GENEVA/LONDON (Reuters) - The Vitol oil trader dressed in heels picking her way through the armed rebels and pick-up trucks of post-war Tripoli had eyes only for the lucrative oil contracts up for grabs from Libya's new revolutionary government.
Her landmark deal for Vitol to export Libyan crude heralded the return of commodity houses to their swashbuckling roots, trading oil and grain with countries troubled by war and debt.
After years of backroom work focused on the dry business of building out storage, shipping and logistics operations, a small club of trading houses has jumped at the chance to land some old-fashioned big-profit deals.
They have had plenty of choice over the past year: war or unrest in Libya, Egypt, Syria, Yemen and South Sudan, sanctions on Iran, Greece on the brink of default.
"Trading houses are not shying away from places with high risk profiles if these profiles also lead to higher profit margins. It's about risk versus reward," said Ton Schurink at Geneva-based Commodity Finance Trading Advisory Services.
Vitol, Glencore, Gunvor and Trafigura in oil and Cargill, Louis Dreyfus and Bunge in grains have demonstrated that, for some at least, the security, credit and reputational risks are worth taking if the rewards are big enough.
Traders can operate in risky places because their business model is fundamentally different from the likes of BP or ExxonMobil.
Oil majors tend to be more wary of upsetting their home governments or shareholders and are bound to stricter rules when it comes to daily operations.
And because trading companies are mostly private, there is nobody to second-guess their internal decisions and more room for a star trader to take a bold initiative.
"Can you imagine someone at Exxon saying I'm just going to override that rule and send my tanker into pirate waters because it's a good trade? In a trading house, you don't have to listen to the model as it's privately owned," said an industry source working for a European oil firm.
Estimates from rivals suggest a trader who dares to sell grains to sanctions-straitened Iran could pocket $2 million profit per Panamax-size cargo as opposed to $200,000 if the cargo is sold to a low-risk buyer.
Premiums of at least $1.25 million were charged per diesel fuel cargo heading to unrest-prone Egypt in June this year, just days before the presidential election.
"Everyone has the same commodity to sell so you have to take risks to distinguish yourself and then manage them," said Robert Petritsch, Chief Financial Officer of Swiss-based Quadra Commodities.
Greece's credit rating is now worse than many African nations.
Perhaps not surprising then that many firms are cautious about supplying the partly state-owned Greek refiner Hellenic Petroleum with crude oil.
"If a country defaults, then it's a different ball game entirely. Credit dries up. So costs go up," said a trader with a Swiss-based trading house.
The prospect of default hasn't scared off Glencore and Vitol.
The two traders are estimated to have given Greece at least 300 million euros in open credit financing - meaning it does not need guarantees from banks to buy crude. Both firms declined to comment.
The financial might of big trading houses enables them to act as both bank and supplier to clients who have limited access to credit, at the expense of others who either cannot or will not take that risk.
"No doubt the credit comes at a cost and can possibly provide an interesting margin," said Schurink. A Swiss-based oil trader agreed: "Every company tight on credit is prepared to pay a premium to the market."
Industry sources said that the traders had probably also negotiated refined products or oil assets as collateral.
In a similar scenario, Egypt's military rulers sought record supplies of fuel for the summer months, trying to avoid a repeat of shortages that led to public anger earlier this year.
But difficulty obtaining payments for earlier purchases and other costly delays prompted some suppliers to think again before participating in the record tender.
In the end, Egypt purchased close to $1.2 billion worth of fuel from trading houses including Vitol and Glencore, paying above market prices ahead of the first presidential election and amid fears of renewed instability. Again, both firms declined to comment on the deal.
"The premium is considerable - if the threat is real enough ... maybe 25 percent," said one trader with a firm that supplies fuel to Egypt.
A typical diesel cargo of 30,000 metric tons is worth some $25 million at current prices and so even a 5 percent premium would mean an additional cost of $1.25 million.
If in Libya traders bet on the rebels, in Syria the gamble was different.
Firms with investments there were reluctant to move out at first, but most dropped out as the death toll mounted and sanctions made it increasingly difficult to operate.
Around September 2011, Vitol and Trafigura abandoned the multi-million dollar Syrian market, but others like Switzerland's AOT Trading, Galaxy Group, based in Monaco, and Greek-based Naftomar exploited gaps in the sanctions regime.
This small pool kept the Syrian state supplied with diesel and heating gas for cooking throughout the winter, risking western opprobrium at a time when Assad's long-time allies Russia and Venezuela were the only other suppliers.
The deliveries were controversial not least because diesel is mainly used to power heavy vehicles including army tanks.
Naftomar, which supplied Syria with about $55 million a month of cooking gas, defended its position on the grounds its fuel may have prevented a worse humanitarian crisis.
Critics said that Naftomar, by delivering the fuel, might have been helping to extend Assad's rule.
Naftomar denied it was supporting Assad. "We were simply executing a contract that we had to sell LPG to a Syrian government related company. We stopped delivering to Syria when the sanctions were imposed," a Naftomar director said.
