1 00:00:02,720 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,560 --> 00:00:13,440 Speaker 2: The US has intensified its blockade of Venezuela by trying 3 00:00:13,480 --> 00:00:16,520 Speaker 2: to intercept a third oil tanker off the country's coast. 4 00:00:17,200 --> 00:00:20,560 Speaker 2: These actions could put pressure on President Nicholas Maduro's government, 5 00:00:20,760 --> 00:00:24,560 Speaker 2: as Maduro faces calls to step down. At least ninety 6 00:00:24,600 --> 00:00:28,000 Speaker 2: five percent of the country's overseas revenue comes from oil sales. 7 00:00:28,720 --> 00:00:32,159 Speaker 2: Whenever there are winds of conflict involving oil producers, oil 8 00:00:32,240 --> 00:00:36,240 Speaker 2: markets tend to react strongly, but on Monday, Brent oil 9 00:00:36,280 --> 00:00:40,199 Speaker 2: prices rose only moderately, from over sixty dollars on Friday 10 00:00:40,479 --> 00:00:43,840 Speaker 2: to over sixty two dollars on Monday. That's in part 11 00:00:43,880 --> 00:00:47,600 Speaker 2: because these days, Venezuela's exports account for less than one 12 00:00:47,680 --> 00:00:51,480 Speaker 2: percent of global oil demand. There are many other countries 13 00:00:51,640 --> 00:00:52,760 Speaker 2: flooding the market. 14 00:00:52,520 --> 00:00:55,040 Speaker 3: With oil, whether you look in the US, whether you 15 00:00:55,080 --> 00:00:57,720 Speaker 3: look at OPEC produces in the Middle East, whether you 16 00:00:57,720 --> 00:01:00,360 Speaker 3: look at countries you don't necessarily think of it sort 17 00:01:00,360 --> 00:01:03,960 Speaker 3: of long storied oil producers like Guyana. The general story 18 00:01:03,960 --> 00:01:05,920 Speaker 3: of oil production over the last couple of years has 19 00:01:05,959 --> 00:01:07,679 Speaker 3: been that it has grown incredibly quickly. 20 00:01:07,959 --> 00:01:11,120 Speaker 2: Alex Longley is an oil reporter at Bloomberg based in London. 21 00:01:11,840 --> 00:01:14,840 Speaker 2: At a time when affordability has become a political watchword 22 00:01:15,080 --> 00:01:18,559 Speaker 2: and it feels like everything is up in price, Alex says, 23 00:01:18,600 --> 00:01:20,440 Speaker 2: oil is a notable exception. 24 00:01:20,800 --> 00:01:23,160 Speaker 3: And that's sure if dasoline prices at the pump, that's sure, 25 00:01:23,160 --> 00:01:26,320 Speaker 3: if crude prices traded by oil traders or derivative traders 26 00:01:26,319 --> 00:01:27,160 Speaker 3: across the globe. 27 00:01:27,480 --> 00:01:30,440 Speaker 1: Three years ago, we were trading above one hundred dollars 28 00:01:30,480 --> 00:01:31,080 Speaker 1: per barrel. 29 00:01:31,200 --> 00:01:34,479 Speaker 2: That's heavier Blast, a columnist for Bloomberg Opinion, who writes 30 00:01:34,520 --> 00:01:36,280 Speaker 2: a lot about energy, we. 31 00:01:36,200 --> 00:01:38,840 Speaker 1: Are trading now. If we look at the US benchmark, 32 00:01:38,880 --> 00:01:42,480 Speaker 1: a West Texas intermediate around fifty five dollars per barrel. 33 00:01:42,600 --> 00:01:44,800 Speaker 1: So the price of oil has has gone down by 34 00:01:44,880 --> 00:01:48,080 Speaker 1: fifty percent over the last two and a half three years. 