As geopolitics reshapes commodity flows, large traders are becoming economic and strategic powerhouses for governments seeking to secure long-term supplies of critical goods. But in an increasingly complex financing landscape, banks will need to weigh up their approach to a sector that sits permanently on the front line of volatility.
Large commodity traders thrive on volatility. Pandemic-era supply chain disruptions proved lucrative for the sector, as traders leveraged their market knowledge, access to finance and sophisticated hedging tools to keep goods flowing, particularly across energy markets.
Then, in 2022 and 2023, propelled by the introduction of western sanctions on Russia, the trend accelerated further. With prices unstable and fears growing over supply security, trading giants including Gunvor, Mercuria, Trafigura and Vitol were able to post record profits.
Global commodity value pools – essentially the potential profit within the sector – grew to over US$100bn by 2023, more than triple the figure for 2019, research by McKinsey found.
Since then, however, large traders’ earnings have generally stabilised. In March last year, Trafigura chief financial officer Stephan Jansma said the company had reached “a new cruising altitude”, significantly less profitable than the 2022-23 peak but still well above pre-pandemic levels. Gunvor, Mercuria and Vitol have all indicated their 2025 earnings will be down from those peak years.
Yet the world has not become less volatile. Geopolitical tensions, sanctions and trade restrictions have largely intensified, in particular under the Trump administration’s unpredictable approach to sanctions and – in the case of Venezuela – military intervention. Deep concerns also remain across the West over reliance on Chinese supply, notably for critical minerals.
Why, then, was 2025 not another record year for commodities? According to a December report by consultancy firm Oliver Wyman, the sector has been grappling with a “new kind of instability”.
Throughout the year, sharp market movements were driven by “an increasing global willingness of some players to use aggressive tactics in both trade and military disagreements”, it says. Tariff-related announcements have created “difficult-to-anticipate volatility to commodity markets many times over”.
The report finds that while overall commodity price volatility has been largely stable across the last two years, the unpredictability of those swings – the volatility of the volatility – has increased markedly.
“Building a trading position that is robust enough to withstand the short-term fluctuations and accurately identifies the true direction and intensity of market movements amid changing policies has proven to be a challenge,” the report says.
Last year was not characterised by “the good volatility traders like”, but rather “many erratic movements”, says Patrick Arnaud, co-head of trade and commodity finance at ING Switzerland and leader of its global merchants group, which targets larger commodity traders.
Trump’s salvo of proposed tariffs in April, on what the US president dubbed Liberation Day, had a “massive impact on markets, on commodities, equities and even the debt capital markets”.
“All of this plays into the hands of the large trading houses. The world is fragmenting, and they can find a way to supply these strategic commodities, so people will pay the right price.”
Jean-François Lambert, Lambert Commodities
Strategy over economics
Going into 2026, Arnaud believes this might be starting to change.
“The market dynamics are not fully back to supply and demand, and in general, a level of uncertainty remains,” he says. “But the world is getting used to it, and I think the negative impact is fading away.”
Jean-François Lambert, founder and managing partner of Lambert Commodities, says the situation reflects a gradual shift away from a world of globalisation – characterised by just-in-time supply chains and cost optimisation – to one “ruled by geopolitics”.
Despite a difficult 2025, the longer-term outcome could create different kinds of opportunities for savvy and cash-rich larger traders.
“The priority is no longer efficiency,” Lambert says. “It’s about strategic autonomy. If we don’t have these strategic commodities, how are we going to get them? Suddenly supply chains are shortened, secured, diversified.
“It’s all about resilience, and people are happy to pay a bit more to make sure they’re getting the goods they require. Price, quality and quantity are still important, but availability is more important than anything else.”
Critical minerals from China have become a prominent example of strategic commodities. The country holds a 40% share of the global processing market for copper, 35% for nickel, 65% for cobalt and 58% for lithium, according to research by the International Energy Agency. It also dominates the global market for both the extraction and processing of rare earths.
As renewable energy expands, data centres ramp up and electrification spreads, demand for these materials is expected to skyrocket. Yet China has used export restrictions on these materials as a vital weapon in its trade conflict with the US.
Energy markets are also reconfiguring, not least due to sanctions on Russia. The EU recently introduced a full ban on pipeline gas and LNG imports, while western governments are targeting markets such as India that have continued to buy Russian crude. The US, meanwhile, has grown to become the world’s largest exporter of LNG.
“All of this plays into the hands of the large trading houses,” Lambert says. “The world is fragmenting, and they can find a way to supply these strategic commodities, so people will pay the right price.
“If you have those optionalities, you have the real source of power in this world. To do that, you need enormous liquidity, and what it means is that the large trading houses are the only ones who can take advantage of what the world has become.”
“Traders are very keen to get locked into these term contracts, because this is the long position they need to secure. We have seen this trend accelerate in 2025 and it is now full steam ahead going into 2026.”
Patrick Arnaud, ING Switzerland
A mixed blessing for banks
Large traders have several tools to ensure they maintain access to sufficient liquidity and strong relationships with lenders, and built up sizable cash buffers during the boom years of 2022 and 2023. For their bank partners, however, this can be a mixed blessing.
