Iran war disruption creates ‘huge’ oil trading opportunities, Vitol says

The ongoing war in Iran is causing significant disruptions to global energy markets, presenting "huge" arbitrage opportunities for oil trading firms, according to Vitol Group, the world's largest independent oil trader. Managing Director Tom Baker highlighted these opportunities during an industry forum in Fujairah. The conflict has led to the saturation of global tanker fleets, forcing vessels to take longer routes and increasing ship-to-ship transfers, thereby driving tanker rates to unprecedented levels. Average spot earnings for very large crude carriers hit $642,000 a day in late September.

Baker noted that the disruption has altered the routing of Vitol's barrels. "It's been fascinating to see that barrels from our Western or European refineries have found their way around to the east under these conditions," he remarked. The Middle East refining capacity, significantly impacted by the conflict, is now recovering rapidly.

Around two million barrels per day of refining capacity have been affected in Russia, with similar outages in the Middle East and reduced capacity in China. Vitol anticipates Middle East refinery runs to average about eight million barrels per day this year, which is 1.6 million barrels per day below 2025 levels.

The turmoil is also changing Vitol's approach to energy infrastructure investments. The trader now favors assets that can generate immediate returns over long-term projects, given the uncertainty caused by "black swan events." Some projects may also be driven by national strategic reasons rather than financial returns. Vitol has shifted from being a mere third-party barrel trader to playing a more active role in the energy infrastructure chain.

This new perspective is particularly evident in Africa, where Vitol views the Middle East and East Africa as an increasingly interconnected energy market. The Gulf's surplus fuel supply and short shipping distances make this region a natural source for countries with shortages. Vitol recently facilitated Uganda's diversification of fuel imports by routing supplies through Tanzania's port of Tanga, a move that could see Uganda exporting about 230,000 barrels of crude per day to Tanga "at some point next year."