A surge in oil prices ignited by geopolitical conflict has come at a high cost for Vitol Group, the world's largest oil trader, with Chinese star trader Yaoyao Liu at the center of the storm.
According to The Wall Street Journal, Liu's team suffered losses of hundreds of millions of dollars due to misjudged oil derivative bets in the early stages of the Iran war. Bloomberg also reported that Vitol is restructuring its London derivatives team, with some traders potentially leaving, and others being integrated into physical trading teams focused on single markets.
Vitol is a global commodity trading giant, trading 8 million barrels of crude oil daily, with projected 2025 revenues of $343 billion, surpassing ExxonMobil. Approximately 600 employees hold shares, and the company was among the world's most profitable traders during the Russia-Ukraine conflict.
<h2>Star Trader Bets on the Wrong Direction</h2>
According to The Wall Street Journal, citing sources familiar with the matter, Liu allegedly held two core positions: one betting on the price of diesel rising relative to jet fuel; and another betting on the price of Dubai crude falling relative to Brent crude. The underlying logic for these positions was a bet that the Trump administration would back down from its military confrontation stance and avoid direct conflict.
However, with the outbreak of war and Iran's blockade of the Strait of Hormuz, price movements went in the opposite direction of these bets—in the first week of the conflict, Singapore jet fuel prices surged by over 70%, and Dubai crude soared due to the Strait's blockade, putting several of his positions at a disadvantage.
In addition, derivative contracts previously sold by Vitol to hedge against price risks of Middle Eastern cargoes inadvertently became positions that shorted the crude oil market as prices spiked, amplifying the overall losses.
However, according to sources, Liu's team has since partially recovered from the initial losses. As the market digested the extreme price spreads, the team recouped some losses by adjusting its positions.
Yaoyao Liu is known in trading circles for his large-scale bets. He graduated from Cambridge University with a degree in Chemical Engineering and has published papers on quantum chemistry. Born in China, he previously worked at Goldman Sachs and joined Vitol in 2012. Sources say that multiple commodity hedge funds on Wall Street have tried to poach him, but Liu has remained with Vitol.
In 2022, he generated approximately $2 billion in trading profits for Vitol, with executives from rival companies even studying his trading movements. He manages teams of analysts and traders in Dubai, London, and Houston, and his operational model is seen by insiders and outsiders as an internal hedge fund. To prevent competitors, and even internal colleagues, from knowing his position information, Liu's holdings are highly confidential within the company.
<h2>War's Impact Spreads Across Operations, Physical Business Also Under Pressure</h2>
Beyond derivative losses, the impact of the Iran war on Vitol's physical business is also significant. According to The Wall Street Journal, within weeks of the US and Israel attacking Iran, two fuel tankers chartered by Vitol were attacked in the Persian Gulf, resulting in one crew member's death.
The blockade of the Strait of Hormuz prevented Vitol from exporting its purchased oil and LNG from the Persian Gulf, forcing the company to urgently seek alternative sources to fulfill its supply obligations. Simultaneously, derivative contracts previously sold by Vitol to hedge against price risks of Middle Eastern cargoes inadvertently became positions that shorted the crude oil market as prices spiked, further exacerbating losses.
Vitol has briefly informed banks of some of its difficulties, including substantial insurance and freight bills from the ships trapped in the Persian Gulf at the end of March, but has not disclosed detailed figures. Some employees have also left the company's regional headquarters in Bahrain.
<h2>Company Remains Profitable, Restructuring Limited to London</h2>
Despite the significant scale of losses, Vitol's overall financial situation remains sound. According to Bloomberg, citing sources, Vitol achieved overall profitability in March and for the first quarter.
In terms of liquidity management, Vitol has arranged a $30 billion credit line to cope with potential large margin calls in commodity trading, but it has not yet been utilized. The company's reliance on debt financing is lower than that of some peers, providing it with a buffer.
According to Bloomberg, this restructuring of the derivatives team is currently limited to London, and the decisions have not been finalized, with variables still present. The direction of the restructuring is to integrate derivatives traders into physical trading teams focused on single markets, rather than maintaining the existing centralized derivatives trading structure. Vitol declined to comment on the changes and performance of its derivatives business.
This restructuring of the derivatives team occurs against the backdrop of leadership changes at Vitol. According to Bloomberg, the company recently announced that its long-serving Chief Financial Officer, Jeff Dellapina, is set to depart, and the adjustments to the derivatives team are intertwined with this executive transition process.

The US-Iran talks are about to be held in Islamabad, the capital of Pakistan. Pakistan has activated a red alert, deploying over 10,000 military and police personnel to tightly control key areas and ensure the security of the talks. Do you think this crucial meeting can ease tensions in the Middle East?

The US-Iran talks are about to be held in Islamabad, the capital of Pakistan. Pakistan has activated a red alert, deploying over 10,000 military and police personnel to tightly control key areas and ensure the security of the talks. Do you think this crucial meeting can ease tensions in the Middle East?

With US-Iran negotiations imminent, where is the situation in the Middle East headed?

Yaoyao Liu, a Chinese trader at Vitol Group, suffered hundreds of millions of dollars in losses due to misjudged oil derivative bets in the early stages of the Iran war. He bet on diesel rising relative to jet fuel and Dubai crude falling relative to Brent. The blockade of the Strait of Hormuz led to a more than 70% surge in jet fuel prices, severely impacting his positions. Liu, a Cambridge graduate and former Goldman Sachs employee, generated $2 billion in trading profits in 2022, and his team was considered Vitol's "internal hedge fund."

- The recent surge in oil prices due to geopolitical conflicts has resulted in significant losses for Vitol Group, primarily affecting trader Yaoyao Liu's team.  
- Liu's team incurred hundreds of millions in losses from incorrect bets on oil derivatives amid escalating tensions following the outbreak of war in Iran.  
- Despite these setbacks, Vitol maintains a stable financial condition, achieving profitability in early 2026, while undergoing a restructuring of its London derivatives team.

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"Oil Trading Giant" Vitol Hit Hard in Iran War; Chinese Star Derivatives Trader Suffers Heavy Losses on Big Bets