Glencore sees energy trading profits nosedive in Trump's tariff era

Global commodities trader Glencore observed "challenging energy market conditions" in the first half of 2025, as weaker macro sentiment and tariff uncertainty dampened potential arbitrage opportunities.

In the first six months of the year, the company reported that its physical energy and steelmaking coal traders earned $40 million before interest and tax, in a dramatic drop from $326 million the previous year. In contrast, its metals and minerals traders saw earnings grow to $1.57 billion.

Speaking on the company's earnings call, CEO Gary Nagle noted that a raft of US tariffs and geopolitical volatility would ordinarily come with trading opportunities. However, policy uncertainty and weaker economic indicators made it hard to capitalize on market dislocations, he said.

"Tariffs would create opportunities for us, provided that sort of tariffs are not changing every two days," he said, signposting the company's copper and zinc division as one area that was able to capitalize on policy changes.

After a series of new US trade deals around an Aug. 7 deadline, the CEO expressed cautious optimism that US trade policy had started to stabilize, however, expecting "some changes here and there," but a more consistent approach from the US government. "We now have a bit more certainty around tariffs. Well, they're certain for today," he said.

Sluggish demand was reflected in the company's oil trading turnover, which showed a lack of price elasticity as crude prices weakened. Oil products marketing volumes stayed almost flat year over year at 343 million barrels of oil equivalent, while crude sales climbed 12% to 401 million barrels.

The world's four biggest traders – Vitol, Trafigura, Mercuria and Gunvor, have been struggling to replicate record earnings produced by the volatility of the COVID-19 crisis, and later the Russia-Ukraine war. From 2022-2023, the four companies are estimated to have taken home some $50 billion in profit.

However, CFO Steven Kalmin hinted at a more siloed global market that could prove challenging for the physical trading business. "We saw very well-supplied markets, geopolitical uncertainty. That's across coal, gas, crude and the like. Very little actionable arbitrage or volatility," he said.

Physical assets

The company saw mixed results from its physical energy assets, reporting stalling upstream performance but solid refining results.

In March 2025, the company acquired a 20% stake in Singapore's Bukom refinery through its investment in energy company Chandra Asri, which bought the refinery and petrochemicals business from Shell.

Kalmin said the 237,000 b/d refining business was "performing very well" since the acquisition, which was valued at $147 million.

"It provides a big boost to our Asian oil business in the supply of crude and the offtake of product of a good-sized important located business," he said.

The acquisition followed similar moves from rivals Trafigura and Vitol to spend hefty earnings on acquiring refining stakes, emerging as new buyers as international energy companies shed assets.

However, as energy majors have shied away from long-term profitability risks, margins strengthened in H1, taking Singapore's Urals margins to recent highs of $16.5/b, according to Energy analysts.

On the upstream side, Glencore said its West African oil production had fallen 19% year over year in the first half of 2025, with natural declines at its Cameroonian and Equatorial Guinean assets pushing output down to 9,500 boe/d. In 2023, it was 13,000 b/d.

The Aseng field in Equatorial Guinea's Douala basin -- operated by Noble Energy -- peaked at over 60,000 b/d in 2012, according to data from S&P Global Energy, but has since fallen below 8,000 b/d. The Aseng gas field, meanwhile, could come online as soon as this year.

Glencore's other assets, including the Alen field in Equatorial Guinea and the small offshore Perenco-operated Bolongo field in Cameroon have also seen maturation dent output in recent years.