Major oil companies are grappling with significant profit declines as geopolitical volatility disrupts the trading environment. Over the past decade, many of these firms have established dedicated trading divisions that typically thrive during price fluctuations, allowing them to generate substantial profits when oil and gas prices drop. According to Bloomberg, these oil majors often manage more barrels than leading commodity traders like Vitol, Trafigura, and Glencore.
While high market volatility can be advantageous, the unpredictable nature of current geopolitical events has created challenges for these trading arms. For instance, Shell recently reported a Q2 2025 revenue of $65.41 billion, which marked a 12.2% year-on-year decline and fell short by $800 million. The company’s net income for the first half of the year was $9.4 billion, a 30% decrease compared to the previous year.
Geopolitical Factors Impacting Trading Strategies
During an earnings call, Shell CEO Wael Sawan highlighted the difficulties faced by traders when markets are influenced by factors unrelated to supply and demand. He indicated that such turbulence makes it harder for traders to navigate the market effectively, leading many to adopt a more cautious approach rather than chasing every oil price fluctuation. Sawan noted, “Market turbulence not directly tied to demand and supply dynamics is challenging for our trading operations.”
Similarly, TotalEnergies reported its own struggles in a recent earnings update, with Q2 revenue reaching $44.68 billion, down 9.2% year-on-year but exceeding expectations by $1.76 billion. The company’s adjusted EBITDA for the same period fell 11% to $9.7 billion, while net income dropped 31% to $2.7 billion. CEO Patrick Pouyanne chose not to elaborate on the performance of TotalEnergies’ trading division during the call, emphasizing the broader challenges facing the industry.
Impact of Regulatory Changes and Market Conditions
Norway’s national oil company, Equinor, also reported mixed results, posting a revenue of $25.14 billion for Q2, which was a 1.6% year-on-year decline. Despite beating expectations by $2.09 billion, the company’s net operating income fell to $5.72 billion, down from $7.66 billion in the same quarter last year. CFO Torgrim Reitan noted that regulatory changes introduced by the Trump administration, including tariffs and the removal of tax credits for wind and solar energy, have negatively impacted Equinor’s asset value, particularly in its large onshore terminal in South Brooklyn.
While European oil majors are feeling the effects of a volatile trading environment, U.S.-based companies are also bracing for a challenging earnings season. The energy sector in the United States is projected to experience the lowest profit growth among the country’s 11 market sectors, with an expected decline of 24%. This downturn is largely attributed to lower oil prices, which averaged $63.68 in Q2 2025, down 21% from the average of $80.66 in Q2 2024.
As geopolitical uncertainties continue to shape the oil market, traders face a complex landscape where traditional strategies may no longer suffice. The challenges presented by the current environment highlight the need for adaptability among major oil companies as they navigate an increasingly unpredictable market.
