Glencore asked its board for permission to take on more trading risk as the escalating US-Iran conflict rattled commodity markets. The request for waivers, which would allow the trading giant to exceed normal risk limits, came during a period of extreme volatility in oil, metals and agricultural products. The move signals how even the world's largest commodity traders are scrambling to adapt to a geopolitical shock that has upended supply chains and price forecasts.
Why the waivers were needed
Commodity traders typically operate within strict risk parameters set by their boards. Those limits are designed to prevent catastrophic losses when markets move against a position. But the US-Iran crisis created conditions that made those normal boundaries untenable. Prices swung wildly day to day, and liquidity in some contracts dried up. Glencore's traders needed room to hedge positions and seize opportunities that would have been impossible under standard caps.
The company did not disclose the exact size of the waivers or which commodities were most affected. But the request itself is a rare admission that the firm's usual risk framework was insufficient for the current environment. Glencore's board approved the waivers, according to people familiar with the matter, though the terms were not made public.
The US-Iran conflict's toll on commodities
The US-Iran war, which began with a series of airstrikes and naval skirmishes in the Persian Gulf, sent shockwaves through global commodity markets. Oil prices spiked more than 20% in the first week, then fell just as sharply on ceasefire rumors. Natural gas, copper and wheat also saw double-digit swings. For traders, the volatility was both a threat and an opportunity. Those who could accurately predict the next move stood to make huge profits. Those who guessed wrong faced margin calls and potential insolvency.
Glencore, with its vast network of mines, refineries and shipping routes, is particularly exposed to Middle Eastern supply disruptions. The company sources a significant portion of its oil and metals from the region. The wavering of shipping lanes and the imposition of sanctions forced it to constantly reassess its positions. The board waivers gave its traders the flexibility to adjust without having to seek approval for every individual trade.
What the waivers mean for Glencore's risk profile
Board waivers are not uncommon in times of crisis, but they are usually temporary and come with strict oversight. Glencore's board likely imposed conditions such as daily reporting, higher collateral requirements, or a sunset clause that would automatically revoke the waivers once market calm returns. The company's shareholders will be watching closely. Any losses incurred under the waivers could raise questions about whether the board was too permissive.
Glencore has a history of aggressive trading. In 2020, it was fined for bribery and market manipulation. The current waivers are a reminder that the line between prudent risk-taking and recklessness can blur in a crisis. The company's next quarterly earnings report, due in three weeks, will be the first test of whether the waivers paid off or backfired.
