UK shipbroker Braemar is beefing up its securities operation with a new oil derivatives desk.
The decision to set up the operation was spurred by growing client demand, the London-listed company told TradeWinds.
The service will be led by new recruit Rebecca Reed-Sperrin, poached from Marex Spectron in January.
The desk will be one of the first in the market to be led by a woman.
Reed-Sperrin will be supported by Sheldon Valjalo, another new face at Braemar.
They will initially be focused on fuel oil and middle distillates, like diesel and gasoil, in northern Europe and the Mediterranean, as well as the Arabian Gulf, Singapore, and US markets.
The idea is to enable shipping clients to hedge their bunker fuel exposure through swap markets.
The new team will also work with oil refiners to hedge refinery production and with trading companies to hedge their physical exposure, as well as assisting banks on behalf of their clients and helping hedge funds to take positions.
Braemar explained that crude oil prices have fallen by about a third from their June 2022 highs, but remain extremely volatile.
“Given that bunkers are typically a ship’s largest variable cost, reducing price exposure via swaps is a popular way to provide certainty of voyage costs and enable better budgeting and forecasting,” the company said.
The desk will provide an “excellent complement” to the forward freight agreement (FFA) and tanker derivatives desks, as well as the chartering team, Braemar said.
“Oil derivatives will be working closely with our natural gas desk of 10 brokers —previously at Arraco Global Markets — which primarily deals in EU gas, UK NBP gas, LNG and European Union carbon allowances (EUAs),” the broker added.
Obvious synergy for shipowners
Reed-Sperrin was previously a middle distillates derivatives broker at Marex Spectron, where she had worked since 2019.
She has also clocked up experience at CF Partners and Deutsche Bank.
Reed-Sperrin told TradeWinds: “There’s an obvious synergy with Braemar’s client base. We’re not reinventing the wheel here, this is something companies have been doing for years and years.”
Hedging has traditionally been done through banks, but this is moving more to the broker side, she explained.
There are plans to expand the desk across all oil sectors, Reed-Sperrin said.
More hires expected
And “more bodies” will be added as market demand dictates, she added.
The plan is to add specialists in crude and light ends, which are the hydrocarbon gases and liquids that come off the top of distillation towers and fractionators.
Valjalo was head of fuel and oil at Arraco between February and November 2022, and spent seven years before that at ICAP as a broker.
Braemar is also continuing to expand its core shipbroking business, luring away the tanker desk of Spanish broker Medco in December to form Madrid Shipping Advisors.
In the same month, the group grew its Athens office by adding a corporate finance desk, and bought US broker Southport in a $14m cash and shares deal.