OPINION | The new divide between oil majors: trading versus drilling

Opportunity and risk

A sprawling web of refineries, pipelines, storage terminals and tankers, combined with a large derivatives trading desk, gives the majors exceptional flexibility to exploit small price dislocations across regions and products. When those dislocations become seismic – as they did over the past two months – the opportunities, and the dangers, multiply.

Since the Iran war broke out on February 28 and the Strait of Hormuz was effectively closed, more than 13 million bpd of oil production - around 13 per cent of global supply - has been trapped inside the Persian Gulf, sending shockwaves through crude and refined product markets.

The impact has been massive. Brent crude has risen more than 60 per cent to over $115 a barrel since the war began, accompanied by tremendous volatility across oil, fuel and liquefied natural gas markets.

Disruptions of that scale create profitable arbitrage opportunities. One example is rerouting diesel and jet fuel along highly unusual paths, such as shipping cargoes from Europe to Australia, where prices have surged since the start of the conflict.