Big Oil's Trading Desks Adopt Prudent Risk Management Amid Volatility

Big Oil's crude traders are dialing back risk due to geopolitics-led volatility, according to Shell Plc CEO Wael Sawan. The industry executives have pointed out that such market turbulence isn't easy for traders to deal with, leading them to adopt a more prudent risk-management approach. The oil majors are tight-lipped about their trading operations, but handle more barrels than many top merchants.

Big Oil's crude traders are dialing back risk due to geopolitics-led volatility, according to Shell Plc CEO Wael Sawan. The industry executives have pointed out that such market turbulence isn't easy for traders to deal with, leading them to adopt a more prudent risk-management approach. The oil majors are tight-lipped about their trading operations, but handle more barrels than many top merchants.

Shell's second-quarter earnings and those of its peers reflect the impact of geopolitical events on crude markets. The company's sales and revenue for the second quarter were USD 65.4 billion and USD 66.4 billion, respectively, down from USD 74.5 billion and USD 75.1 billion a year ago. Net income was USD 3.6 billion, a slight increase from USD 3.5 billion in the prior year [2].

Geopolitical factors such as US President Donald Trump's tariffs and military maneuvers have made crude markets highly unpredictable. Norway's Equinor ASA, for instance, lamented the "different type of volatility" that makes it "very hard to trade around," leading to a dip in its second-quarter profit compared to a year earlier [1].

The oil majors are learning to sit out price swings rather than chasing every movement. This cautious approach is crucial for investors to understand, as it reflects the industry's response to the uncertain geopolitical landscape.

In today's market, Big Oil isn't chasing every price swing. Rather, it's learning when to sit them out. That's an important nuance for investors.

References:
[1] https://www.bloomberg.com/news/newsletters/2025-07-31/big-oil-s-trading-desks-have-a-warning-message-for-investors-about-geopolitics
[2] https://www.marketscreener.com/news/shell-plc-reports-earnings-results-for-the-second-quarter-and-six-months-ended-june-30-2025-ce7c5fddd98cf224