For instance, recent years have been characterised by traders’ use of multi-billion-dollar, syndicated revolving credit facilities (RCFs), a flexible source of liquidity that supports fast-paced trading activity.
In 2025 alone, Trafigura grew its European RCFs to US$5.6bn, Gunvor agreed a US$2.4bn multi-currency RCF, and Mercuria upscaled its European RCFs to US$3.5bn. The previous September, Vitol closed RCFs totalling nearly US$12bn. In each case, dozens of banks participated.
However, whether these bumper RCFs are a major asset for participating banks typically depends on utilisation. If commodity prices are low, which has been the case in the oil market for much of the last year, “that results in a lot less utilisation with the banks”, says Walter Vollebregt, founder of Vollebregt Advisory.
Financing lines can also be complicated by geopolitical uncertainty, or, as Vollebregt says, the “expectation of sudden change”. This could mean established flows come to a halt as buyers seek alternative sourcing markets.
“This means the books tend to be a lot shorter in tenor, because there’s much more spot trading than before,” he says. “You may have had a pipeline of material going into the US, for example, that all of a sudden isn’t there anymore because of tariffs. Then you’ll have a lot less material to finance because you’re only buying and selling on a spot basis.”
And more widely, some banks – typically those that do not prioritise or specialise in commodity finance – might run into issues persuading their credit committees and managing boards that commodity trading is a healthy business during turbulent times, Lambert suggests.
“Of course, the core banks that are deriving significant profits from commodities are not going to disappear. If a leading trading house has more than 100 banks, let’s say 20 of those are key. Those 20 will remain,” he says.
“But more than ever, the banks need expertise to understand that business and navigate more complex political risk. When there is a problem, other banks might retrench, just to be on the safe side.”
A shifting financing landscape
At the same time, the higher-risk environment is creating opportunities for alternative lending strategies.
Arnaud of ING Switzerland points to growing demand for sophisticated financial market products that help traders pre-hedge – protecting future commodity purchases before they are delivered or produced. If prices rise in the interim, traders may need to stump up liquidity to meet margin calls.
“Typically in such circumstances, the trader is keen to work with a bank that will step in and fund the initial margin, the variation margin or a combination of both,” he says. “We are playing a key role here. Depending on the models that are used, these types of trades can constitute lower risk-weighted assets, which can be quite attractive.”
Political uncertainty is also creating financing opportunities. Government concerns over energy and metals supply have led to increasing state involvement in trading activity, with financial support coming via lending and guarantees from export credit agencies (ECAs).
“In that world, a new player has emerged, and it is a very powerful player,” Lambert says. “The governments are now using the wedge of the ECAs to help the leading trading houses access long-term money and guarantee their sourcing or their sales. That shows how friendly this environment has become for them.”
Trafigura has been highly active in this market, securing ECA-backed facilities for Japanese gas imports, Korean metals imports, UAE non-oil exports and US energy exports in the last two years alone.
“We’ve seen all these untied schemes and tied financing for strategic commodities imports,” Arnaud says. “Obviously this is a nice diversification of financing for the traders, but also, the commercial debt is attractive.”
“You may have had a pipeline of material going into the US, for example, that all of a sudden isn’t there anymore because of tariffs. Then you’ll have a lot less material to finance because you’re only buying and selling on a spot basis.”
Walter Vollebregt, Vollebregt Advisory
Large traders are becoming more active as lenders themselves. Lambert suggests that tactically, they “may consider offering some of the ECA guarantees to second-tier banks to stabilise their commitments and prevent knee-jerk pullbacks” from the sector.
Traders are also increasingly using their ample liquidity to provide prepayment facilities to producers in exchange for offtake agreements.
“For producers, accessing prepayment can be less expensive compared to a regular RCF from the bank market,” Arnaud says. “Then the traders are very keen to get locked into these term contracts, because this is the long position they need to secure. We have seen this trend accelerate in 2025 and it is now full steam ahead going into 2026.”
This strategy gives traders a way to secure longer-term supply of crucial commodities without having to purchase fixed, production-related assets such as mines.
“Getting into assets on the mining and smelting side can put a lot of pressure on a trader’s balance sheet,” Vollebregt says. Not only does that reduce available liquidity, but for privately held traders it can limit their ability to repay retiring executives who hold equity in the company.
Mercuria’s group chief financial officer, Guillaume Vermersch, said at an industry event last year the company was focused on “unlocking value around assets without specifically being the owner of that asset”.
The company has since signed a US$100mn prepayment facility with Eurasian Resources Group for a copper mine in the Democratic Republic of Congo, and a US$250mn facility with Geotechmin for a copper mine in Bulgaria.
Going into 2026, the picture is of large trading houses emerging as powerhouses on the world stage. Although unpredictability and volatility may be here to stay, they have the backing of both banks and governments, strong liquidity and new strategies falling into place.
Roland Rechtsteiner, a partner at McKinsey, reflected on the market for 2026 during a recent podcast with HC Commodities. With the right trigger, such as a shift from oversupply to undersupply in the oil market, the next year or two “could be the beginning of the next very strong cycle”.
For commodity finance banks, a vigilant, strategic approach could reap rewards.
