The world’s top energy traders, accustomed to profiting from volatility, were caught holding short positions when the Iran war erupted, leading to billions in losses as trapped ships and soaring prices upended their bets.
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Energy Traders Lose Billions in Iran War as 3 Firms Face Crisis
Top energy traders including Vitol Group, Trafigura Group, and Mercuria Energy Group took a multi-billion dollar hit from the Iran war's outbreak on Feb. 28, as a blockade of the Strait of Hormuz stranded their physical cargoes and crushed derivative short positions.
"In this environment, getting cargo to its destination is extremely difficult; it's a complex and delicate task," said Jean-François Lambert, head of consulting firm Lambert Commodities. He noted, however, that the volatility will also create "superb opportunities," adding that "from a profitability point of view, 2026 could be a very good year."
The traders’ troubles stem from holding short positions in some energy markets they had viewed as oversupplied, according to a Financial Times report. When Iran’s blockade effectively shut the critical Persian Gulf chokepoint, Brent crude surged toward $115 a barrel and physical cargoes were stranded. Vitol, the largest independent oil trader, had more than 10 cargoes trapped, and on March 12 two of its chartered vessels were set on fire, killing one crew member. To manage the intense margin calls, Vitol and Trafigura have each secured an additional $3 billion in credit lines.
The crisis, which stands in stark contrast to the record profits traders earned after Russia’s 2022 invasion of Ukraine, has paralyzed the world’s most important oil transit lane. The Strait of Hormuz normally sees 20 million barrels of oil pass daily, but that volume has been slashed by as much as 16 million barrels, threatening to push prices into uncharted territory.
A Chokepoint on a Global Artery
The conflict has effectively weaponized the global oil supply chain. The Strait of Hormuz accounts for about a fifth of the world's oil and liquefied natural gas supply. A prolonged closure could push crude to $150 a barrel or higher, according to Vikas Dwivedi, a global energy strategist at Macquarie Group cited by OilPrice.com. Nobel Prize-winning economist Paul Krugman told CBS News that a $200 per barrel scenario is "extremely plausible."
The risk extends to a second chokepoint, the Bab el-Mandeb Strait, controlled by Iran-backed Houthi militants in Yemen. A simultaneous closure of both straits would halt up to 45 percent of the world’s oil flows, according to Macquarie's analysis, an event that would severely pressure the global economy.
Forecasts Recalibrated After $19 Shock
The war has forced a historic reassessment of market forecasts. A March Reuters survey of 38 economists and analysts saw the average 2026 forecast for Brent crude surge by nearly 30 percent to $82.85 per barrel, up from $63.85 in February. The $19 increase represents the steepest single-month revision in the poll's history, which dates back to 2005.
Analysts now project that supply from OPEC and its allies could plummet by as much as 11 million barrels per day in the second quarter. "Unless the Strait opens soon, the risk of prices rallying to demand destruction territory cannot be ruled out," Ole Hansen, head of commodity strategy at Saxo Bank, told Reuters. Even if traffic through Hormuz normalizes, analysts believe a risk premium will persist due to depleted global inventories.
This article is for informational purposes only and does not constitute investment advice.
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