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Ian Taylor, CEO of Vitol, the world’s largest oil trading company, flew into the rebel-held city of Benghazi, Libya during the 2011 civil war to meet with representatives of the rebels.
The rebels were running low on fuel and needed diesel, gasoline and fuel oil for their vehicles and power stations. However, they had no cash to pay for supplies.
Vitol agreed to a barter deal where they would supply fuel to Benghazi in exchange for crude oil from rebel-controlled oilfields. They also extended credit to the rebels.
The trip was risky as Benghazi was in the midst of a war zone, but Vitol had political support from the UK and US governments.
When Taylor landed, he found Benghazi to be unstable and lawless. He met with Nuri Berruien, an engineer running the rebel oil company, to finalize the supply deal personally.
The deal could help keep the rebel forces operating and prove critical to the outcome of the Libyan civil war. It showed how oil traders like Vitol were willing to take risks in unstable regions for commercial opportunities.
Vitol, an international commodity trader, struck a risky deal with Libya’s rebel government in 2011 during the country’s civil war against Gaddafi. They agreed to supply fuel to the rebels in exchange for crude oil.
The deal gave the rebel forces crucial fuel supplies that helped them advance against Gaddafi’s forces and take key oil towns. Without Vitol’s fuel deliveries, the rebels likely would have lost the war.
However, Gaddafi’s forces sabotaged the pipeline connecting rebel oilfields to export terminals, preventing Vitol from being paid in crude oil as planned. Vitol continued fuel deliveries anyway, taking on growing financial exposure.
By the end of the deal, Vitol was owed over $1 billion by the unstable rebel government. The risky deal demonstrated commodity traders’ power to influence geopolitics through strategic resource flows and their willingness to operate in unstable environments for profit.
While the rebels ultimately prevailed, Libya descended into further conflict after Gaddafi’s defeat, and Vitol’s intervention had complex and sometimes destabilizing impacts on Libya and the wider region in subsequent years.
A small number of commodity trading companies have an outsized influence on global markets and prices for raw materials like metals, grains, and oil due to their dominance in trading volumes. Glencore accounts for a third of the world’s cobalt supply and was the largest metals trader.
Commodity traders have historically been secretive private companies that reveal little information about their activities and view transparency as compromising their competitive edge. They seek to operate in the shadows.
The book aims to shed light on these influential traders through over 100 interviews with current and former traders from Glencore and other major firms. It draws on the authors’ two decades of reporting and thousands of documents to understand traders’ activities and impacts.
The book focuses on independent commodity trading houses rather than producers, consumers, banks/funds that only trade financial derivatives. It profiles the major traders in oil, metals, and agriculture over the last 75 years, especially Glencore and its predecessor firms Phillip Brothers and Marc Rich.
Glencore is described as the world’s largest wheat trader and commodity trading company. It operates out of an unassuming building in Switzerland but has global interests stretching from Canadian wheat to Peruvian copper and Russian oil.
The traders at Glencore exhibit similar traits to their boss Ivan Glasenberg - they work tirelessly, join him for morning runs, and many are South African accountants like him.
Trafigura is the world’s second largest oil and metals trader. It was started by former Marc Rich employees in 1993 and has retained an underdog mentality and French style.
Vitol is the leading oil trader, with a more establishment British feel given its proximity to Buckingham Palace.
Cargill is the largest grain trader and exhibits Midwest American wealth and tradition, with an extensive company history.
Commodity trading involves exploiting price differences between locations, products, and delivery times to arbitrage and facilitate global trade. Traders play an important role in directing resources to high-value uses.
In the decade leading up to 2011, the three largest commodity traders (Vitol, Glencore, Trafigura) had combined profits bigger than well-known companies like Apple and Coca-Cola.
These profits were shared among a very small group, making some individuals fantastically wealthy. Vitol alone distributed over $10 billion to trader-shareholders. The Cargill family contains over 14 billionaires.
Commodity trading operates in a lightly regulated environment and opaque financial systems, making oversight difficult. They are often based in places like Switzerland known for their light-touch regulation.
Some traders have been implicated in corruption and bribery to facilitate deals. While not all traders engage in wrongdoing, corruption has plagued the industry.
Traders have also paid little tax on large profits by being based in low-tax jurisdictions. Many still rely heavily on fossil fuel commodities that contribute to climate change.
In summary, commodity traders have become enormously influential actors in global commerce, yet their activities have long escaped serious scrutiny or understanding due to their opaque and global operations.
The world was entering a period of stability, economic prosperity, and peace (Pax Americana) in the 1940s-1960s. Living standards increased as more households could afford consumer goods like TVs and cars.
International trade was expanding due to free trade policies and global markets. The world economy was growing rapidly, fueling greater consumption of natural resources. Leading commodity traders exploited opportunities in this booming global economy.
Ludwig Jesselson of Philipp Brothers, John MacMillan Jr. of Cargill, and Weisser saw potential to create truly global commodity trading businesses. Where traders previously focused on local markets, these pioneers saw the whole world as one market.
Over the following decades, commodity trading was transformed from a small business into one of the most important industries worldwide. Traders like Jesselson, MacMillan, and Weisser amassed great wealth and influence dealing resources around the globe.
By the 1970s, policymakers realized commodity traders had accumulated unprecedented power over critical materials like energy, metals, and food. This pioneering period laid the foundation for modern global commodity trading.
Philipp Brothers, an American metals trading firm, secured a major contract in the late 1940s to sell Yugoslavia’s entire metals output, linking the socialist government with capitalist America. By the 1950s, this contract was worth $15-20 million annually.
Philipp Brothers also began buying metals from the Soviet Union and East Germany, becoming one of the first US companies allowed to open an office in Moscow. For the company’s founder Jesselson, political implications were irrelevant as long as business was profitable.
Cargill, a large American agribusiness, was focused on the domestic US market in the early 1950s under John MacMillan Jr. He realized the company needed to expand internationally to capitalize on growing global trade. He established Tradax International in 1953 to spearhead this expansion.
Cargill began exporting large volumes of American agricultural products globally, including to Communist countries. This caused some political controversy but significant profits for Cargill. Under MacMillan’s leadership, Cargill became a pioneer in global commodity trading.
Theodor Weisser founded Mabanaft, Germany’s first independent oil trading company, after WWII. He helped create a new global oil trading industry largely outside the control of the major oil companies (“Seven Sisters”) that had dominated previously. Weisser’s deals with the Soviet Union made Mabanaft the first independent trader to circumvent the oligopolistic control of the oil majors.
In the 1950s, German oil trader Emil Weisser brokered deals to export Soviet oil to Western markets, helping to open trade links that had previously been closed behind the Iron Curtain.
Soviet oil production was rapidly increasing, doubling from 1955-1960, as new deposits were found in the Volga-Urals basin. The USSR became the second largest oil producer behind the US.
Weisser helped pioneer a new model of global commodity trading. Traders like Weisser, Philipp Brothers, and Cargill aimed for worldwide mastery of commodities through extensive networks of contacts and market information.
They cultivated long-term supply contracts, maintained global offices, and developed sophisticated communications to gather intelligence. This allowed them to make well-informed speculative trades and profit off disruptions.
The culture of these early trading houses placed heavy emphasis on hard work, loyalty, and partnership. Junior traders underwent grueling apprenticeships. Successful employees were given ownership stakes, binding interests.
By the 1970s, commodity traders like Cargill and Philipp Brothers had grown enormously profitable facilitating increased global commodity trade links. However, their operations received relatively little public attention or scrutiny.
