Marc Rich, known as the father of modern oil trading and founder of the group that became Glencore Xstrata, has died at the age of 78, the head of his philanthropic foundation said today.

Many of the biggest players in oil and metals trading trace their roots back to Rich, whose triumph in the 1960s and 1970s was to create a spot market for oil, wresting business away from the world’s big oil companies.

Rich, however, was also a controversial figure. He was forced to flee the United States for Switzerland in 1983 after allegedly taking advantage of the 1980 US embargo against Iran to make huge profits in illicit Iranian oil sale.

"Marc Rich passed away this morning at his home in Lucerne. He will be brought to Israel for burial," Avner Azulay, managing director of Marc Rich Foundation, said by telephone.

The Belgian-born son of Jewish refugees, Rich began his career with one of the biggest trading houses of the time, Philipp Brothers, subsequently Phibro, aged 20. He left in 1974 with a fellow graduate of the Phibro mailroom, Pincus "Pinky" Green, to set up Marc Rich and Co AG in Switzerland.

That group would eventually become Glencore.

"We are saddened to hear of the death of Marc," Glencore Xstrata Chief Executive Ivan Glasenberg said. "He was a friend and one of the great pioneers of the commodities trading industry, founding the company that became Glencore."

Allegations of oil trading with Iran and tax evasion later landed Rich on the FBI’s most-wanted list.

He never returned to the United States after fleeing to Europe, although he received a presidential pardon from Bill Clinton on the president's last day in office.