild commodity price swings and margin pressures from the Hormuz blockade, major traders have begun bolstering their credit reserves. Vitol and Trafigura each added $3 billion in credit lines, with Gunvor adding $1.5 billion, to ensure sufficient liquidity cushions under extreme market conditions.

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