Marc Rich: The Man Who Invented Modern Commodity Trading

Marc Rich's contribution to modern commodity trading is difficult to overstate. Born Marcell David Reich in Antwerp in 1934 to a family of Jewish refugees, Rich fled Europe as a child and eventually made his way to the United States, where he began his career as a commodities trader at Philipp Brothers in New York.\n\nAt Philipp Brothers, Rich demonstrated an exceptional talent for finding and developing new trading relationships in markets that his colleagues considered too risky or too remote. His willingness to trade with countries under US sanctions — including Cuba, Iran during the hostage crisis, and apartheid South Africa — made him extraordinarily wealthy and ultimately a fugitive from US justice.\n\nTHE OIL MARKET REVOLUTION\nBefore Marc Rich, oil was traded almost exclusively through long-term contracts between oil companies and their government partners. The concept of a spot market — where oil could be bought and sold for immediate delivery at market prices — barely existed. Rich essentially created this market in the 1970s, building relationships with oil ministers and national oil companies across the world and offering them something the major oil companies would not: immediate cash payment at market prices, no questions asked.\n\nThis innovation proved enormously valuable during the oil shocks of the 1970s, when spot market prices diverged dramatically from long-term contract prices and enormous fortunes could be made or lost by those with access to spot supplies.\n\nTHE TRADING HOUSE MODEL\nRich left Philipp Brothers in 1974 to found Marc Rich + Co in Zug, Switzerland, establishing the model that virtually all subsequent large commodity trading houses have followed: a private company, domiciled in Switzerland for tax and regulatory reasons, operating through a network of global trading offices and counterparty relationships, with profits distributed entirely to partners and employees.