In the summer of 1972, grain trader Cargill was riding high under the leadership of Erwin Kelm, having grown to $5 billion in sales and claiming the title of largest agricultural trader. However, the late 1960s had been tough and Cargill barely broke even.
Nikolai Belousov, head of Soviet grain trading agency Exportkhleb, arrived in New York to negotiate purchases of US grain. He negotiated deals totaling over $1 billion worth of grains from Cargill and other major traders like Continental Grain.
The enormous secret Soviet purchases far exceeded what the US could supply. When this became known, grain prices skyrocketed, causing inflation and public outrage dubbed the “Great Grain Robbery.”
While Cargill said it lost money on the Soviet deals, it had large speculative profits by betting grain prices would rise due to shortages. This demonstrated the power and importance of commodity traders in facilitating global resource flows.
The Soviet grain purchases were a prelude to major disruptions in the critical oil market that would profoundly impact the global economy in the coming years. Oil consumption was growing rapidly to meet rising global demand and dependence.
The power of the “Seven Sisters” oil majors was declining as oil producing countries gained more independence and control over oil prices through the formation of OPEC in 1960.
The closure of the Suez Canal during the 1967 war prompted Iran and Israel to secretly build an oil pipeline between them to transport Persian Gulf oil to the Mediterranean, bypassing the canal.
Young commodity trader Marc Rich was hired to help market oil from the new pipeline as other companies feared antagonizing Arab states that opposed Israel.
This opportunity allowed Rich to break out on his own and he soon established himself as a master trader who could buy and sell oil anywhere through his sharp business skills and risk-taking attitude. He went on to dominate the global oil market.
Roque Benavides recalls dining with Rich, who plied him with wine and got what he wanted - a 10-year mining contract. Rich was adept at using social encounters to gain information or business advantages.
Alan Flacks at Philipp Brothers did the company’s first oil trade in 1969, a riskless back-to-back deal that made $65k. But Rich soon supplanted him as the main oil trader due to his aggression and enthusiasm for the new commodity.
Rich and his partner Pincus Green exploited the secretive Eilat-Ashkelon pipeline to transport Iranian oil to Europe, bypassing the Sisters. This gave them a major price advantage and supply deals with Iran.
However, Philipp Brothers bosses were uneasy with the risks. After Rich and Green made a $37.5M deal for Iranian oil above the official price, believing prices would rise, Jesselson ordered them to immediately sell the cargo. They did, making a small profit.
In October 1973, tensions between Arab states and Israel erupted into war on Yom Kippur, the holiest day in Judaism. OPEC demanded a large price increase from oil companies at negotiations in Vienna, but the companies refused due to pressure from Western governments.
Sheikh Yamani of Saudi Arabia warned the oil executives this was a mistake. When no agreement was reached, OPEC announced unilateral price increases and production cuts, essentially using oil as an economic weapon.
Oil prices more than doubled, seriously impacting the global economy. The era of stable oil prices controlled by major companies was over - prices were now subject to Middle Eastern geopolitics.
Independent traders like Rich and Philipp Brothers benefited from the new volatility. While Rich was unhappy they didn’t fully capitalize on opportunities, Philipp Brothers profits increased 75% that year.
However, the events of 1973 marked a major power shift - control of oil production and pricing moved from companies to OPEC countries. This exacerbated Western dependence on Middle Eastern oil.
In 1974, Marc Rich was trying to negotiate higher compensation from his boss Jesselson at Philipp Brothers, one of the largest commodity trading companies at the time. Jesselson only offered a small fraction of what Rich and his partner Green were asking for.
Rich decided to leave Philipp Brothers and start his own company, Marc Rich + Co AG, registered in April 1974 in Zug, Switzerland. A few other senior traders from Philipp Brothers also defected to join Rich’s new company.
Starting with just $650,000 in capital, Marc Rich + Co grew rapidly as the oil market boomed in the 1970s. By aggressively taking on risk and spotting trends, they grew profits to $28 million in their first 8 months and $50 million the next year.
Meanwhile, Philipp Brothers also profited greatly from the rising oil market, making over $125 million per year in profits from 1974-1979. However, Marc Rich + Co had already surpassed Philipp Brothers in profits by 1976, with $200 million that year.
Rotterdam, Netherlands became a major hub for the burgeoning independent oil trading industry in the mid-1970s, with dozens of companies trading and arbitraging oil cargoes globally. Marc Rich + Co and other ambitious traders capitalized on the deregulation and price volatility in the oil market during this period.
Rotterdam became the focal point and benchmark for the emerging spot oil market in the 1970s as prices were now set by traders rather than OPEC. Traders bought and sold oil cargoes like speculative commodities.
Many traders were headquartered elsewhere but traded Rotterdam oil. Dutch companies like Vanol and Vitol grew into major players. Dr. Theodor Weisser’s company Mabanaft became a multi-billion dollar oil storage business.
Other traders like Gerd Lutter, Oscar Wyatt, David Chalmers, and the Koch brothers entered the market. Large oil companies also established trading arms.
Johannes Christiaan Martinus Augustinus Maria Deuss, along with Marc Rich, dominated oil trading in the 1970s-1980s. Deuss secured deals between governments and played politics to make deals and money. He had a lavish lifestyle and pushed boundaries in risky dealings with pariah states.
Deuss personified the shift to traders setting oil prices, away from the Seven Sisters. A new Iranian revolution was about to further transform the oil market and bring great riches to traders like Deuss and Rich.
In early 1980s, Jamaica ran out of money and could no longer afford to pay for its monthly oil shipment. This would have left the country without fuel within days.
Hugh Hart, Jamaica’s minister for mines and energy, was informed of the crisis on a Friday evening. The country’s central bank did not have enough funds to guarantee payment for the next oil cargo, due on Sunday.
Hart called Willy Strothotte at Marc Rich + Co’s New York office for help, but Strothotte said there was likely nothing they could do. He provided Marc Rich’s home phone number in Zug, Switzerland.
Hart called Rich directly in the middle of the night. Despite the late hour, Rich agreed to extend Jamaica a $10 million line of credit, guaranteed by Jamaican bauxite, to cover the upcoming oil shipment. This averted an immediate crisis.
The situation highlighted Jamaica’s dire financial straits and dependence on international traders like Marc Rich to access vital commodities like oil. It showed Rich’s influence and willingness to extend credit when other banks would not.
Hugh Hart, an executive from Jamaica, called Marc Rich at 2am asking for help as Jamaica was on the brink of running out of oil reserves and facing bankruptcy.
Rich was annoyed at being woken up but listened to Hart explain Jamaica’s dire situation. He told Hart to call his employee Willy in an hour.
Rich had arranged for an oil tanker full of Venezuelan crude that was heading to the US East Coast to stop off in Jamaica to deliver 300,000 barrels of oil within 24 hours. This saved Jamaica from ruin.
These type of risky deals without contracts demonstrated the power and influence commodity traders like Rich wielded after profiting greatly from the 1970s oil shocks. Jamaica in particular became hugely dependent on Rich and his successors for decades.
The chapter uses this story as an example of how commodity traders like Rich stepped in to fill gaps when nationalizations disrupted traditional relationships between resource-rich developing countries and large Western oil/mining companies during the 1970s-80s period.
In the 1980s, Jamaica’s aluminum industry was struggling due to high energy costs. Alcoa planned to shut down its alumina plant in Jamaica.
Jamaica’s prime minister Hart approached Marc Rich for help. Marc Rich agreed to a 10-year contract to buy alumina from the plant, as well as supplying fuel oil and caustic soda. This financing help allowed Jamaica to acquire a share in the plant from Alcoa.
Marc Rich then struck deals called “tolling” with aluminum smelters, exchanging alumina for finished aluminum. This made Marc Rich a major aluminum trader without owning production assets.
Marc Rich invested in an aluminum smelter in South Carolina and took a tolling deal for half its output.
In 1987, Marc Rich bet big that aluminum prices would rise due to tight supply. Prices quadrupled between 1985-1988.
Marc Rich was able to “corner” the aluminum market temporarily by holding a massive position larger than global stockpiles. This made them millions.
By 1988, aluminum profits made Marc Rich over $100 million that year and metals surpassed oil as their main revenue source.

