Big US commodity houses were wrongfooted by the Iran war, losing over $10 billion in oil as markets moved sharply against expectations.
Traders had positioned for weaker prices, but the conflict triggered a rapid surge. The sudden shift disrupted both financial trades and physical oil flows across key shipping routes.
Traders caught off guard by price surge
Major US commodity trading firms suffered heavy losses after betting that oil prices would decline. Instead, the outbreak of conflict involving Iran pushed crude prices sharply higher. According to a study by Oliver Wyman, early losses across the sector exceeded $10 billion.
Before the conflict, market sentiment leaned heavily toward falling prices. This consensus left many traders exposed when oil reversed direction. Alexander Franke, head of risk and trading at Oliver Wyman, said the scale of the surprise was significant.
The rapid price increase created losses across trading desks. Firms that had built positions expecting declines were forced to absorb immediate financial damage. Some losses were later reduced, but the initial shock remained severe.
Reports indicated that major firms, including Vitol, Trafigura, and Mercuria, were affected during the early phase of the conflict. The losses highlighted how quickly geopolitical risks can overturn market assumptions.
Shipping disruptions amplify losses
The conflict also disrupted physical oil flows across the Gulf region. More than 100 tankers were unable to move as planned, creating logistical challenges for traders and suppliers. Cargoes already sold for future delivery became difficult to fulfill.
Traders were forced to secure replacement shipments at much higher prices. This added another layer of financial pressure. The mismatch between contracted sales and available supply intensified losses across the industry.
Shipping data showed a sharp decline in tanker traffic. Only a few supertankers completed journeys during peak disruption periods. Before the conflict, daily traffic levels were significantly higher.
The situation placed pressure on companies that rely on steady shipping routes. Delays and rerouting increased costs, while uncertainty made planning difficult. The disruption also reduced overall market liquidity.
Margin calls and rising costs hit firms
The surge in oil prices triggered large margin calls for traders holding short futures positions. These positions are often used to hedge physical cargoes. As prices rose, firms had to post significant cash quickly.
Margin calls do not always reflect final losses, but they strain liquidity. Many trading houses faced immediate funding demands as prices climbed. This added to the financial stress already caused by disrupted shipments.
The losses come at a time when industry profits have already cooled. Oliver Wyman reported that trading margins fell to $92 billion last year. This marked a decline from the peak seen in 2022.
Operating costs have also increased. The report noted that seat costs rose by more than 30 percent since 2021. While metals trading showed some growth, oil trading profits declined.
Oil prices surged again as tensions escalated. US crude reached $104.40, while Brent climbed above $102. The rise followed failed diplomatic talks and preparations for a blockade of Iranian ports.