35 00:01:48,440 --> 00:01:50,960 Speaker 2: These days, gasoline at the pump is less than three 36 00:01:51,000 --> 00:01:53,920 Speaker 2: dollars a gallon in the US on average, the first 37 00:01:53,920 --> 00:01:56,080 Speaker 2: time it's been that low since twenty twenty one. 38 00:01:56,480 --> 00:01:59,480 Speaker 1: And if we look at adjusted by inflation, what is 39 00:01:59,520 --> 00:02:02,960 Speaker 1: really what matters. The price of oil is not very 40 00:02:02,960 --> 00:02:06,840 Speaker 1: different to what it was around twoenty twenty five years ago. 41 00:02:07,520 --> 00:02:10,520 Speaker 1: It paints me almost saying because I make a living 42 00:02:10,600 --> 00:02:14,760 Speaker 1: writing about energy and oil prices and how important they 43 00:02:14,800 --> 00:02:19,680 Speaker 1: are to the global economy. But at current prices, central 44 00:02:19,680 --> 00:02:22,640 Speaker 1: banks don't need to think about oil, governments don't need 45 00:02:22,680 --> 00:02:26,400 Speaker 1: to think about oil. To be honest, drivers and families 46 00:02:26,480 --> 00:02:30,519 Speaker 1: can't really go on that business without having to think 47 00:02:30,520 --> 00:02:32,560 Speaker 1: about oil because it's cheap. 48 00:02:38,760 --> 00:02:40,600 Speaker 2: I'm David Gera and this is the big take from 49 00:02:40,600 --> 00:02:44,080 Speaker 2: Bloomberg News today on the show, what's behind this glut 50 00:02:44,160 --> 00:02:47,240 Speaker 2: of oil which has led to lower prices and how 51 00:02:47,320 --> 00:02:56,960 Speaker 2: conflicts involving Russia and Venezuela could impact them. When you 52 00:02:57,000 --> 00:02:59,960 Speaker 2: see oil around fifty five or sixty dollars a barrel, 53 00:03:00,200 --> 00:03:03,640 Speaker 2: you might wonder about demand, whether electric vehicles and clean 54 00:03:03,720 --> 00:03:07,480 Speaker 2: energy might be driving down prices, but Bloomberg Opinions Heavier 55 00:03:07,520 --> 00:03:09,200 Speaker 2: Blast says that's not the case. 56 00:03:10,639 --> 00:03:14,960 Speaker 1: The reality is that demand is actually not bad. It's 57 00:03:15,000 --> 00:03:17,840 Speaker 1: an all time high considering what is happening in the 58 00:03:17,880 --> 00:03:20,440 Speaker 1: global economy is growing as much as we will expect. 59 00:03:20,639 --> 00:03:23,440 Speaker 1: What has been the main driver of the price weakness 60 00:03:23,560 --> 00:03:27,320 Speaker 1: is the supply, and that is coming from everywhere. It's 61 00:03:27,360 --> 00:03:30,720 Speaker 1: coming from Texas and New Mexico in the United States 62 00:03:30,720 --> 00:03:34,920 Speaker 1: and new shale regions it's coming from opic countries like 63 00:03:34,960 --> 00:03:39,000 Speaker 1: Saudi Arabia and Iraq, and it's coming from new big 64 00:03:39,040 --> 00:03:42,400 Speaker 1: players in the market like Guiana and Brazil. After a 65 00:03:42,480 --> 00:03:46,160 Speaker 1: period of very high prices around twenty twenty one twenty 66 00:03:46,160 --> 00:03:49,360 Speaker 1: twenty two, we are beginning to see the market reacting. 67 00:03:49,400 --> 00:03:51,840 Speaker 1: And the market is reacting the way it does, bringing 68 00:03:51,960 --> 00:03:54,960 Speaker 1: a lot more supply, and that's what's really driving the 69 00:03:55,000 --> 00:03:55,560 Speaker 1: price down. 70 00:03:56,160 --> 00:03:58,840 Speaker 2: Alex You've written that supply could exceed consumption by four 71 00:03:58,840 --> 00:04:01,480 Speaker 2: million barrels a day, and I wonder if you could 72 00:04:01,480 --> 00:04:03,840 Speaker 2: help us think about that quantity. How much oil are 73 00:04:03,840 --> 00:04:05,840 Speaker 2: we talking about? How would you explain that to somebody 74 00:04:05,880 --> 00:04:08,000 Speaker 2: who isn't following this day in the day out. 75 00:04:08,280 --> 00:04:11,080 Speaker 3: Perhaps the simplest way is, think of the biggest ships 76 00:04:11,080 --> 00:04:12,760 Speaker 3: that can carry oil in the world. They carry two 77 00:04:12,760 --> 00:04:15,720 Speaker 3: million barrels. If supplies exceeding demand by four