So in summary, creative deals with Jamaica and aluminum companies allowed Marc Rich to build a towering position in aluminum and generate huge profits by accurately predicting and benefiting from a supply squeeze and price surge.

The government of Jamaica had been taking advantage of by commodity trader Marc Rich in deals negotiated by the previous government.
When Michael Manley returned to power in 1989 after elections, he promised to investigate these deals. But Marc Rich’s power and influence was demonstrated.
Hugh Small, the new mining minister and critic of deals with Rich, was pressured by officials in Venezuela and Canada to take a less hostile stance towards Marc Rich.
Small met with a Marc Rich executive who agreed to a small alumina price increase but only if Jamaica publicly dropped investigations into Marc Rich. Small refused but Jamaica still needed Rich’s money.
Manley announced a new $45 million loan from Marc Rich, saying “if Marc Rich is good for Jamaica, Marc Rich is good for Jamaica”. This appeased Rich though it wasn’t a full apology.
Marc Rich and later Glencore profited greatly from deals with Jamaica over decades, often paying far below market prices for alumina. In return they provided around $1 billion in financing to Jamaica.
The deals showed the new power and influence commodity traders like Marc Rich wielded as governments grew dependent on their financial resources in an era of global political and economic changes.
In the 1970s/80s, South Africa faced international oil embargoes and sanctions due to apartheid policies. This threatened to seriously damage their economy.
Traders like Marc Rich helped circumvent the embargoes by securing oil from Iran, Russia, Saudi Arabia and elsewhere and selling it to South Africa at a large profit. They used secrecy, codes and fake documentation to hide the trades.
Their dealings were a huge lifeline for South Africa’s economy and allowed the apartheid regime to continue. However, it cost South Africa billions extra to buy oil through the traders.
One major way traders disguised trade was through a front company called Cobuco, which pretended to supply oil to impoverished Burundi but was actually selling to South Africa on behalf of Marc Rich.
The oil trades showed the traders’ willingness to engage in deception and put profits over ethics by circumventing internationally-supported sanctions on apartheid South Africa.
In the 1980s, when US dollar interest rates were high (around 20%), many African nations wanted access to cheap oil and financing.
Marc Rich & Co trader came up with the idea of using a poor African country as a front to get cheap oil barrels and financing. They created Cobuco, which was formally a joint venture between Rich and the government of Burundi.
In reality, Cobuco did not supply any oil to landlocked Burundi, whose small consumption would be met by one tanker for over 6 years. It helped line officials’ pockets.
Cobuco negotiated deals with Iran to buy oil at the official OPEC price, significantly below market. Payment was not due for two years, effectively an interest-free loan.
Rich diverted the tankers and resold the oil at a profit. Some went to apartheid South Africa at a premium. Rich made $40-70M in profits from the different prices and $42M more from investing the loan for 2 years.
Burundi was paid a small fee but likely did not see the money. Rich replicated this model in other African countries.
Rich’s continued deals with Iran, including a $200M deal with another trader, eventually led to his indictment for tax evasion and trading with Iran during the hostage crisis. This transformed him into a famous and controversial figure.
Lawyers for Marc Rich challenged the indictment against him as a civil tax case rather than a criminal matter. They argued other companies like Exxon had engaged in similar activities but paid fines without facing criminal charges.
The lawyers also argued Rich’s trades with Iran were done through his Swiss company, which they believed was permitted. However, their protests made little difference. Rich’s company paid $200 million to settle accusations but Rich and Green fled the country instead of facing trial.
By the time they were indicted in 1983, Rich and Green had relocated to Switzerland where they were protected. Rich renounced his US citizenship and obtained other passports. Their fleeing the country was seen as treachery by many Americans.
Despite being international fugitives wanted by US marshals for nearly 20 years, Rich and Green were pardoned by President Clinton in 2001, just before leaving office. The pardon was highly controversial and seen as due to lobbying and donations made by Rich’s ex-wife.
Congressmen from both parties condemned the pardon. While Rich was now free, his time as a fugitive had taken a toll on him and made him defensive and suspicious, though his business continued to thrive through risky deals in unstable markets.
Futures contracts allow traders to agree to buy or sell commodities like oil at a future date, to hedge against price fluctuations or speculate.
Most traders don’t hold futures contracts until expiry - they trade the contracts before expiry to profit from short-term price movements.
However, the trader who initially sold a futures contract is obligated to deliver the physical commodity at expiry if the contract is not closed out beforehand.
In the given context, the summary is highlighting that although traders usually trade futures contracts before expiry to profit from price changes, the trader who sold a contract is ultimately obligated to deliver the commodities at the contract expiry date if the position remains open.
Andrew Hall, a trader at Phibro Energy (which was owned by Salomon Brothers), had the idea to store excess oil on very large crude carriers (VLCCs) by hiring tankers and paying demurrage fees to leave them idly anchored at sea. This was done at a large scale as a play to take advantage of fluctuating oil prices.
The trade worked well as tensions rose between Iraq and Kuwait in 1990, allowing Hall to lock in profits by hedging future oil prices. When Iraq invaded Kuwait, spot oil prices spiked from $20 to over $40 per barrel, generating huge gains for Hall both on his hedged and unhedged oil holdings.
However, the first Gulf War ended quickly with minimal disruptions, causing oil prices to plunge 35% in a single day and losing Hall $100 million. This demonstrated how rapidly fortunes could change in the newly financialized oil markets.
In 1981, Philipp Brothers merged with Salomon Brothers to form Phibro-Salomon. The merger took the financial world by surprise.
However, the merger quickly ran into issues. The traditional metal trading business of Philipp Brothers was struggling, while the bond traders at Salomon were profitable.
By 1983, the head of Salomon had become co-CEO, and in 1984 the businesses were further split. The old Philipp Brothers focused on metals trading while a new division called Phibro Energy focused on oil.
The metals business continued to decline and was eventually sold off. But the oil business thrived under a new leader who embraced futures, options and physical trading.
By the 1990s, the landscape had changed dramatically. Well-capitalized banks entered commodity trading and the successful firms needed relationships, capital, global reach and financial sophistication.
Many former giant trading firms collapsed trying to transition, including Transworld Oil whose owner John Deuss lost $600 million trying to corner the Brent oil market in 1987-1988.
By the end of 1992, Marc Rich + Co, formerly Philipp Brothers, was running out of money and struggling to survive in the transformed market environment.
By the early 1990s, Marc Rich’s original partners had all retired and he had controlling stake in the company for the first time.
Rich brought in his personal lawyer Bob Thomajan to help run the company, curtailing the power and independence of the senior traders.
Traders like Willy Strothotte, Manny Weiss, and Claude Dauphin felt they were no longer partners but subordinates, taking orders from Rich and Thomajan.
Relations deteriorated as Rich refused calls to distribute shares more widely. He fired Strothotte for perceived insubordination.
Dauphin resigned in July 1992 after his father’s death, wanting to return to France. Weiss followed shortly after at Rich’s prompting, ending his 30+ year career with the company.
By July 1992, Marc Rich + Co was in the midst of a full-blown leadership crisis as the two most senior traders resigned within a week amid rising tensions with Rich.
Marc Rich’s company, Marc Rich + Co, had a major risky zinc trade in the early 1990s that went badly. A trader named David Rosenberg convinced Rich to corner the zinc market, but when prices fell sharply they suffered huge losses of $172 million.
This failed trade hurt the company’s finances and weakened Rich’s grip on the company. The senior traders became unhappy with Rich and started planning their own competing firm.
In 1993, the oil trading team resigned en masse, prompting the banks to push for changes. The traders confronted Rich with demands that he sell his shares and step down as CEO.
After some negotiation led by senior trader Strothotte, Rich agreed to sell enough shares to lose control of the company. Strothotte returned as CEO but Rich remained chairman.
Strothotte then worked to completely sever ties with Rich by finding funds to buy out his remaining 27.5% stake in the company. This led to an unusual deal bringing in pharmaceutical company Roche as the new investor in Marc Rich + Co.
In the 1980s, Roche pharmaceuticals made huge profits from selling the drug Valium, which gave them a large cash stockpile.
In the early 1990s, looking to invest this cash, Roche purchased a 15% stake in Strothotte, a struggling Swiss trading firm founded by Marc Rich, for $150 million.
This allowed Strothotte’s management to fully buy out Rich, who had been running the company but was facing legal issues. They renamed it Glencore.
Glencore then thrived, gaining access to major bank financing now that it was no longer associated with Rich. It invested in physical commodity assets and became a highly profitable company.
A group of traders led by Claude Dauphin also broke away from Rich around this time to form the new trading house Trafigura, building it up slowly from scratch over many years.
Glencore in particular became extremely profitable for its trader-owners through large bonuses and the appreciation of their shares in the private company. Top traders accumulated great wealth.
In 1992, David Reuben, an aluminum trader, met Lev Chernoy, a disabled entrepreneur from Central Asia, in Moscow as the Soviet Union collapsed.
Chernoy had failed to deliver aluminum to Reuben in the past but came to apologize. Reuben was more interested in Chernoy’s knowledge of where to buy aluminum in the chaotic post-Soviet environment.
Reuben told Chernoy “Show me, and I’ll make you a billionaire.” Their meeting occurred as the planned Soviet economy disintegrated, creating opportunity for traders.
The collapse of the USSR opened up its vast oil, metals and grain resources to the global market. Traders like Reuben stepped in to connect Russian commodities to international buyers.
During Soviet times, trade was centralized and traders dealt mainly with state agencies. But economic reforms in the late 1980s allowed more private entrepreneurship, creating new partners for traders.
The chapter outlines examples of traders like Marc Rich cultivating new Soviet business contacts to bypass state monopolies and access commodities amid the dysfunctional economic transition period. This created wealth for traders and Soviets alike.
In the late 1980s and early 1990s, as the Soviet Union’s economy was collapsing, wild commodity deals were struck to get cash and supplies. PepsiCo famously received Soviet naval ships in exchange for Pepsi.
Traders like Philipp Brothers and Marc Rich took advantage to acquire Soviet metals exports cheaply. David Reuben’s company Trans-World was also a major player in Soviet metal trading since the 1970s.
As the USSR dissolved in 1991, it created an unprecedented opportunity for commodities traders. Resources could be acquired for a fraction of global prices as industries struggled. Traders helped connect producers with international markets.
Lev Chernoy, a Soviet entrepreneur, was acquiring alumina and aluminum in barter deals from struggling Soviet plants. He convinced Reuben to fly to Siberia to see one such massive aluminum smelter complex in Krasnoyarsk firsthand, launching Reuben’s deeper involvement in post-Soviet resource deals.
The Reuben brothers invested heavily in Russia’s aluminum industry in the early 1990s after the Soviet collapse, seeing an opportunity to become a major supplier.
They partnered with Lev Chernoy to gain expertise in operating in Russia and struck supply agreements with aluminum smelters, exchanging imports of alumina for aluminum.
This made their company, Trans-World, the dominant player in Russia’s aluminum sector, taking stakes in major smelters and building new infrastructure.
The large influx of inexpensive Russian aluminum flooded global markets and drove down prices significantly. Trans-World profited greatly from these trading activities.
However, the industry in Russia became dangerous due to organised crime involvement in competing for control of smelters and supplies. Several traders and company representatives were murdered in the violent competition.
By the late 1990s, Trans-World was facing challenges as the political situation in Russia changed and they lost control of some assets, bringing their dominance of the industry to an end.
Cuba was facing an economic crisis in the 1990s after its main backer, the Soviet Union, collapsed. It struggled with shortages of goods and fuel.
To save the economy and keep the revolution alive, Cuba opened up to foreign investment and tourism.
Vitol, a commodity trading company, had been selling fuel to Cuba on credit. When Cuba racked up debts, Vitol decided to invest in tourism as a way to make its money back.
Vitol built the luxurious Parque Central hotel in Havana in the 1990s, Cuba’s first five-star hotel. It cost $31 million and showed how Cuba was embracing foreign capital.
The hotel’s construction revealed how the fall of the Soviet Union was impacting countries globally. Commodity traders like Vitol saw opportunities to invest in Cuba’s emerging tourism industry during its economic crisis.
