The world’s largest independent oil trader, privately-held Vitol, saw its net profit collapse by 70 percent in the first quarter of 2020, as the coronavirus pandemic and the plunging oil demand and prices took its toll on oil trade, the Financial Times reported on Tuesday, citing figures it has seen.

Vitol’s net profit for Q1 was just US$180 million, according to the figures seen by FT. To compare, in the first quarter of 2019, Vitol – which trades more than 7 million barrels of crude oil and products every day – booked a net income of as much as US$600 million.

According to industry insiders briefed by FT, Vitol started this year holding a large oil inventory, expecting that global oil demand would be stronger than last year’s.  

But after the COVID-19 pandemic spread out of China into Europe, the world’s top oil trader found itself in a position to reschedule shipments of crude oil and refined petroleum products because buyers wanted to delay taking delivery of cargoes, due to the plunging demand as many countries went into lockdown in March. In addition, a Vitol partner had opened a large position on the financial markets early this year, after the Chinese outbreak, betting on a recovery in oil prices, according to FT. However, the spread of the coronavirus outside of China and the Saudi-Russia price war further depressed oil prices in March and Vitol’s bet was wrong.  

By the end of March, Vitol was already predicting a plunge in oil demand by 20 million barrels per day for the weeks ahead.

After the oil price crash, Vitol has reportedly done better after Q1 ended, benefiting from booking very large crude carriers (VLCCs) in order to store oil at sea. Oil trading houses usually profit from a glut in oil markets, FT notes.

Vitol called the end of the worst period for the oil market in early May, with chief executive Russell Hardy telling Reuters that “It’s a bit easier to see the future, so the market is more able to make an educated guess about what that supply/demand balance looks like. We haven’t had a monster rally. It’s just a statement that the worst is over.”