The Freakonomics headline is "The Most Powerful People You’ve Never Heard Of" but that is more than a bit presumptuous, especially for our readership.
From Freakonomics Radio, episode 633, May 23, 2025:
By Stephen J. Dubner
Just beneath the surface of the global economy, there is a hidden layer of dealmakers for whom war, chaos, and sanctions can be a great business opportunity. Javier Blas and Jack Farchy, the authors of The World for Sale, help us shine a light on the shadowy realm of commodity traders.
Episode Transcript
For the past couple years, I’ve been letting a very good book collect dust on my shelf. A friend had told me about the book, and I did read the introduction — a wild introduction, about the C.E.O. of a British company who flies his private jet into the middle of the Libyan civil war to make an oil deal with the rebel army, an army which happened to have the covert support of the governments of Britain, Qatar, and the U.S. So, yeah, I probably should have kept reading. But I had 30 other books I wanted to take a look at. A dirty little secret about me: there are a lot of books where I read only the introduction or a couple of chapters, even books I like. This may strike some people as a wasteful practice, but I recommend it. Anyway: as fascinating as I found that introduction about the oil trader in Libya, the book didn’t seem relevant at that moment. But at this moment — with the U.S. signing a mineral deal with Ukraine; with Donald Trump expressing his appetite for the natural resources in Greenland, in Canada, even at the bottom of the ocean; and of course with an on-again, off-again trade war — the book is very relevant. It’s called The World for Sale: Money, Power, and the Traders Who Barter the Earth’s Resources. So I finally took it off the shelf, read it, and — well, wow. The traders in this book are not the kind who sit at a desk in New York or London and buy and sell the options on commodities; these are the people who finance, procure, and trade the actual commodities — petroleum products, agricultural products, and metals. This is high-stakes territory.
Javier BLAS: If you think about a commodity trader, it has to have a bit of the Wolf of Wall Street character. It has to have a bit of James Bond character. And it has to have a lot of the character of Pirates of the Caribbean.
The authors of this book are two Bloomberg journalists who also used to work together at the Financial Times — Javier Blas whom you just heard, and Jack Farchy. The main subjects of their book are trading firms that you’ve likely never heard of: Glencore, Vitol, Trafigura, Gunvor Group, Mercuria, and Cargill. These firms operate all over the world, and their reach is massive. Here’s Jack Farchy:
Jack FARCHY: The revenues of the four largest is just under a trillion dollars last year. Which in terms of global exports would make them I think the fourth-largest country, behind the U.S., China, and Germany, and ahead of Japan.
Have you ever thought that you really understood something, that you were looking into the heart of it, only to realize that you were just looking at the surface layer? That’s the sensation I had while reading The World for Sale. These commodity traders are often at the center of big political and economic events — civil wars and military coups seem to be a specialty; but they usually operate deep in the shadows. Today on Freakonomics Radio, with the help of Javier Blas and Jack Farchy, we try to shine a light.
* * *
Last year, there was a record $33 trillion in global trade. Commodities make up about a third of that. Here are the two journalists who try to follow that money.
FARCHY: My name is Jack Farchy. I’m a senior reporter covering energy and commodities at Bloomberg News.
DUBNER: How did you get onto this beat?
FARCHY: I started my journalism career at the FT, I started out in 2008, just as the financial crisis was happening.
DUBNER: Good timing for you, really.
FARCHY: Yeah, much better than I had anticipated. I thought I was interested in geopolitics, global affairs. I didn’t think I was very interested in finance or business or markets or economics. Then I sat in the middle of the F.T., not understanding half of what was going on as the global financial system was collapsing and taking the world economy with it, and I realized, actually, I was wrong. I was looking for my first reporting job and Gillian Tett back then was the capital markets editor, said, “Why don’t you go and work with Javier writing about commodities?”
BLAS: My name is Javier Blas. I’m a commodities columnist for Bloomberg Opinion, and for the last 25 years I have been writing about energy and natural resources.
DUBNER: How did you become interested in that — or were you shoved into it? How did that work?