After the fall of the Soviet Union, deeply rooted economic networks between the Soviet bloc countries were disrupted. Many foreign investors were hesitant to invest in these formerly communist countries due to political risk.
However, commodity traders stepped in to prop up these cash-strapped countries by supplying goods like oil and food on credit. They redirected trade flows based on market prices rather than political relationships.
This opened up huge opportunities for traders like Vitol to buy and sell commodities across the former Soviet sphere, from Cuba and Angola to Romania and Kazakhstan. Countries like Cuba now depended on traders rather than the Soviet Union.
Ian Taylor of Vitol exemplified this era. He built close relationships with political figures like Fidel Castro while ensuring Vitol maintained access to Western financial markets and credibility. He helped keep communist regimes afloat through market-based trade.
Cuba entered a period of economic hardship known as “the special period in time of peace” after the fall of the Soviet Union eliminated Moscow’s assistance. Shortages emerged as Cuba could no longer import basic goods.
Fidel Castro turned to commodity traders like Marc Rich and Vitol for help, as they were willing to buy Cuban sugar in advance and provide oil and fuel in return. This recreated the Soviet-era trade arrangement but with private companies.
Vitol became highly active in Cuba, launching a sugar trading unit and briefly investing in a sugar refinery. At its peak it delivered $300 million of fuel to Cuba annually.
However, Cuba’s sugar production declined dramatically, making it difficult for traders to get repaid. Vitol invested in Cuban hotels to try to recoup losses. It created shell companies to avoid U.S. sanctions against business with Cuba.
Though Vitol later sold its hotel venture, it maintained close ties with Castro and Cuba, visiting annually to ensure Cuba did not forget its support during the economic crisis after the Soviet fall. The commodity traders had become crucial partners for Cuba’s economy during this turbulent period.
In the early 1990s during the conflicts following the dissolution of the Soviet Union, commodity trading firms like Marc Rich + Co and Glencore financed the government of Tajikistan in exchange for aluminum exports. It was a risky but profitable business amidst the power struggles.
Payment was often done through barter as countries lacked cash. Traders facilitated exchanges of goods for desperate parties. For example, Marc Rich traded cotton for corn from Ukraine in Uzbekistan.
Vitol transformed dramatically in this period, increasing trading volumes threefold from 1990-1999 to become the world’s largest oil trader. It expanded from refined products into crude oil trading globally.
Vitol encountered some challenges, like losing money on a venture trading substandard aluminum in Russia in the 1990s through a joint venture called Euromin.
Ian Taylor helped grow Vitol’s crude oil business significantly in this chaotic post-Soviet period, striking deals in places like Russia, Kazakhstan, Libya, Iran, Nigeria and beyond. He became CEO in 1995 as Vitol took on more risk to capitalize on opportunities from the integration of former communist countries.
The collapse of communism and emergence of capitalism in former Soviet states provided many opportunities for commodity traders to operate in new markets. However, it was also a risky and corrupt environment in the early 1990s.
Vitol supplied fuel to Yugoslavia during its civil war and sanctions, losing money and turning to a Serbian warlord named Arkan to help resolve a payment dispute.
Glencore also engaged in fraudulent activities in Romania, delivering cheaper types of oil than what was specified in contracts and falsifying documents to cover it up. They were later ordered to pay $89 million in compensation.
The 1990s saw economic crises that impacted commodity prices and emerging markets where traders had investments. Only the strongest traders survived this period of consolidation, with many struggling or going out of business.
Major oil and mining companies also consolidated, reducing the number of large in-house trading operations and making the independent trading houses more important competitors in the industry.
In 2001, Mick Davis drafted a memo outlining plans to turn Xstrata, a struggling mining company, into one of the world’s largest by acquiring mining companies globally.
Davis had taken over as CEO of Xstrata, in which trading giant Glencore owned a 39% stake. He was convinced commodities prices were at or near their lows and would rise significantly due to growing demand from China.
Davis’s prediction proved correct. Over the next decade, China underwent astonishing growth that transformed natural resources demand. It became the world’s largest consumer of materials like steel, nickel, soybeans and more.
China’s rise caused prices of commodities to triple or quadruple. This boosted Xstrata, which became the most valuable part of Glencore. Glencore transitioned into a hybrid trader and miner.
It was an unprecedented boom for commodity traders as none since the 1970s. However, few traders saw China’s growth and impact coming at the time. Traditionally, China was seen as an exporter of resources rather than major consumer.
In 1978, Deng Xiaoping set out new economic reforms in China embracing limited capitalism and engagement with the outside world after Mao’s death. This sparked decades of spectacular 10% annual growth as China became the world’s factory.
China’s growth didn’t significantly impact commodities until it hit a “sweet spot” of per capita income over $4,000, around 2001. This spurred urbanization, infrastructure development, and consumption of resources like copper, oil, meat.
China’s 2001 entry to the WTO turbocharged its growth. Its demand for commodities like copper skyrocketed in the 2000s as it entered peak consumption.
Synchronized growth in emerging markets created a multi-decade “supercycle” of high commodity prices as demand outstripped supply. Between 1998-2018, emerging markets drove over 90% of metals consumption growth.
Surging Chinese and global demand collided with under-investment in the 1990s, exploding commodity prices in the 2000s-2010s to record highs and fueling a global economic boom. This enormously benefited commodity producers and traders like Glencore.
Ivan Glasenberg grew up in Johannesburg, South Africa in a wealthy household. He attended Hyde Park High School where he was a confident but unremarkable student who did not always accept the teacher was correct.
After military service, he took an accounting job and enrolled in university to study accounting. In 1982, he moved to the US to earn an MBA from USC. He was also a competitive athlete who hoped to compete in the 1984 Olympics but was barred due to South Africa’s apartheid policies.
Glasenberg joined Marc Rich + Co. (which would later become Glencore) in 1984, starting in their Johannesburg office. He excelled at building relationships in the coal industry and worked his way up, eventually becoming head of Glencore’s coal division in 1990.
Glasenberg emerged as a rising star at Glencore and was seen as the one who would take the company to the next stage. He stayed out of internal power struggles but supported Willy Strothotte emerging as CEO in the 1990s.
In the early 1990s, Glasenberg started acquiring coal mines for Glencore, making it one of the first trading firms to own production assets. These early deals were small but helped transform Glencore’s fortunes as coal prices rose due to growth in China.
Glasenberg and Glencore were looking for ways to maintain profitability as commodity trading became more competitive due to technological changes. Buying mines would ensure a supply of commodities to trade without competing for supplies.
Starting in 1998, Glasenberg took advantage of low coal prices to acquire over a dozen coal mines in Australia and South Africa. By 2000 Glencore was the world’s largest shipper of thermal coal.
Glencore needed to buy back a 15% stake held by Roche. Glasenberg’s solution was to create a new publicly traded company, Enex, comprising Glencore’s coal assets to raise funds.
On September 11, 2001, terrorists attacked the US, crashing markets. Glasenberg had been meeting investors in New York for the Enex IPO. The listing was cancelled due to the market turmoil, scuttling Glasenberg’s plan to buy out Roche. Xstrata, which Glencore used previously to raise funds, was also struggling.
Mick Davis took over struggling mining company Xstrata in 2001 and worked to turn it around. Xstrata was at risk of breaching debt covenants which could have forced parent company Glencore to provide support.
Davis and Glencore CEO Ivan Glasenberg knew each other previously. In 2002, Davis came up with a plan for Xstrata to buy Glencore’s struggling coal assets, raising funds through a share sale in London. This addressed problems for both companies.
The deal went through in 2002 but Glencore was initially thought to have gotten the better end. However, coal prices soon rose sharply as China’s growth fueled a commodity boom. The assets proved very valuable for Xstrata.
This was the beginning of over a decade of negotiations between Davis and Glasenberg as they built their companies through the commodity price boom, culminating in a later merger attempt between Glencore and Xstrata.
Murtaza Lakhani, a Pakistani-born businessman known as Glencore’s “man in Baghdad,” visited Glencore’s headquarters in Switzerland multiple times in 2002 to collect large sums of cash.
On one visit he collected $415,000 in cash, which he then deposited at Iraq’s diplomatic office in Geneva to pay illegal “surcharges” on oil contracts that benefited Glencore.
Lakhani served as a middleman facilitating oil deals for Glencore in Iraq. He received a monthly fee of $5,000 plus undisclosed “success fees” from Glencore.
Iraq had implemented an oil-for-food program after the Gulf War to sell oil on international markets and use the proceeds to buy humanitarian aid for Iraqis. This program was corrupted as oil prices rose in the 2000s.
Iraq began demanding illegal “surcharges” paid directly to Baghdad from oil buyers if they wanted continued access to Iraqi oil. A later UN investigation found Glencore and other traders had paid these surcharges via middlemen like Lakhani.
After Iraq imposed surcharges on oil exports after 2000, major oil traders like Trafigura, Vitol, Glencore, and Oscar Wyatt found complex ways to pay the surcharges while obscuring their involvement. They used shell companies in tax havens to hide the payments.
The UN investigated and concluded Iraqi leader Saddam Hussein ensured oil prices were low to allow room for surcharges paid to Baghdad. The regime earned $228.8 million from surcharges between 2000-2002.
While Glencore denied wrongdoing, the UN found its employee Lakhani paid $1 million in surcharges, including $710,000 in cash to Iraq’s UN mission in Geneva. An investigation also said Glencore paid $3.22 million in “illegal surcharges.”
As demand from China and others grew through the 2000s, tight oil supplies caused prices to soar from 2004 onward. Rising prices hugely benefited traders through speculation, long-term contracts, and exploiting tolerances in contracts to buy and sell more oil than the contract terms. This flexibility, or “optionality,” allowed traders to profit off the rising prices.
The passage discusses the emergence and growth of two large oil trading companies, Mercuria and Gunvor, in the early 2000s amid strong global demand for commodities, especially from China.
Mercuria originated from two musicians who got into oil trading in Russia/Poland in the 1990s. They established a dominant position in shipping Russian oil. Gunvor was formed by a partnership between Gennady Timchenko and Torbjorn Tornqvist, who had been rivals exporting Russian oil products through Estonia.
As Chinese demand and Russian oil production boomed in the 2000s, opportunities emerged for traders to facilitate oil sales between these countries. Mercuria pioneered oil trades between Russia and China.
Gunvor helped maintain flows of Russian oil exports and dollars to the Russian state under Putin. Both companies played an important political role through their trading activities.
By linking supply from countries like Russia to rising global demand, especially China’s, Mercuria and Gunvor grew rapidly in the 2000s to become major global oil trading companies handling tens of billions in resources annually.
Two entrepreneurs invested almost all their money to acquire shares in an oil trading company they started, with additional funding from loans from two partners.
The company was well-positioned to connect Russian oil supply with growing Chinese demand. It grew rapidly and became very profitable as the trade between Russia and China increased.
By connecting Russian oil to Chinese buyers, the company demonstrated how money could be made in the oil market, attracting a rival company called Gunvor.
Gunvor cultivated close political connections in Russia, especially with Putin. When Putin became president, it helped Gunvor succeed tremendously.
When Putin seized assets from oligarch Khodorkovsky’s Yukos oil company, Gunvor was positioned to help the Russian state sell that oil. This transformed Gunvor from a small player into a major global oil trader, handling large volumes of Russian crude exports.
Gunvor’s role in assisting Russia after the Yukos takeover contributed greatly to its huge profits in subsequent years, making it one of the key companies carrying out Putin’s agenda in oil markets.
In the 2000s, as commodity demand boomed due to China’s growth, companies could no longer ignore Africa’s rich natural resources. Traders, miners, and oil companies all scrambled to invest in Africa.
Glencore emerged as a major player through its ownership of copper mines like Mutanda in the DRC. Their involvement in Africa both brought great wealth but also controversy.
Africa relies heavily on commodity exports, so its economy rises and falls with commodity prices. After struggling in the 1980s-1990s due to low prices, Africa boomed in the 2000s thanks to high prices.
Traders played a key role supplying commodities to China and other emerging markets. They also financed African governments and politicians, some of whom were corrupt. This enriched leaders but also propped up authoritarian regimes.
Doing business in Africa was challenging due to dictators, corruption, and local power brokers. Traders often outsourced these relationships to agents and fixers on the ground.

