Commodity pricing logic changes: The "no politics involved" iron law collapses, and traders are forced to factor in the "Trump variable".

This week, the most important annual event in the global commodities industry, the FT Commodities Global Summit, kicked off in Lausanne, Switzerland. Unlike previous years where the focus was on supply and demand curves and capacity games, this year there is an unprecedented sense of anxiety both inside and outside the venue. As the Trump administration views natural resources as national strategic weapons, the industry's longstanding rule of "no involvement in politics" for over half a century has been replaced by an extreme game of profit and geopolitical risk. For a long time, global commodities traders, whether secretive families in Switzerland, seasoned traders in London, or operational centers in Singapore, have adhered to a golden rule - as proclaimed by Glencore's founder Marc Rich in 1992: "We don't get involved in politics. We never have." It is this flexibility of not taking sides that has allowed them to conduct trades unhindered in the Soviet Union during the Cold War, in sanctioned Iran, and resource-rich Africa. Now, Trump is rewriting this set of rules. Over the past six months, top executives from global trading companies such as Trafigura and Vitol have frequently appeared at the White House to meet with the US president, surpassing the total number of visits over the past 25 years. From Venezuela's oil concession trades, to critical metal disputes in the Democratic Republic of the Congo, to the "cleaning" of Russian-linked shareholders, Washington is using a series of carrot-and-stick measures to push the previously low-profile resource "mules" to the forefront, forcing them to make difficult choices between commercial interests and national interests. From behind the scenes to the forefront: carrot and stick, new regulars at the White House meeting table In the history of modern commodity trading, the US government has never played such a direct and powerful role. Trump's key policies - whether tariff barriers, containment of China, or military intervention in major oil-producing regions - are deeply intertwined with the global circulation of oil, metals, and food. This has made the US government increasingly dependent on a few private trading giants that control the global resource lifelines. A typical case occurred in Venezuela. After a change in the local regime, the US urgently needed to quickly resume the external transport of heavy oil from the country to offset the supply gap caused by the Iran war. Instead of using strategic reserves, Washington issued special permits to Vitol and Trafigura to purchase large quantities of Venezuelan crude oil at prices far below the benchmark Brent, and then make huge profits by reselling it in the global refinery market at a high premium. Meanwhile, what has made traders most cautious is their relationship with China. China is the final destination for almost all commodities globally, and also the biggest source of profits for these traders. In the strategic metal sector, the US, holding $12 billion worth of key resources, has directly hired trading companies such as Mercuria Energy Group and Traxys as "outsourced procurement departments" in an attempt to regain dominance from the Central African copper-cobalt belt, which is heavily influenced by Chinese capital. Wouter Jacobs, director of the Rotterdam Erasmus University Centre for Commodities and Trade, commented, "Turning everything into a show and having business executives appear in front of the camera has become almost a major feature of this government. Traders usually prefer to stay away from the spotlight, but apparently they feel that the temptation of profits outweighs the risk of exposure." Approaching the White House is not without cost. If the contracts in Venezuela were sweet bait, then the stick swung at the Gunvor group by Washington has sounded a warning bell for the entire industry. The US Department of the Treasury recently openly described the oil trading giant as a "puppet of the Kremlin" on social media. Shortly after, Gunvor announced that its co-founder and CEO Torbjrn Trnqvist would resign in a management buyout. Although Gunvor claimed that this adjustment was part of a "pre-planned" move and denied the US accusations, the company admitted in a statement, "Misunderstandings about its past have become a difficult-to-ignore disruptive factor." This event marks a thorough change in the rules of the game: a trader's shareholder background and historical connections are no longer just commercial privacy, but geopolitical landmines that Washington can detonate at any time. The wave of politicization may reshape market pricing logic The intervention of the Trump administration not only changes the business models of traders, but also deeply affects the fundamental logic of global commodity pricing and circulation. First is the "re-regionalization" of trade flows. During politically neutral times, the flow of commodities followed the principle of "shortest path, lowest cost." But under the sanctions, tariffs, and franchising framework imposed by the US government, trade flow is forced to go around. For example, Venezuelan oil flows to specific markets through licensed traders instead of freely entering the global pool. These artificial trade barriers will lead to long-term and exacerbated regional price differentials, ultimately paid for by end consumers. Second is the normalization of geopolitical risk premiums. In the past, commodity prices mainly reflected supply and demand fundamentals and inventories. Now, "compliance premiums" and "sanction risk discounts" have become new variables in pricing models. The same batch of copper from the Democratic Republic of the Congo is now showing price differentials due to "political endorsements" when sold to the US strategic reserve versus when sold to Chinese smelters. These premiums will be difficult to eliminate in the short term and will exacerbate the difficulty of global inflation governance. Additionally, the commodity futures and derivatives market heavily rely on globally unified benchmarks (such as Brent and WTI). The US government's interventions in the trading process are actually weakening the representativeness of these benchmarks. When some physical trades move away from the open market and into bilateral political agreement frameworks, price transparency and market liquidity may be undermined. For individual traders, this is a redefining of core competencies. The restructuring of business models from "light asset arbitrage" to "heavy asset lobbying." Traditional traders relied on information asymmetry, logistics scheduling, and leveraged financing to make money, belonging to a typical light asset industry. But in the new environment, the ability to maintain political relationships has become a core production factor. Traders must establish high-profile government affairs teams in Washington, and even introduce former high-ranking officials with connections to both parties to their boards. As the Gunvor incident shows, one negative qualification on social media is enough to destroy the multibillion-dollar commercial reputation. Shareholder structures face a "de-risking" cleanup. Mercuria repurchasing Chinese-related shares, Gunvor's founder stepping down, heralds a reshuffle of the industry. Family capital with a blurred background and sovereign wealth funds will gradually give way to long-term institutional investors that meet Western regulatory preferences. For many Swiss trading firms controlled by founders, this means giving up some control in exchange for political security. Industry giants take it all, while small and medium players are forced out. Those who can obtain special permits from the US Department of the Treasury and participate in strategic reserve plans are all top giants like Vitol and Trafigura. Small and medium-sized traders are unable to bear the complex compliance costs and mobilize enough political resources to compete for lucrative government contracts. The Matthew effect will become more pronounced, with giants consolidating their monopoly position with the help of political moats, while small and medium traders are forced to turn to riskier fringe markets. For Trafigura and Glencore, the greatest pain lies in the normalization of strategic dilemmas - they may not be able to embrace both of the two largest economies at the same time. "Looking East" means losing the lucrative orders dominated by the US, while "Looking West" means giving up China's huge daily business base. This tearing apart will force traders to physically separate their internal business lines in the coming years, and even split entities to evade collateral sanctions.