million brows 78 00:04:15,760 --> 00:04:18,680 Speaker 3: a day, two giant supertankers of oil. Imagine those rocking 79 00:04:18,760 --> 00:04:20,479 Speaker 3: up off the coast of Texas or off the coast 80 00:04:20,480 --> 00:04:23,080 Speaker 3: of the UK. Here two of those appearing every day 81 00:04:23,279 --> 00:04:25,800 Speaker 3: for three hundred and sixty five days in the year. Firstly, 82 00:04:25,839 --> 00:04:28,200 Speaker 3: it's a physical impossibility, but it tells you something about 83 00:04:28,240 --> 00:04:30,000 Speaker 3: the scale of the numbers. Now, if you talk to 84 00:04:30,000 --> 00:04:32,919 Speaker 3: oil traders privately, they have smaller numbers than that. For 85 00:04:32,960 --> 00:04:35,000 Speaker 3: the most part, I think four million brows a day 86 00:04:35,120 --> 00:04:36,599 Speaker 3: for the whole year would be the kind of the 87 00:04:36,680 --> 00:04:39,200 Speaker 3: high end of what people are expecting. But even the 88 00:04:39,240 --> 00:04:41,520 Speaker 3: lower end of what people are expecting is in any 89 00:04:41,520 --> 00:04:44,919 Speaker 3: market a very very oversupplied market, still. 90 00:04:44,880 --> 00:04:47,039 Speaker 1: A lot of it. It is already in the water, it 91 00:04:47,120 --> 00:04:50,160 Speaker 1: is already in oil tankers, and is heavy in front 92 00:04:50,520 --> 00:04:54,479 Speaker 1: production area as to consulsian areas. It takes only about 93 00:04:54,839 --> 00:04:57,040 Speaker 1: less than a week for some of the oil from 94 00:04:57,200 --> 00:05:00,719 Speaker 1: the North Africa to reach Europe and refiners rus But 95 00:05:00,960 --> 00:05:03,800 Speaker 1: if the oil is going, say from Brazil all the 96 00:05:03,800 --> 00:05:06,920 Speaker 1: way to China, that's gonna take forty to forty five days. 97 00:05:07,160 --> 00:05:09,760 Speaker 1: But what we don't know is what is going to 98 00:05:09,839 --> 00:05:13,120 Speaker 1: happen when that oil reaches destination. Is it going to 99 00:05:13,200 --> 00:05:15,880 Speaker 1: be consumed or is it going to go straight into 100 00:05:15,920 --> 00:05:18,680 Speaker 1: a storage? And the most likely situation that we're going 101 00:05:18,760 --> 00:05:22,800 Speaker 1: to have is that come January February, that oil is 102 00:05:22,800 --> 00:05:25,200 Speaker 1: going to go straight into a storage, and is when 103 00:05:25,240 --> 00:05:28,000 Speaker 1: we are going to see a price that it's gonna 104 00:05:28,040 --> 00:05:31,719 Speaker 1: have to go down because you need to incentivize that 105 00:05:32,000 --> 00:05:37,559 Speaker 1: historian process, and for that we need lower prices than today, Alex. 106 00:05:37,640 --> 00:05:41,080 Speaker 2: I remember during the pandemic, oil prices went up, and 107 00:05:41,279 --> 00:05:43,000 Speaker 2: when they came back down, the prices at the pump 108 00:05:43,000 --> 00:05:45,200 Speaker 2: what I was paying for gas didn't come down as much. 109 00:05:45,279 --> 00:05:48,080 Speaker 2: Release It didn't seem that way. What's different about this. 110 00:05:48,080 --> 00:05:51,440 Speaker 3: Time, Firstly, it depends on where you are in the world. 