Dan Gertler was one of the most prominent “fixers” or intermediaries in Africa, with connections stretching across many countries on the continent. He helped facilitate business dealings for commodity traders by establishing layers of deniability around bribery and other payments needed to operate. Gertler cultivated close relationships with political leaders in the Democratic Republic of Congo like President Joseph Kabila, becoming a gatekeeper to the country’s valuable mineral resources. This included advantageous mining deals for companies like Glencore. Gertler’s influence grew amid rising global demand for Congo’s copper, cobalt and other metals. However, his opaque dealings would later draw sanctions from the US over allegations of corruption. For years, he acted as a crucial middleman assisting foreign companies to navigate Congolese politics and bureaucracy to access the country’s lucrative mineral wealth.

Glencore became interested in expanding into mining in the Democratic Republic of Congo (DRC) in the 2000s. They were introduced to promising copper deposits at Mutanda hill by middleman Arif Hamze. Glencore CEO Ivan Glasenberg was impressed and saw Congo as an opportunity for growth beyond just trading.

Hamze had formed a company called Mutanda Mining to develop the deposits. In 2007, Glencore bought a 40% stake in Mutanda for $150 million, gaining operational control. Around this time, Glencore also partnered with Israeli businessman Dan Gertler on another mine in Congo. This began a close and lucrative relationship between the two.

Glencore and Gertler worked together on over a dozen deals worth over $1 billion in Congo over the next decade. Gertler used his political connections to facilitate deals, while Glencore provided financial backing and market access. However, Gertler was also alleged to have paid over $100 million in bribes to Congolese officials in deals involving Glencore’s mines.

In 2017, Glencore bought out Gertler’s stakes in its main Congolese mines for $960 million. But in 2018, Glencore disclosed it was being investigated by US authorities for corruption and money laundering related to its Congo dealings dating back to 2007. Glasenberg’s ambitions in Africa had turned into a legal stain.

