King of Oil

The following is a poignant example from the company’s later year that illustrated how Green was able to utilize such price differences. In the 1980s the Soviet Union supported Cube, its «socialist brother nation,» with cheap oil. Instead of transporting this oil over long distances from Russia to Cuba, the state trading company Cuba Metals traded a portion of this oil with March Rich + Co. Rich’s company then delivered the same amount of oil to Cuba, obtained from nearby Venezuela. Rich was able to buy the Russian oil meant for Cuba at its reduced price and sell it for a profit on the global market.

There were three main reasons for Rich’s success - a success that took the industry completely by surprise. First of all, Rich’s company was willing to take on much higher level risk than its competitors. Second, the best people in the business were working for the company. Finally, Marc Rich + Co. was the first company to develop a sophisticated system for trading oil independently. It is no exaggeration to state that Marc Rich and Pincus Green truly did invent the spot market for crude oil.

From the company’s very first day? Marc Rich +Co.’s financial success was nothing less than astounding. In 1974, the company’s first fiscal year, it had a turnover of more than $1 billion while reaping a net profit of $28 million. The company’s profit in 1975 was $50 million, and it went on to earn what was then an unbelievable $200 million in 1976.

«We knew more than our competitors. Of course, I always develop relations with my customers.»

To this day the Iranian connection to the oil pipeline is one of Israel’s best-kept state secrets. The pipeline was an attempt to solve one of the Jewish state’s greatest strategic challenges, one that threatened the national’s very survival: access to a steady supply of oil. There’s an old Israeli joke: Moses wandered the Middle East for forty years - and finally settled in the only place without any oil.

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The pipeline was what game theorists would call a «win-win situation» - a solution of equal benefit to both parties. «Thanks to the pipeline, the shah was able to gradually outrival the multinational oil companies and become a powerful force in the oil trade,» a participant in the deal told me. NIOC was able to freely sell its oil on the open market for the first time ever. The shah made a lot of money and could continue to feed his extravagant lifestyle. Furthermore, the pipeline was a useful tool in his struggle to gain greater control over the oil companies. Israel, on the other side, earned good money on the transit fees for the pipeline and was at the same time able to secure a constant supply of oil.