111 00:05:51,480 --> 00:05:53,760 Speaker 3: In the US, the response at the pump is much 112 00:05:53,800 --> 00:05:55,880 Speaker 3: more reactive. It takes a bit of time, but you'll 113 00:05:55,920 --> 00:05:58,159 Speaker 3: still see it come down. Here in the UK, for example, 114 00:05:58,240 --> 00:06:00,760 Speaker 3: and in many European countries, a giant amount of what 115 00:06:00,800 --> 00:06:02,440 Speaker 3: you pay at the pump is of course tax, rather 116 00:06:02,520 --> 00:06:05,159 Speaker 3: than the actual price of the barrel itself. I think 117 00:06:05,160 --> 00:06:06,760 Speaker 3: the other things that we have to keep in mind 118 00:06:06,800 --> 00:06:09,159 Speaker 3: this time that are different is how far oil could 119 00:06:09,160 --> 00:06:11,599 Speaker 3: fall in the coming period. And twenty twenty was a 120 00:06:11,600 --> 00:06:14,000 Speaker 3: period when we all worked from home for at least 121 00:06:14,000 --> 00:06:16,440 Speaker 3: a few months, and in some countries years we all 122 00:06:16,440 --> 00:06:19,320 Speaker 3: stayed at home, no one flew, no one drove, and 123 00:06:19,360 --> 00:06:21,120 Speaker 3: that was what kind of took the floor out of 124 00:06:21,120 --> 00:06:23,400 Speaker 3: the oil market. This time is very different. This is 125 00:06:23,400 --> 00:06:26,520 Speaker 3: an oversupply, but there is a natural flaw here, and 126 00:06:26,560 --> 00:06:29,640 Speaker 3: as Xavier has talked about previously, oil prices are already 127 00:06:29,720 --> 00:06:31,440 Speaker 3: very cheap, so you can kind of start to ask 128 00:06:31,440 --> 00:06:34,320 Speaker 3: the question of how far as we fall into the fifties, 129 00:06:34,320 --> 00:06:36,279 Speaker 3: how much further can we fall. Yes, we might see 130 00:06:36,320 --> 00:06:38,360 Speaker 3: oil with a foe handle, but you don't hear people 131 00:06:38,440 --> 00:06:41,160 Speaker 3: talking about, for example, the twenties or even really the thirties. 132 00:06:41,520 --> 00:06:44,000 Speaker 2: Let's talk a bit about winners and losers. Who's benefiting 133 00:06:44,000 --> 00:06:46,320 Speaker 2: from these lower oil prices? And Alex I'll turn to 134 00:06:46,320 --> 00:06:48,720 Speaker 2: you first, Tavier, moment to go mention Guiana. Who is 135 00:06:48,760 --> 00:06:50,280 Speaker 2: winning out here? Who's this good news for? 136 00:06:50,680 --> 00:06:52,560 Speaker 3: Well? I think there's a few things, and perhaps the 137 00:06:52,600 --> 00:06:54,719 Speaker 3: best place to start is sort of the buyers of 138 00:06:54,720 --> 00:06:57,400 Speaker 3: sanctioned oil. You mentioned before that kind of twenty twenty 139 00:06:57,440 --> 00:07:00,360 Speaker 3: two price shock that we in the West felt very acute, 140 00:07:00,400 --> 00:07:03,240 Speaker 3: But there were countries continuing to buy oil that is 141 00:07:03,279 --> 00:07:06,240 Speaker 3: now sanctioned where those inflationary pressures were nowhere near as large. 142 00:07:06,240 --> 00:07:09,120 Speaker 3: So the country's continuing to take oil that is under 143 00:07:09,160 --> 00:07:11,600 Speaker 3: some form of restriction, whether it's India buying Russian oil, 144 00:07:11,600 --> 00:07:14,400 Speaker 3: whether it's China buying Venezuela, or Iranian oil. They have 145 00:07:14,480 --> 00:07:16,920 Speaker 3: long been feeling the benefits of lower prices in this 146 00:07:17,000 --> 00:07:19,800 Speaker 3: higher level of supply. We've already touched on drivers at 147 00:07:19,800 --> 00:07:22,600 Speaker 3: the pump. That's another clear area of wind and as 148 00:07:22,680 --> 00:07:24,480 Speaker 3: time goes by, I think you're likely to see that 149 00:07:24,520 --> 00:07:26,680 Speaker 3: in things like airfares as well. Add in to that 150 00:07:26,760 --> 00:07:29,800 Speaker 3: as well, struggling emerging nations finally starting to get a 151 00:07:29,800 --> 00:07:32,920 Speaker 3: benefit of lower prices for their economies. And on top 152 00:07:32,960 --> 00:07:34,880 Speaker 3: of that, you have, as you said, the new producers 153 00:07:35,080 --> 00:07:38,320 Speaker 3: countries where there is an oil windfall that didn't previously exist. 