Trafigura, a commodity trading company, bought cheap coker gasoline from Pemex that contained high levels of sulfur and other impurities.
To make the fuel usable, Trafigura planned to remove the sulfur via “caustic washing” onboard a tanker. This process produces a toxic residue.
Ports refused to allow Trafigura to perform the washing due to environmental concerns over disposal of the residue.
Trafigura found an old tanker, the Probo Koala, and had the washing done onboard, producing 528 cubic meters of toxic residue stored in the tanker’s slop tank.
Still needing to dispose of the residue, Trafigura contacted ports but ultimately dumped the waste in a landfill in Abidjan, Ivory Coast, causing a major pollution incident and health issues for thousands of local residents.
The incident cost Trafigura over $200 million and damaged its reputation due to the environmental hazards of dumping toxic waste in Africa with lax regulations.
Soaring food prices in 2008 caused a crisis as demand outpaced supply due to bad weather hurting crop yields. This caused prices of staples like wheat, rice and corn to spike dramatically.
The price increases hit the poor hardest and nearly overwhelmed aid organizations like the World Food Programme.
China, the world’s largest soybean importer, turned to the “ABCD” agricultural commodity traders (ADM, Bunge, Cargill, Louis Dreyfus) for help securing supplies amid fears of shortages and social unrest from high prices.
Other governments in places like the Middle East, Asia and Africa also worried about price spikes for key staples like wheat and rice causing instability.
While shipping commodities globally, the traders also profited from bets placed using their unique market insights as the food crisis unfolded alongside the 2008 financial crisis and recession.
Commodity trading companies like Cargill would profit greatly from speculative trades during the global economic turmoil and commodity price fluctuations of the late 2000s.
Speculation has always been a central part of commodity trading, with proprietary/speculative trading desks making significant profits for many companies. Agricultural commodity traders in particular relied heavily on speculation given their access to information from thousands of farmers.
In late 2008-early 2009, Cargill made over $1 billion from speculative short positions betting that oil and shipping prices would fall as the global economy headed toward recession.
Glencore also profited from speculation, quietly going long on wheat futures before publicly calling for Russia to impose an export ban in 2010 due to drought, which drove up wheat prices.
While speculative bets did not always pay off, the late 2000s were generally a boom time for commodity trading companies to profit from speculation amid significant commodity price volatility during the economic crisis and recovery.
Glencore claimed it received timely reports that growing conditions in Russia were deteriorating severely in 2010 due to drought, putting it in a position to profitably trade wheat and corn prices.
Between June 2010 and February 2011, wheat prices more than doubled, generating $659 million in profits for Glencore’s agricultural trading unit.
The Russian export ban triggered panic buying in wheat-importing Middle Eastern and North African countries like Egypt. This exacerbated food inflation and dissatisfaction in the region, contributing to the Arab Spring uprisings starting in late 2010.
While the drought would have impacted wheat supplies regardless, Glencore’s statements and Russia’s export ban amplified the effects, with wide-ranging geopolitical consequences across the Middle East and North Africa. Glencore was able to profit from speculative trades during this period of crisis.
Archer Daniels Midland (ADM) aggressively lobbied the US government for decades to promote ethanol use in vehicles as a motor fuel. ADM’s CEO Dwayne Andreas personally delivered large cash donations to politicians like Richard Nixon to support pro-ethanol policies.
Under Andreas and later CEO Patricia Woertz, ADM became the dominant producer of corn-based ethanol in the US. The company increased lobbying spending and supported regulations in the 2000s that mandated increasing levels of ethanol blending into gasoline.
The US policies pushed by ADM helped cause ethanol production from corn to balloon. By 2011, a sixth of the global corn crop was being used for US ethanol.
The large diversion of corn supplies into fuel contributed to rising agricultural commodity prices during the food price spikes of 2008 and 2010. While not solely responsible, ethanol use exacerbated tight global food supplies.
By supporting ethanol policies for decades, ADM significantly influenced US energy policy in a way that indirectly impacted global food markets and prices through increased commodity demand. This demonstrated the political influence large trading companies could wield.
The IPO of Glencore, one of the largest commodity trading companies, revealed the enormous personal wealth that had accumulated for some of its top traders and executives from decades of trading.
Glencore’s CEO Ivan Glasenberg owned 18.1% of the company, worth $9.3 billion, while several other senior traders also became billionaires. This showed the fortunes being made in the secretive commodity trading industry.
The IPO brought greater public scrutiny not just of Glencore but of the entire commodity trading world. Traders and their vast financial influence were now being exposed after operating in the shadows for so long.
It marked a shift as commodity traders transitioned from simply buying and selling to also investing in productive assets like mines, oil tankers, and warehouses. This integrated model had become necessary as margins on trading alone declined with increased transparency and consolidation in supply industries.
By building out infrastructure and supply chains, commodity traders established themselves as important players globally, not just middlemen, influencing commodity flows especially in emerging markets.
Glencore’s IPO in 2011 marked a turning point when commodity traders became too big for investors, journalists and governments to ignore.
In 2007, Glencore realized it needed to go public to continue expanding through acquisitions, as it lacked the capital. A merger with Xstrata was initially proposed but negotiations failed.
The 2008 financial crisis nearly caused Glencore’s bankruptcy as its credit lines were threatened. This experience reinforced the need to go public for reliable access to capital.
While Glencore went public, many other traders like Trafigura, Louis Dreyfus and Gunvor raised money through public bonds. Others sold shares to sovereign wealth funds and private equity investors.
Going public brought greater publicity and scrutiny to commodity trading companies that had previously operated in the shadows. Some traders came to regret this loss of anonymity.
Glencore’s 2011 IPO marked the point when the scale of commodity trading could no longer be ignored by outside observers.
Glencore was under pressure financially during the global financial crisis, making CEO Ivan Glasenberg vulnerable as he had to ask his lieutenants for support. This experience made relations within the company more competitive.
Glasenberg realized Glencore needed to go public to address constraints on growth and remove risk of mass partner departure. He pursued an IPO starting in around 2010.
Glencore struggled to find a suitable chairman for its board as it prepared for the IPO. Talks broke down with prominent potential chairman John Browne over issues like control and transparency.
Glencore went ahead with the IPO in 2011 without a chairman initially named, appointing Simon Murray later. The IPO was hugely successful, valuing Glencore at $60 billion.
Glasenberg continued pushing for a merger with rival Xstrata, which was approved in 2012. However, tensions emerged between Glencore traders and Xstrata executives about control and integration of the companies.
Mick Davis was a large shareholder and CEO of Xstrata, which was publicly listed, while Ivan Glasenberg owned a significant stake in privately held Glencore.
Glencore was acquiring Xstrata in a merger. Davis realized Glasenberg would replace him and his team after the merger.
Davis negotiated “retention bonuses” totaling over $200 million for himself and his team to stay on or if forced out by Glencore after the merger.
This generated public backlash against executive pay packages amidst a wave of shareholder activism in the UK. It galvanized opposition to the merger among Xstrata shareholders.
Qatar’s sovereign wealth fund also started buying Xstrata shares, acquiring over 10% to demand Glencore increase its offer price.
After months of refusal, Glasenberg was forced to admit defeat and increase Glencore’s offer price to secure Qatar’s approval and save the merger deal. However, he replaced Davis as CEO of the combined company.
This culminated in an eight-month saga that saw Glencore eventually complete the merger and become a mining giant, while Davis remained upset about how events unfolded.
In 2018, public school teachers in Pennsylvania received a notice about an investment made by their pension fund into Kurdistan. Pension funds from South Carolina and West Virginia had also invested in the same venture.
The investment connected the pension savings of these American public sector workers to one of the more volatile regions in the Middle East. However, the exact nature of the investment was obscured due to passing money through offshore vehicles.
The investment was made through an Irish company called Oilflow SPV 1 DAC, which was registered to a non-descript office building in Dublin housing many other companies.
In 2017, Oilflow SPV 1 DAC had raised $500 million by issuing “secured amortizing notes” through the Cayman Islands Stock Exchange. This effectively meant it had borrowed money through a bond-like instrument.
So public pension funds from several U.S. states had portions of teachers’ and other public workers’ retirement savings indirectly invested in borrowing money that was linked to the oil industry in Kurdistan, a politically volatile region in the Middle East.
Oilflow SPV 1 DAC was an investment vehicle controlled by Glencore that offered unusually high yields of 12% annually to American pension funds. This reflected the risky nature of the investment, which financed oil exports from Iraqi Kurdistan.
Glencore and other commodity traders began arranging deals to export Kurdish oil after ISIS advances in 2014 gave Kurdish forces control over oil-rich Kirkuk. This offered the Kurds a chance to build an economically independent state.
Exporting the oil was challenging due to legal threats from Baghdad, which claimed the oil. Traders used techniques like obscuring the oil’s origin and blending it with other crude to move it to markets like Israel and China.
The deals involved complex financial structures and risk, but allowed commodity traders to take on political roles and influence by facilitating the Kurdish region’s oil exports and drive for independence through their financial support and trading activities.
Vitol traded oil from Iraqi Kurdistan independently of the central Iraqi government in Baghdad, which claimed the oil was stolen. When Vitol’s oil tanker disappeared to avoid seizure, it eventually reappeared empty after offloading the cargo somewhere.
To fund the Kurdistan region’s independence ambitions, several trading companies including Vitol, Glencore and Trafigura lent the Kurdish government billions of dollars in exchange for future oil shipments.
Glencore arranged financing through an offshore bond backed by Kurdish oil. This involved an intermediary company with past Glencore ties, raising funds from international investors including American pension funds.
The cash from oil traders empowered Kurdistan’s independence movement, but when they held an independence referendum against Baghdad’s warnings, the Iraqi army retook disputed regions. This threatened the oil-backed loans.
While traders claim political neutrality, their deals had significant political effects by financing Kurdistan’s autonomy bid that backfired, hurting the offshore bond’s repayment terms. Traders follow profits over political consequences.
Glencore provided significant financing to Chad through oil-backed loans, known as prepayments. This included $300 million in 2013, doubled to $600 million that year, and another $1.45 billion in 2014.
The loans helped fund Chad’s President Idriss Déby, who has ruled the country for decades. Déby faced threats from Islamist militants and used the money, indirectly, to finance military operations against them in neighboring countries.
While the loans were supposed to only support Chad’s civil budget, in effect they freed up other funds to fund the military. Glencore was aware its money could help finance Déby’s wars.
When oil prices fell sharply in late 2014, Chad struggled to repay the loans. Glencore had to renegotiate the deals in the lower price environment.
The deals showed Glencore’s willingness to take on risky investments and lend to unsavory regimes, filling a gap left by other institutions increasingly wary of Chad under Déby’s leadership. But they also took on significant country risk through this dominant involvement in Chad’s economy.
Glencore had provided crucial financing to Chad, loaning the country almost $1.5 billion, equivalent to 15% of Chad’s GDP. This loan imposed severe austerity on Chad and forced deep spending cuts.
Even after restructuring, the loan terms were punishing for Chad. Déby, Chad’s president, came to regret the deal with Glencore.
Vitol also provided crucial financing to Kazakhstan’s state oil company KMG, channeling over $6 billion in loans in exchange for future oil supplies. This made Vitol the largest financier of KMG and probably the largest financier of the Kazakh state.
In Russia, Glencore and Vitol provided $10 billion in loans to Rosneft, Russia’s state oil company, in exchange for future oil supplies. This was the largest ever oil-for-loans deal and cemented the traders’ foothold in Russia’s oil industry. The financing helped Rosneft acquire TNK-BP in a massive $55 billion deal.
The passage describes a pivotal phone call that Claude Dauphin of Trafigura received from BNP Paribas in 2014.
BNP Paribas was under pressure from the US government for violating sanctions against countries like Cuba, Sudan and Iran. It had pled guilty and agreed to pay $9 billion in fines.
In its statement of the case, the US mentioned loans BNP Paribas provided “to a Dutch company” to finance oil trades with Cuba, without naming the company.
This Dutch company was Trafigura. As a result of its sanctions-related legal issues, BNP Paribas was pulling about $2 billion in credit lines from Trafigura, ending their long banking relationship.
This marked the beginning of a new era where the commodity traders faced aggressive regulation and oversight from the US government, unlike in previous decades when they faced little scrutiny. It was a cataclysmic moment that showed how reliant the traders were on bank financing like from BNP Paribas.
Trafigura was a major European commodities trading company that had been shipping oil to Cuba since the 1990s in partnership with French bank BNP Paribas. They would finance oil inventories stored in Cuban tanks, with BNP providing financing and Cuba paying afterwards.
This arrangement helped Cuba preserve cash during hard times while giving Trafigura access to the Cuban market. It amounted to hundreds of millions in sales over many years.
The issue was that BNP loans supporting Trafigura’s Cuban business were in US dollars, requiring routing through the US financial system in violation of US sanctions on Cuba.
When the US discovered this in 2014, it fined BNP $9 billion, an unprecedented penalty. This threatened Trafigura’s business, as BNP was its largest financier and other banks might follow BNP in cutting ties.
The BNP case showed the US willingness to aggressively enforce its foreign policy even against allies’ companies, using the dollar’s influence over global banking. Commodity traders were now on notice of increased enforcement.
This passage discusses the changing landscape faced by commodity traders in the late 2000s and 2010s, as US enforcement efforts ramped up.
The US began using economic sanctions more aggressively as a tool of foreign policy, targeting not just adversaries but also individuals involved in corruption and human rights abuses. This had major impacts as the US dollar dominated global trade.
Commodity traders like Glencore and Gunvor faced scrutiny as many of their business partners and allies were sanctioned by the US. Investigations into bribery and corruption also began in countries like Brazil and Switzerland.
The US Department of Justice launched an investigation into Glencore’s operations in Congo, Nigeria and Venezuela starting in 2018. Other regulators followed suit.
Traders felt they were now “under a microscope” as the banking industry had been previously, facing a stricter benchmark for acceptable behavior from US authorities.