AOT and Galaxy Group did not respond to a request for comment.
EU sanctions targeting Syria's state-owned fuel distributor Mahrukat had forced trade to a halt by April this year.
Naftomar said that margins during the winter were "not excessive at all" and that it had since turned down requests to deliver fuel with "excellent" margins because of the embargo.
As in Syria, violence has deterred traditional suppliers from Yemen. Attacks on the energy infrastructure are costing up to $15 million a day in lost oil export revenue. Attacks on pipelines have halted flows to Yemen's, leaving the impoverished country even more dependent on imports.
Over the past year, Saudi Arabia has stepped in with donations worth hundreds of millions of dollars.
But when donations from Riyadh dried up Yemen became more reliant on Vitol and Trafigura for refined products supplies under long-term and spot deals.
"If you get it wrong, Yemen can lose you a lot more money," said a trader with experience of doing business with its government.
Both Vitol and Trafigura declined to comment.
Gripped by U.S. and European oil and banking sanctions, Iran has become a profitable trade for grains suppliers including U.S.-based Cargill and Bunge, France's Louis Dreyfus and Glencore.
The measures against Iran's disputed nuclear program have led to a complex array of global restrictions on doing business there, stifling Iran's oil sales and forcing Tehran to pay more for food imports.
While grain and sugar trade are not under embargo, a freeze on financial dollar transactions has caused some former suppliers to Iran either to drop out or cut volumes.
But big trading firms with multi-billion dollar credit lines and a team of lawyers are able to find ways of navigating through the restrictions legally, industry sources said.
Margins for grain deliveries can be between $15-$30 a metric ton, industry sources familiar with the deals said, indicating a gross margin of up to $2 million for a typical shipment.
The Swiss-based trading arms of Cargill and Bunge are able to continue food deliveries to Iran using non-dollar payments.
"Dealing with countries under sanctions of the U.S., EU, Switzerland is always more difficult," said Henri Rieux, vice president of corporate affairs at Bunge.
"Nonetheless, such sanctions do always provide the potential trading companies with some, while admittedly limited, latitude to grant the countries under sanctions with the required food for their population," he added.
Glencore confirmed that it was able to continue deliveries of corn and soymeal to Iran in compliance with sanctions without giving details. Louis Dreyfus did not respond to a request for comment. Cargill declined to comment.
"I think with grains that you will never get into moral arguments. Even if you are providing one side of a conflict that is starving the other - is it better to let them starve as well?," a Swiss-based industry source said.
The majority of the big players are Swiss-based. Traders say Geneva makes a good hub for pulling the strings on deals such as food trade with Iran as traders need no special permission from Swiss authorities.
In theory, Swiss-based firms can still trade Iranian oil as Switzerland is outside the European Union's oil embargo, although most big traders say they have stopped dealing with Tehran.
Marie Avet, spokeswoman for the Swiss federal department responsible for sanctions, said that food payments to Iran needed to be declared to the government and confirmed that these transactions were continuing.
Rules for U.S. companies are more onerous since they require a special license from the Office of Foreign Asset Controls. EU firms have to get clearance from national authorities.
But even this perfectly legal trade comes with some occupational hazards as traders can get hit by fines for delays while waiting for Iranian counterparties to transfer payment.
"You can't get trade finance for deals involving Iran, so transactions have to be "cash against documents", which is risky if anything goes wrong," said lawyer Matthew Parish at Geneva law firm Holman Fenwick Willan.
When payment falls through, it can be hard to negotiate a resale of a distressed cargo to a third party near Iranian waters.
Sometimes the big bets backfire in unexpected ways.
In February, Swiss-based Trafigura bought a cargo of discounted oil the South Sudanese government said was seized by Sudan, its northern neighbor.
Trafigura says it made significant efforts to establish ownership but proceeds from the deal were seized by a British court and the matter is legally unresolved.
The row between the two countries led to border fighting and prompted South Sudan to shut oil production despite sourcing 98 percent of its revenue from the commodity.
Also in South Sudan, the government scrapped a contract with Glencore for crude marketing and other services citing unfavorable terms.
But in some places, like Libya, the pay-off can be huge.
In October 2011, Libya's interim council said it owed $1 billion in payments for fuel - a large portion of which was supplied by traders.
Vitol was the first trader to supply Muammar Gaddafi's opponents with a fuel lifeline and was subsequently granted access to half of the crude production from Libya's eastern oil firm Agoco as repayment.
In November, Vitol, Glencore, Gunvor and Trafigura were among those awarded term contracts, in a break with former Libyan policy of restricting sales only to refiners.
"We can't just eliminate the traders. They are a necessary evil," Ahmed Shawki, general manager for oil marketing at Libya's National Oil Corporation, said at the time.
additional reporting by Jonathan Saul in London, Michael Hogan in Hamburg. Editing by Richard Mably and William Hardy