Global Volatility Boosts Trading, India Resumes Iraqi Crude Imports

Shell expects significantly higher oil and LNG trading results for the second quarter, according to an update from the supermajor on Tuesday. The company attributed the expected windfall to extreme volatility in energy markets driven by the war in Iran. Shell and other European majors, including BP and TotalEnergies, previously reported higher-than-expected Q1 profits on the back of very strong trading results, with analysts estimating such profits can reach billions of dollars per quarter during times of high volatility.

Meanwhile, global crude flows are showing tentative signs of resuming through a key chokepoint. Indian state refiners have resumed buying Iraqi crude that must transit the Strait of Hormuz, according to OilPrice.com. Mangalore Refinery and Petrochemicals Limited (MRPL) has chartered the Aframax tanker Jasmin Joy to load crude from Iraq’s Basrah oil terminal on July 19-20. This is the first such charter by an Indian state refiner since tankers began moving inbound into the Strait a few weeks ago.

The move indicates the world's third-largest crude importer is seeking to restore Middle East supply, but the shipping market remains strained. India has struggled to charter vessels due to high freight costs and uncertain transit terms. At the end of June, Indian Oil Corporation received no bids in a tender to charter three tankers for Persian Gulf shipments. Many shipowners remain cautious about sending tankers inbound through the Strait to pick up cargoes.

Adding to available supply, TotalEnergies is reportedly offering millions of barrels of Iraq’s Basrah Medium and Basrah Heavy crudes for prompt delivery to Asia this month and next, according to OilPrice.com. The supermajor is offering the crude to buyers in China, South Korea, and Taiwan.

On the consumer front, U.S. drivers faced the third most expensive Independence Day ever for gasoline, according to Rigzone. Patrick De Haan, Head of Petroleum Analysis at GasBuddy, said the national average was approximately $3.74 per gallon on July 4, though prices fell in nearly every state over the preceding week.

All supermajors are set to report bumper profits for Q2 later this month, driven by price surges and strong trading. However, OilPrice.com notes Big Oil will be careful not to boast too much amid U.S. Administration pressure, as officials investigate the market for price-gouging and demand lower gasoline prices.