The profits of commodity trading firms are no longer growing at the rapid pace they once did for several key reasons:

Information is now more democratized. Traders no longer have the same huge informational advantage they once had due to technological changes like the Internet. All market participants now have more equal access to commodity data and prices.
Global trade is facing headwinds from rising protectionism. Trends toward more open trade that benefited traders for decades may be reversing due to developments like the US-China trade war. This fragments markets.
Climate change poses a risk as policies are enacted to reduce fossil fuel use. Traders generate much of their profits from oil, gas, and coal trading, but demand for these commodities is expected to peak in the coming years.
Producer firms and governments are entering trading themselves. As awareness of trader profits grows, some suppliers are conducting their own trading to capture more value. This decreases opportunities for independent trading houses.

In summary, structural changes in information, trade, energy markets, and industry dynamics have made it harder for commodity traders to earn the outsized profits they once routinely did. Their traditional business model is becoming more difficult to sustain.

Chinese state-owned commodity trading companies have been aggressively expanding their trading activities in recent years in agriculture, metals, and oil. This poses a threat to existing Western trading houses like Glencore and Vitol by reducing their potential business in China.
Chinese traders have an advantage in that they have less need to comply with US sanctions and regulations since they have few US assets and don’t rely heavily on the US financial system. For example, Zhuhai Zhenrong continued trading with Iran even after Western traders withdrew due to US sanctions.
When the COVID pandemic caused a massive drop in global oil demand in 2020, Glencore and other traders stepped in to purchase excess oil from struggling producers. Glencore chartered very large oil tankers to store the oil it purchased. It was able to profit greatly by selling oil futures at much higher prices than it paid due to the expectation that demand and prices would recover.
This intervention by traders to purchase and store excess supply helped stabilize oil markets during a period of crisis, demonstrating their continued important role in global commodity markets.
Commodity traders continue to play an essential role in the global economy by buying, selling, and storing natural resources around the world. Politicians rely on their ability to manage commodity supplies despite criticism of their business dealings.
Oil remains a key currency of power globally, and traders are still dominant players in the oil market. They helped absorb a billion barrels of excess oil during the 2020 pandemic, preventing bankruptcies and job losses in the oil industry.
However, many of the legendary traders who dominated the industry for decades are now retiring. A new generation is facing increasing pressures to reform practices around legality, sustainability, and diversity.
Banks are enforcing stricter policies on financing due to corruption risks, although traders have few financing alternatives. Society is demanding more sustainable and ethical business conduct.
While some trading styles may fade, the core role of facilitating global commodity trade will likely continue as long as resources are internationally shipped and markets have inefficiencies. The traders remain influential economic and political actors for the foreseeable future despite industry challenges.
The idea came from Carola Hoyos, who had been mentoring the authors and befriended them.
James Pullen enthusiastically helped them turn the idea into a reality by giving feedback on early drafts and helping to organize their thoughts to understand the world of publishing.
They are grateful for the support of their friends and family, especially their mothers, who encouraged the project even when it kept the authors apart while working on it.

Here is a summary of page 40:

Discusses conflicts of interest in the Soviet grain deals of the early 1970s between trading companies and the US government. Trading companies like Cargill and Philipp Brothers profited greatly from selling grain to the Soviets while implementing Nixon administration policy.
Notes that trading executives testified before Congress but maintained the deals benefited both American farmers and the Soviet Union. Critics argued the deals amounted to a “coup” for the trading companies and burned American taxpayers. Government studies later supported this view.
Quotes an older commentary that called the deals a “very sweet deal” for Cargill and “something of a bonanza” that added greatly to their profits in 1972. The deals demonstrated the growing political and economic power of private grain trading companies.

Based on the provided text, egoce refers to a company or organization. However, there is no further context or explanation provided about egoce in the passage. The text is a series of endnotes and does not appear to mention or summarize egoce.

Here is a summary of the key points from the given text:

In the early 1990s, after Iraq’s invasion of Kuwait, oil prices spiked dramatically due to supply disruptions. This created opportunities for oil traders.
Andrew Hall of Phibro (later acquired by Salomon Bros) was one of the traders who benefited greatly. He took large speculative positions and made large profits as prices rose.
Other major traders like Marc Rich and Vitol also did well initially. However, Marc Rich’s company began facing legal issues over tax evasion charges in the US.
With Rich facing indictment, he fled the country in 1983. His company continued operating but he transferred control to employees in the early 1990s to isolate himself from legal risks.
Meanwhile, some other companies like Philipp Brothers and Ferruzzi struggled due to poor trading positions and financial troubles. Some went bankrupt.
In the power vacuum left by Rich, new traders like Glencore, Trafigura and Mercuria emerged. They were more financially disciplined and traded both physical cargoes and paper barrels. This helped them gain market share.
Trafigura in particular grew rapidly after acquiring some of Marc Rich’s assets. It became a major global integrated oil trading company under the leadership of former Marc Rich employees.

Here is a summary of the key points from the provided text:

The accounts describe Trans-World’s operations in Russia in the 1990s, including partnering with Lev Chernoy to acquire aluminum assets from the Russian government.
The Reuben brothers also became involved through providing financing. Trans-World aimed to consolidate Russia’s fragmented aluminum industry.
The project encountered difficulties including disputes with other oligarchs and issues with plant modernization. However, it helped establish the foundations for a private aluminum industry in Russia.
Interviews with former Trans-World employees and executives provide details on the company’s strategy and challenges in operating amidst the turmoil of 1990s post-Soviet Russia.
The account references legal disputes, organized crime issues, and the eventual sale of Trans-World’s Russian assets as it changed strategy in the late 1990s/early 2000s.

Here is a summary of the notes for Ibid.:

Ibid. refers to the previous source cited. The notes provide additional context about Glencore’s role in the UN oil-for-food scandal in Iraq based on the report by the Independent Inquiry Committee led by Paul Volcker. It details how Glencore, through a company called Incomed Trading which was run by businessman undisclosed Indian businessman Rajendra Kumar Lakhani, became one of the largest purchasers of Iraqi oil under the oil-for-food program. It was alleged they paid illegal surcharges or kickbacks on oil purchases. While Glencore denied intentionally violating the sanctions, the Volcker report found evidence they were aware of the surcharge practices.

