The King of Oil: The Secret Lives of Marc Rich

“I was fascinated by the size of the market,” explains Rich. “Take oil or aluminum. You can find those materials in almost any product you touch. The whole world needs them, from east to west and north to south.” It was a fascination that would remain. The first commodity he personally traded was Bolivian tin.
To Create a Market
     
    Rich was soon being referred to as a wunderkind at Philipp Brothers. “From the beginning he was an astute and very knowledgeable trader,” says one eyewitness. There was one main reason for his success—he had specialized in a niche product, one that in the mid-1950s was only traded in minute quantities: mercury.
    Talk to commodities traders and sooner or later you will hear an expression that is inevitably spoken in a tone of reverence: “to create a market.” It is a trader’s lifelong goal to match producer with consumer and find a buyer for a commodity that has previously only been traded very little. An exceptional commodities trader requires one skill above all else in order to create a new market for a commodity: the capacity to analyze a situation thoroughly and recognize trends quicker than the competition. Who is sitting on a commodity without recognizing its complete potential? How do technological developments or political events such as wars affect the demand for commodities? Crude oil, to take an example, was processed for lamp oil and tar for centuries before its monetary and strategic value was changed drastically by the invention of the gasoline engine in the late nineteenth century.
    Many good commodities traders have never succeeded in creating a market, yet Rich managed to do so while he was still a junior trader. It was a coup he pulled off time and again, most resoundingly with crude oil. One of his greatest talents was seeing what others failed to see. “He is a visionary,” Rich’s friend and former employee Isaac Querub told me. In the opinion of one trader who worked with him in Africa, “Marc Rich was a man of genius.” Ursula Santo Domingo adds, “He sees things before others even begin to think about them.” “To see the opportunity is the most important thing as a trader,” Rich told me. We spoke about the importance of contacts in this business—access to the “man with the key,” as the decision makers are so quaintly called in Africa. Rich’s answer surprised me. “The analysis is more important than the relationships,” he said.
    Rich first created a new market for a commodity in the mid-1950s. He began to develop an interest in mercury when he was still only twenty-one years old. At the time mercury was used predominantly in thermometers, batteries, and detonators; trading was consequently limited, and the prices were low. Rich searched for available mercury with a determination that impressed his colleagues. Having analyzed the global political situation, he had come to the conclusion that mercury would soon be in great demand, which meant that there was business to be made.
    The cold war was on the verge of escalating in the mid-1950s. The Communists, led by Mao Tse-tung, had seized control in China in 1949. The Korean War had erupted in 1950 and continued until the summer of 1953. In June 1953 Soviet troops had crushed an uprising in East Germany. The year 1956 saw the Suez Crisis, when Gamal Abdel Nasser of Egypt nationalized the Suez Canal and was opposed by Great Britain, France, and Israel. The Soviet Red Army marched into Hungary in the same year to defeat the popular uprising against the Soviet-backed government.
    When Rich started trading in mercury, all the indications were pointing to war. “He called any producer who had the slightest connection to mercury in order to buy the stuff,” remembers a colleague. He located his first source at the Spanish mining company Consejo de Administración de las Minas de Almadén y Arrayanes, which is known as Mayasa today. Before long he had established good relationships with producers and consumers and was regarded as an expert in the mercury trade.
    Meanwhile, the demand for the commodity soared. The United States government, with Republican President Dwight D. Eisenhower at the helm, commenced a rearmament program that saw the air force and army increasing their stocks of mercury by over 50 percent. The United States bought commodities in huge amounts. Mercury had only been used for batteries since the mid-1940s, but now the market was booming. Due to their longer life