"Crude oil trading giant" Vitol severely hit amid Iran war; Chinese-American star derivatives trader suffers massive losses

A surge in oil prices triggered by geopolitical conflict exacted a heavy toll on Vitol Group—the world’s largest oil trader—placing Chinese-American star trader Yaoyao Liu squarely at the center of the storm. According to The Wall Street Journal, Liu’s team incurred losses totaling hundreds of millions of dollars due to misjudged bets on petroleum derivatives early in the Iran war. Bloomberg reported that Vitol is restructuring its London derivatives team, with some traders likely to depart and the remainder being integrated into physically focused, single-market trading teams. Vitol is a global commodities trading powerhouse, buying and selling 8 million barrels of crude oil daily. Its 2025 revenue reached $343 billion—surpassing ExxonMobil. Around 600 employees hold equity stakes in the company, which ranked among the world’s most profitable traders during the Russia-Ukraine conflict. The star trader bet in the wrong direction. Citing informed sources, The Wall Street Journal reported that Liu reportedly held two core positions: first, betting that diesel prices would rise relative to jet fuel; second, betting that Dubai crude would fall relative to Brent crude. The underlying logic was that the Trump administration would retreat from its confrontational military stance and avoid direct conflict. Yet war broke out—and Iran blockaded the Strait of Hormuz—sending prices sharply opposite to Liu’s bets. In the first week of hostilities, Singapore jet fuel prices surged over 70%, while Dubai crude spiked due to the Strait blockade, leaving multiple positions deeply underwater. Moreover, derivative contracts Vitol had previously sold to hedge price risks on Middle Eastern cargoes turned into short crude positions amid the sharp oil price rally—amplifying overall losses. Nonetheless, according to informed sources, Liu’s team has since partially recouped earlier losses. As markets gradually absorbed extreme spreads, the team adjusted positions and recovered part of the loss. Yaoyao Liu is widely known in trading circles for his bold, large-scale trades. A graduate of Cambridge University’s chemical engineering program, he published academic papers on quantum chemistry. Born in China, he worked at Goldman Sachs before joining Vitol in 2012. According to insiders, several Wall Street commodity hedge funds attempted to recruit him—but Liu remained at Vitol. In 2022, he generated approximately $2 billion in trading profits for Vitol; executives at rival firms even studied his trading patterns closely.

Trader Stories Series VI: The Greatest Single Crude Oil Trade in History—Netting Over $10 Billion

Our options went as much as $30–$40 per barrel in-the-money, and we hedged roughly 300 million barrels. At peak, our options’ unrealized profit may have reached $15–$16 billion. Because we initiated hedging so early—even before the 2009 budget was approved—we actually over-hedged, locking in prices above those projected in the 2009 budget. This enabled us to close out portions of our 2009 positions as early as October and November 2008, when those positions were highly profitable. Consequently, gains from the 2009 positions helped fund the 2008 budget—which at the time was already severely strained. Clearly, our tactical decision to hedge early delivered enormous benefits to Mexico—but it was not an easy call to make. Purchasing hedges ahead of time incurs higher costs: the additional option premium could be 20–25% above normal rates. We had to weigh this commercially—considering the extraordinary uncertainty prevailing worldwide, we concluded it was worth paying the extra premium. Fortunately, the approval committee agreed. The hedging program proved exceptionally effective. Profits from the hedge helped Mexico’s national budget weather the first two years of the global financial crisis. At the Treasury Department, staff were fully occupied managing the crisis’s fallout—each day felt like the entire economic system might collapse. There was no time to relax, let alone pause and celebrate the success of the crude oil hedging program—beyond a few words of praise, we never truly had the chance. Years later, after I moved to New York to join BlackRock, the global asset management giant, I ran into a former colleague from a sell-side investment bank—the same firm with which we’d executed the hedging program. He pointed me to an article describing Mexico’s 2009 hedging program as 'the greatest single crude oil trade in history.' I think it was only then that I truly grasped how significant—and how massive—our trade really was. At the time, there was simply too much to do to fully absorb the scale of capital involved or comprehend all its implications. #Mexico’s Sovereign Hedging Program# I served as head of the Public Debt Management Unit until 2011, when I was promoted to Deputy Minister of Finance—a position I held for nearly two years until my departure from government service at the end of 2012. I spent a wonderful 15 years at Mexico’s Ministry of Finance: starting as a junior analyst fresh out of university, I left as Deputy Minister. When I exited government, I knew clearly that—whatever I did next—it would be hard to find work as fulfilling as what I’d just done. Working in government is deeply rewarding, and I was fortunate to be entrusted with major responsibilities early in my career. Working on initiatives like the crude oil hedging program is incredibly exciting: it presents numerous technical challenges—but also profound meaning, because the decisions we made directly impacted our nation. Mexico’s sovereign hedging program remains unique among major oil-producing countries—and perhaps surprisingly so, given the consistently positive results it has delivered over many years.

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Vitol Group oil trader Yaoyao Liu departs after 14 years and billions in profits, following recent losses tied to the Iran conflict. He stepped back from daily trading in mid-year to focus on family.

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Oil Trader Yaoyao Liu Leaving Vitol After Generating Billions

Oil Trader Yaoyao Liu Leaving Vitol After Generating Billions

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