The King of Oil: The Secret Lives of Marc Rich

determination, and endurance, he made himself into the most successful commodities trader of his time. He then ran so afoul of the law that he landed on the FBI’s Most Wanted list. The United States government offered a high reward for his capture and chased him all over the world.
    Rich’s is one of the most amazing careers of the twentieth century, a career that is tightly woven with great events in world history: Fidel Castro’s revolution in 1959; the decolonization of Africa in the 1960s; the Yom Kippur War and the oil shock of 1974; the fall of the shah of Persia and the seizure of power by the Ayatollah Khomeini in Iran in 1979; apartheid South Africa in the 1980s; and the crumbling of the Soviet Union in the 1990s. Marc Rich and his business partners were on the scene when these events happened. Thanks to their know-how, their hard work, and their considerable aggression, they were able to react to these events to their benefit more than their competitors ever could. Most important, however, Marc Rich is an epochal pioneer of globalization and an architect of the modern system of commodities trading. His name will be forever connected with an economic revolution—he is the inventor of the spot market, without which modern oil trading would be unthinkable. Whenever you fill your tank with gasoline, you make a trade “on the spot.” The driver needs gasoline, accepts the price on offer, and can fill up the tank, pay, and drive away with no further obligations. This was the great exception to what was standard procedure in the international oil-trading business right up until the beginning of the 1970s. Only around 5 percent of the world’s oil was freely traded according to the law of supply and demand, whereas the other 95 percent changed hands according to long-term contracts and at fixed prices. Since WorldWar II, the global oil market had been dominated by the “Seven Sisters,” the leading international oil companies. 11
    This cartel of multinational oil companies took its strongest beating from Marc Rich + Co. AG, a small company founded in the Swiss town of Zug in 1974. It is as if a small software company were to suddenly wrestle away Microsoft’s market position. In next to no time, Marc Rich and his four business partners managed to achieve what all commodities traders admire and strive for: 12 They created a new market for products that until then either had been traded in very small amounts or had not been traded at all. They managed to create an independent distribution system that bypassed the Seven Sisters. Rising demand leads to higher prices for consumers, and Rich can be found at the very beginning of the oil boom that followed. He began trading modest amounts of Tunisian crude oil at the end of the 1960s. Then a barrel of crude oil cost2 (the price hit a record147 in July 2008 but fell back as far as35 in February 2009), the Club of Rome’s
Limits to Growth
had not yet been written, and hardly anyone had ever heard of peak oil, a term that describes the worldwide decline in oil production. 13
    Rich also sparked the emancipation of the oil-producing countries. Increased competition among the multinational oil companies meant that producers could now demand more for their natural resources than ever before. Isaac Querub, Rich’s longtime colleague and confidant, went so far as to compare him with the father of Communism: “You can say in a way that Marc Rich was the Karl Marx of the oil-producing countries. In the same way that Karl Marx made all the workers become aware of their class and their interests, Marc made all of the oil countries aware of their interests in a way. It was a revolution, no doubt about it.”
“He Was Our God”
     
    Less than ten years after it was founded, Marc Rich + Co. AG was the largest and most profitable independent oil-trading company in theworld, even though the company’s two most important partners—Marc Rich and Pincus Green—were being pursued by the most powerful nation on earth. No one could avoid dealing with Marc Rich + Co. “By the mid-1980s, we were already trading one million barrels of crude per day,” says Rich. Marc Rich + Co. soon became the largest commodities trading company in the world, trading not only oil but also all types of metals and minerals from aluminum to zinc. “In metals, it’s now Marc Rich and the forty dwarfs,” a competitor said, reflecting a sentiment somewhere between respect and resignation. 14 An