BLAS: I went to college, I wanted to become a journalist. I ended writing about the Spanish economy and quite bored at my job. My dream was to be Jerusalem bureau chief, or Beirut bureau chief. One day the oil correspondent in the newspaper I was writing left. So there was no one to write about the oil market. I raise my hand and they said yes. I started talking to a couple of oil companies and I went to see how they were buying crude oil. The trader that I was sitting was a gentleman called Paco Garcia. He was working at Repsol, the Spanish oil company. Basically, he was babysitting me because everyone on that trading floor realized I have not a clue what I was even asking. Literally I didn’t know what they were doing. invited me to the trading floor, and gave me his second headset and said, “Do you want to buy some barrels of oil?” I say, “Sure, how, when?” And he said, “Now, on the phone.” He was negotiating a deal for two million barrels of Iranian oil out of Kar Island, the main export terminal of Iran. They argue about the price, it’s all on the phone. They agree on a price, and one said, “Do we have a deal?” The other one says, “We have deal.” That was it. I said to the trader, “What just happened?” He said, “We just bought the oil.” And I was like, “What do you mean? I mean, that was on the phone. Do you sign a contract?” He said “No. I said, ‘We have a deal. He said, ‘We have a deal,’ and that’s it. We better find a tanker to bring the oil.” And I became hooked, and I became an oil reporter.
DUBNER: Explain the difference between the commodity traders you write about in your book, and the people who buy and sell financial instruments on commodity exchanges.
BLAS: These traders are very different to what people think about a trader behind a computer screen, trading on the keyboard and the mouse, Wall Street, Goldman Sachs, J.P. Morgan. These traders work in physical stuff. They are buying actual barrels of oil. They buy an actual consignment of copper. They buy a full shipload of wheat or soybeans.
FARCHY: Something that most commodity traders spend a lot of time trying to explain is, they don’t tend to care very much which way prices go. Oil traders, for example, for the most part, when they buy a cargo of physical oil, will, at the very same time, hedge the price of oil by selling a future on the futures exchange. So, the oil price element of what they’re doing, they don’t care about at all. Whereas your trader on a screen, that’s exactly what they’re trading — they’re betting on the ups and downs of the prices, and they’re saying, Okay, there’s a trade war, prices are going to go down, I’ll sell. Or, Actually, the trade war fears are overdone, I’m going to come and buy. Whereas the physical commodity traders do definitely bet on outright prices sometimes, But they’re also, and on a day-to-day basis, trading a whole load of other factors. For example, they’re lending money to some producer in a country where they don’t have much other ability to borrow money, or they’re trading differences in prices between copper in Africa and copper in the U.S. Or they are trading differences in prices between one grade of oil and another grade of oil, and maybe they have several different producers who they have contracts with and they’re buying oil from all three of them and blending it together and then they can sell it for a higher price than the three barrels would have got individually.
DUBNER: So Jack, you said you thought you were interested in geopolitics and so on. To me, the irony is that by coming in this side door, I’m sure you’ve learned a lot more about geopolitics than a lot of people who might’ve been on that beat directly, don’t you think?
FARCHY: Yes, exactly. What I’ve learned is that to understand what’s going on in politics, you have to understand the money. And a lot of the time — not all of the time, obviously, but a lot of time — the money is commodities. Because commodities are a huge source of global trade, a huge source of profits for some companies and some countries, and costs for others. In a lot of places in the world, be it Russia or the Middle East or South America or Asia, following the money means following the oil means following the copper, the soybeans, so if you don’t understand that, then you’re missing a huge part of the political picture.
DUBNER: I’m sure that a lot of people would think that they can follow the money, by following the publicly traded markets. But if I have it right, a lot of the deals you write about are totally hidden from public view. And so you’re offering what strikes me as an almost secret window into how a big part of the economy operates. Am I giving you too much credit?
FARCHY: Probably, but I would agree with you. I think that’s right. That was our experience in coming to this trading industry specifically. Our job was to explain why the oil price was up or the copper price was down. And we found ourselves more and more hearing about this handful of privately-owned, often very secretive, commodity-trading companies, people in the market telling us, “Oh, well, if you really want to know why the oil price is moving or what’s going on in Nigeria, then you need to talk to these guys.” And as we did begin to talk to them, realizing that there were these stories going on behind the news headlines. I think it would be an overstatement of the importance of the commodity traders to say, Oh yes, they’re always the hidden hand, moving political events. Occasionally they are but a lot of the time they’re not. But they’re very often there. The number of examples, including in recent history, we see where there are big, geopolitical shifts, and the first people there are the commodity traders, be it the Libyan Civil War, or when South Sudan became independent. Within days after South Sudan declared independence, a whole team of traders from Glencore arrived trying to do an oil deal and in fact with $800,000 in cash to pay bribes at the same time....
....MUCH MORE
I've mentioned the reformed metals trader who worked for Marc Rich + Co. AG in the days before it evolved into Glencore. They gave him a $50 million bankroll to buy, move, insure, hedge and sell physical metals in Russia. One little vignette:
....And speaking of titles in Russia, there was the guy the Marc Rich metals trader was told he had to bribe to get $10 mil worth of copper cathodes sailing off to Shanghai from the port of Vladivostok.
The guy's business cards say he is the Chief Head.
I think in Italo-American that would be something like Capo dei capi.