Here is a summary of the key points from the passages:

Sub-Saharan Africa’s GDP growth lagged in the 1980s and 1990s due to falling commodity prices. Nigeria’s oil production also declined in this period.
In the 2000s, rising commodity demand and prices from China and elsewhere boosted African economies. Nigeria’s oil production increased.
An investigation found an oil trader paid over $100 million in bribes related to the Nigerian oil industry.
An Israeli billionaire businessman earned billions through mining deals in Congo but the deals left Congo very poor. He had close ties to Congolese leaders and was accused of using his influence to gain lucrative mining rights.
Glencore acquired major mining assets in Congo during this period and faced legal challenges over its operations. It disclosed paying hundreds of millions for stakes in Congolese mining projects.
The passages provide context on how commodity booms impacted African economies and also discuss allegations of corruption and influence peddling related to natural resources industries in Nigeria and Congo.
In May 2011, as part of Glencore’s IPO process, a consultant valued the whole of Mutanda, a copper and cobalt mining company located in the Democratic Republic of Congo, at $3,089 million. This valuation was included in Glencore’s IPO prospectus dated 3 May 2011 on page 130.
In May 2012, Glencore took control of Mutanda through a $480 million deal to purchase additional stakes in the company, increasing its ownership.
This summary references the Glencore IPO prospectus valuation of Mutanda as well as a subsequent deal Glencore did to gain control of Mutanda, citing the specific page number and dates where the information appeared.

Based on the information provided,

The passage references key developments in Glencore’s history, including its initial public offering in 2011 which made its CEO Ivan Glasenberg a billionaire. It discusses Glencore’s major acquisition of Xstrata in 2012 which formed a $90 billion giant, and how Glencore executives like Glasenberg and Mick Davis owned significant stakes in the company and became very wealthy as a result. The section also briefly touches on Glencore’s commodity trading activities over the decades and its operations across various commodities and geographic ket corners, including the Secretan copper corner which began in 1887.

Here is a summary of the key details from the provided text:

The text describes the activities of Glencore and Vitol, two leading commodities trading companies, in trading oil from countries like Iraq, Chad, Kazakhstan, and Russia.
In Iraq, Glencore helped finance oil exports from the Kurdistan region through complex corporate structures. This allowed the Kurds to bypass the central Iraqi government in Baghdad and sell oil independently.
In Chad, Glencore arranged a $1 billion oil-backed loan to the government, equivalent to over 10% of the country’s GDP. This gave Glencore influence over Chad’s oil sector and close ties to its authoritarian ruler Idriss Déby.
In Kazakhstan, Vitol provided multi-billion dollar prepayments to KazMunaiGaz for future oil supplies. This made Vitol a key player in the country’s oil exports and gave it influence. Vitol went on to acquire large stakes in Kazakh oil and gas companies.
Both Glencore and Vitol also traded Russian oil and worked closely with Russian oil producer Rosneft. This included assisting with the privatization of Rosneft in 2017 after other buyers were deterred by sanctions.
The text argues this complex web of financial ties has given commodity traders outsized influence over the oil policies of these producer countries. It has also enabled them to continue trading oil when others faced political or sanctions risks.

This summary discusses the illegal activities and regulatory actions involving major trading companies like Trafigura, Glencore and Vitol. Some key points:

Trafigura was involved in a scandal in 2006 related to toxic waste dumping in Ivory Coast. BNP Paribas pleaded guilty and paid fines for illegally financing Trafigura’s trades with sanctioned countries like Iran and Cuba.
Commodity trading firms like Vitol, Glencore and Trafigura have faced investigations and fines related to bribery and corruption schemes in countries like Brazil.
Glencore has faced ongoing investigations by authorities in the UK, US and Switzerland into alleged bribery and market manipulation.
Enforcement of foreign bribery and sanctions laws has increased in recent decades, with US authorities investigating and sanctioning both companies and individuals involved in sanctions evasions or corrupt schemes.
However, major trading firms are still able to profit from politically sensitive trades, like supplying oil to sanctioned countries, through complex deal structures and affiliate networks.

So in summary, it discusses a history of illegal and unethical activities by major commodity trading companies, and increasing regulatory scrutiny and enforcement actions against such activities.

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The article is from Bloomberg News on April 29, 2020.
It discusses comments from Trader Mercuria that oil prices have likely hit their bottom, as more production shut-ins are expected to come.
Nand estimated Mercuria’s stock build at 1.25 billion barrels.
This suggests Mercuria, one of the world’s largest energy traders, believes oil prices won’t fall much further as global supply cuts help rebalance the heavily oversupplied oil market during the COVID-19 pandemic.
More production shut-ins were expected to come and help reduce the global crude oil stock overhang that had built up due to the demand destruction from the pandemic.
This would support oil prices finding a floor after crashing earlier in the year during the peak of lockdowns and oil price war between Saudi Arabia and Russia.

So in summary, the article discusses Mercuria’s view that oil prices had likely bottomed out, citing their large stock build estimate and expectation that more upcoming production shut-ins would help rebalance heavy oversupply in the market.

Here is a summary of the key points from 190–192:

Glencore’s trading in coal, specifically with the Roche Group. Roche was Glencore’s largest customer for coal.
In the early 2000s, Glencore supplied over 5 million tonnes of coal annually to Roche. This represented over 10% of Glencore’s total annual coal supply.
Roche’s coal needs and Glencore’s supply became very interdependent. Glencore helped arrange financing for Roche’s operations.
The relationship was very profitable for both companies but also exposed each to the other’s credit risk. There was limited scope to replace such a large customer or supplier.
When the global financial crisis hit in 2007-2008, it impacted Roche’s business and ability to take coal shipments from Glencore. This led to difficult negotiations between the companies.
The case shows how concentrated supply/customer relationships can be both very profitable but also risky if one party experiences financial problems, as Roche did in the crisis. It highlights the credit and performance risks attached to such interdependent business ties.

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Marc Rich founded Marc Rich + Co in 1974 and built it into a major global commodities trading firm. He resigned from Philipp Bros. in 1974 to do so.
The firm traded a wide range of commodities including oil, metals, grains and more. It developed significant operations and trading relationships around the world.
Key people who worked for or were associated with Marc Rich + Co included Glasenberg, Hall, Dauphin, Weiss, Posen and others.
The firm was indicted in 1983 for tax evasion and other charges related to trades with Iran and other countries. Rich was later pardoned by President Clinton in 2001.
Rich had close business relationships with countries like South Africa, Cuba, Iran, Iraq and more that were subject to international sanctions or embargoes.
The firm was involved in major historical events and crises including the 1970s oil shocks, the 1990 Gulf War, Russian transition in the 1990s and more.
Rich resigned from key roles in the firm in the 1990s amid difficulties and retirements of others before his death in 2013. The firm continued operating under new leadership.
Glasenberg later went on to found and lead Glencore, building on his experience working for Rich.
Russia is a major oil producer and trader, with state-owned companies like Rosneft playing a big role. It has faced sanctions from the US and others over issues like Crimea.
Glencore has acquired and merged with other commodities traders like Xstrata. It has done significant business in coal, copper and other metals in countries around the world.
Vitol is one of the largest independent oil traders. It does business worldwide and has faced accusations of corruption and bribery at times.
Marc Rich helped establish commodity trading and founded the highly successful Marc Rich + Co. He was later indicted in the US for tax evasion and trading with Iran and pardoned by Clinton.
Oil crises in the 1970s disrupted markets and OPEC gained power. The Soviet Union was previously a major grain and commodity trader before collapsing in the 1990s.
Countries like Nigeria, South Africa, Iraq and Libya have been important sources of oil for traders. Geopolitical issues have impacted commodity flows at various points.
Sanctions have been used as a policy tool by the US and others, affecting the ability of some traders to do business in certain countries. Enforcement of sanctions and corruption laws remains an ongoing issue.
Zbynek Zak - Czech oil trader, worked for Marc Rich & Co. in 1980s-1990s, involved in Soviet zinc deal and Russian production later on.
Jeremy Weir - British oil trader, worked at Marc Rich & Co. in late 1970s/early 1980s, later became CEO of Glencore from 2002-2011.
Zambia and Zimbabwe - African countries that Marc Rich and Glencore traded with and had business interests in, focused on commodities like zinc.
zinc - Important industrial metal that Marc Rich and Glencore traded extensively, with dealings in Russia, Spain, Zambia, and Zimbabwe. Marc Rich also had a major role in the Soviet zinc deal in 1954.
Glencore - Commodities trading and mining firm that was formed by ex-Marc Rich employees in 1994, grew massively to rival some oil majors, had operations and interests across Africa and Asia dealing in oil, grains, metals.
Asturiana de Zinc - Spanish zinc mining company that Marc Rich was involved with trading in early 1990s.

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The World for Sale Money, Power, and the Traders Who Barter the Earth’s Resources - Blas, Javier & Farchy, Jack