Royal Dutch Shell Plcdis closed the profitability of its sprawling and secretive oil trading unit for the first time, saying it almost doubled to $2.6 billion.
The scale of the earnings show the importance of the business to the company in a year that weak demand and prices hit other parts of the business. Shell took advantage of wild price swings and a market situation that allowed it to make money by storing oil to sell it later for a profit.
The company’s oil-trading profit in 2020 beat the highest ever net income achieved by Vitol Group, the world’s largest independent trading house, which made a record $2.3 billion in 2019. Vitol has yet to disclose 2020 earnings.
Shell only disclosed earnings from oil trading in its annual report, and leaving power, natural gas and LNG trading out. Analysts suspect the company was able to make similar profits from those businesses.
The revelation in its annual report comes as the firm is embarking on an energy transition in which Shell has said it will lean on its trading prowess to push through less-profitable renewables.
Rival BP Plc made a similar disclosure last year when its Chief Executive Officer Bernard Looney revealed trading typically boosted returns by 2 percentage points a year, suggesting it makes annual profit of as much as much as $2.5 billion.