Oud oil distilled from Agarwood comes from from the Aquilaria tree that is native to south east asia. Agarwood is by far the worlds most expensive wood. The first time Mike Perez wore dehn al-oud — an essential oil distilled from the agarwood resin of Asian Aquilaria trees — he was so appalled by the smell that he hid inside his home.

“I put on way too much, and frankly, it smelled like animal butt,” says Perez, a 42-year-old manager for Barclay’s Real Estate Group in Miami.

Fragrances reveal their true nature as they evaporate on the skin, Bloomberg Pursuits magazine will report in its Autumn 2013 issue, so Perez resisted the temptation to wash.

“The barnyard note started changing into something intensely woody, damp and complex,” recalls the fragrance enthusiast, who has a collection of almost 1,500 scents. “It lasted 24 hours, and by then, I understood why some have described oud as transcendent. I invited a friend over to try a tiny swipe; after the initial shock, he became emotional as it evoked memories of a boyhood vacation by a lake and the smell of his skin and bathing suit and even the dock drying in the summer sun.”

Akin to such potent, primeval scents as ambergris and Himalayan deer musk, oud (the name means wood in Arabic) is an alluring mystery even to those who know it well. Used by the Ancient Egyptians for embalming and mentioned in the Bible’s Song of Solomon, the resin is produced by a rare and little-understood defense mechanism: When disease-carrying microbes breach the trunk of an Aquilaria tree, a dark and extremely aromatic agarwood resin is secreted, invisible beneath the outer bark.

Agarwood Burned as Incense

For reasons still unknown to science, fewer than 7 percent of wild Aquilaria trees ever produce agarwood resin. For centuries, scent hunters have indiscriminately cut down old-growth forests in search of the substance, which is burned as incense, carved into ritual objects or distilled into the most valuable natural oil on earth.

Half a teaspoon of oud oil made from 100-year-old agarwood trees for Oman’s Sultan Qaboos in 1982 sold to a private collector in 2012 for $7,000. In China, demand for top-quality resin has pushed prices as high as $300,000 per kilogram. Despite a ban on the harvesting of wild agarwood by the Convention on International Trade in Endangered Species, such pricing has triggered widespread poaching and a race to perfect sustainable techniques for artificially infecting farmed trees.

Oud Oil and the Smell of Money from Agarwood

To the $31.6 billion fragrance industry, oud and its aficionados smell like one thing: money. Sales of oud fragrances rose 34 percent in 2012, according to New York-based consumer research firm NPD Group Inc. Such scents were virtually unheard of in the global market before 2002, when Yves Saint Laurent released Tom Ford’s M7, widely acknowledged as the first Western oud fragrance.

Today, out of more than a thousand new scents released annually, one in eight contains oud. The developing taste for oud reflects “trends for intense, intriguing, daring scents that tap into a desire to travel and experience other cultures,” fragrance historian Elena Vosnaki says, and has helped drive sales of prestige male fragrances in the U.S. alone to $953 million. In the past year, Armani, Dior, Ferrari and even the Body Shop have all jumped on the bandwagon.

Perfumer Kilian Hennessy — the cognac heir who introduced Musk Oud, the latest in his line of oud fragrances, in June under the By Kilian label — caught the bug on a 2008 trip to Dubai, where oud incense wafting through malls, mosques and hotel lobbies has become as signature a scent as lavender is to Grasse, France.

Oud Oil Weapon of Seduction

“To Westerners, men’s fragrance is a weapon of seduction,” Hennessy says. “But to people in the Arab Gulf, oud is comforting, part of their olfactory world and an envelope in which they feel protected.” The oud used in all By Kilian fragrances is synthetic, bioengineered to approximate the real deal. That said, “I have never smelled a synthetic oud that re-creates the complexity and intensity of the real one,” Hennessy says. According to Robert Blanchette, a forest pathologist at the University of Minnesota, the scent released by the highest-grade natural oud oils comprises more than 150 separate compounds.

“Even with mass spectrometry and gas chromatography, we still don’t have the complete signature,” he says.

Blanchette, who has spent two decades investigating Aquilaria trees in conjunction with the Amsterdam-based Rainforest Project foundation, has patented a technique to artificially infect saplings, 100 percent of which go on to produce resin, although it’s less dense than that of centuries-old trees.

Oud Oil Chemical Signature

“The chemical signature of Oud Oil from Agarwood or Gaharu as its known in many asian countries is very close, and our hope is that in the future, it will become a viable source,” he says.

Meanwhile, “harvesting wild trees will eventually kill oud, because of the loss of biodiversity,” says Ensar, an online purveyor of organic oud who declines to reveal his full name and who spends much of the year in Asia seeking out the best resin.

“Aquilaria trees have to fight disease and sometimes die for oud to come into existence,” he says. “I wanted to cry when I cut down a farmer’s 60-year-old tree in Thailand that was fully loaded with resin. It’s all extremely existential.”

“Oud takes a commitment, both financially and in the way you wear it,” Barclay’s Perez says. “I wear it only on special occasions and never to the office. But most of the time, I wear it for myself.”