Energy prices dropped from their record highs, resulting in a $2 billion drop in profits for Vitol.
According to people familiar with the group’s finances, it has a net profit of $13 billion. This is down from its record profit of $15 billion in 2022. Vitol declined to comment, as it does not reveal its net profit.
It said last month that it expects its turnover in 2023 to be $400 billion. This is down from the $505 billion of the year before, due to the decline in oil and gas prices from their peaks after the Russian invasion of Ukraine 2022.
Although its net profit is reported to have dropped by around $2 billion in the past year, it still remains higher than the $4 Billion it achieved in 2020. Trafigura is a competitor commodities trader that posted a record-breaking net profit for 2023 of $7.4 billion, an increase of 5% on the previous year.
Vitol’s turnover dropped due to lower commodity prices, but the volume of its energy products traded increased. Vitol’s performance will bring lucrative rewards to its approximately 450 senior partner and increase the resources available for expansion.
Russell Hardy said that the Red Sea Crisis and the rerouting Russian products caused a global tightness in the oil product market. This led to record amounts of oil products being held on tankers.
Hardy also stated that peak oil demand will not occur until the early 2030s. This is later than Vitol had previously predicted. Hardy, who spoke alongside Vitol’s annual report, said that the rate of adoption for electric vehicles has slowed and oil demand in some developing countries may be higher than expected.
“Our strategy is deploying our capital, expertise, and global footprint in order to deliver energy solutions.” Near and medium-term, energy requirements vary significantly across the globe. We are able meet these diverse needs by combining traditional, sustainable and transitional solutions.
A Bloomberg investigation revealed that VPI Holding was the UK power plant division controlled by Vitol. The company had been identified as one of those who benefited from a controversial trading maneuver to ensure higher electricity prices at the cost of consumers. Ofgem, which is the energy regulator, outlawed this practice.
VPI has five plants in Britain. These include gas-fired power stations, which it purchased from Drax early in 2021. It also operates a combined heat-and-power plant in Immingham that supplies both the Humber oil refineries and the Lindsey oil refining facilities, as well as supplying the grid. The company is building two more plants in the UK, and another in Ireland.