154 00:07:38,560 --> 00:07:40,800 Speaker 3: That's a slightly more nuanced case. But if you weren't 155 00:07:40,800 --> 00:07:43,000 Speaker 3: producing any oil five years ago and suddenly you're producing 156 00:07:43,040 --> 00:07:45,440 Speaker 3: a million bowls a day, there's a clear benefit to 157 00:07:45,480 --> 00:07:47,679 Speaker 3: that no matter what, even if prices are falling. 158 00:07:48,080 --> 00:07:49,880 Speaker 2: Have your how about losers shed a tear here for 159 00:07:49,920 --> 00:07:52,440 Speaker 2: the multi billion dollar oil companies. 160 00:07:52,480 --> 00:07:55,080 Speaker 1: Well, certainly big oil is going to lose some money. 161 00:07:55,320 --> 00:07:59,200 Speaker 1: Anyone that is pumping oil or leave around the regions 162 00:07:59,240 --> 00:08:05,520 Speaker 1: where oil is thinking about West Texas, Southeast New Mexico, Oklahoma, Alaska, 163 00:08:05,800 --> 00:08:08,960 Speaker 1: South Dakota, all of them are gonna be suffering. Open 164 00:08:09,000 --> 00:08:12,600 Speaker 1: producing countries. Soudi Arabia, they are tightening the belt big time. 165 00:08:13,120 --> 00:08:16,200 Speaker 1: And then all these new American producing countries that they 166 00:08:16,280 --> 00:08:18,640 Speaker 1: are producing a lot more so they are still they 167 00:08:18,640 --> 00:08:21,080 Speaker 1: have the higher volumes, but they were not expecting to 168 00:08:21,720 --> 00:08:25,120 Speaker 1: receive the price of oil just going into the fifties. 169 00:08:25,120 --> 00:08:28,040 Speaker 1: So you are Brazil, Guiana, you know, it's not great 170 00:08:28,120 --> 00:08:30,800 Speaker 1: news for them. But I think that the biggest loser 171 00:08:30,880 --> 00:08:34,640 Speaker 1: here is gonna be the countries in the Middle East, 172 00:08:34,920 --> 00:08:38,520 Speaker 1: Soudi Arabia, Kubei, Qatar, the United Arab Emi days. They 173 00:08:38,520 --> 00:08:42,360 Speaker 1: are producing more oil, but the larger volume doesn't really 174 00:08:42,440 --> 00:08:46,320 Speaker 1: upset the lower price, and those countries are in need 175 00:08:46,400 --> 00:08:50,240 Speaker 1: of a lot of money, particularly Saudi Arabia. So I 176 00:08:50,240 --> 00:08:54,000 Speaker 1: would say that the biggest loser here is Saudi Arabia. 177 00:08:54,559 --> 00:08:56,800 Speaker 1: The second loser is going to be Texas. 178 00:08:57,120 --> 00:08:59,640 Speaker 2: Let's talk a bit more about Saudi Arabia and Texas 179 00:08:59,640 --> 00:09:02,320 Speaker 2: and ticking with the Middle East through. It sounds like 180 00:09:02,720 --> 00:09:04,680 Speaker 2: when prices are this low, it kind of sets off 181 00:09:04,880 --> 00:09:07,160 Speaker 2: a chain reaction that has a kind of profound effect 182 00:09:07,200 --> 00:09:09,960 Speaker 2: on investment and production. Can you just describe the way 183 00:09:09,960 --> 00:09:12,560 Speaker 2: that customarily unfolds and we see prices as slow for 184 00:09:12,600 --> 00:09:14,079 Speaker 2: such a sustained period of time. 185 00:09:14,679 --> 00:09:18,480 Speaker 1: Well, companies start cutting everything. They're gonna start spending less 186 00:09:18,520 --> 00:09:22,040 Speaker 1: on drilling, less on building pipelines, less on exploring for 187 00:09:22,160 --> 00:09:25,160 Speaker 1: new oil fields, and they're gonna start firing people at 188 00:09:25,160 --> 00:09:28,880 Speaker 1: the office. They're gonna cut the amount of traveling, They're 189 00:09:28,880 --> 00:09:32,360 Speaker 1: gonna cut the paper clips that the personal assistants are using. 190 00:09:32,760 --> 00:09:36,480 Speaker 1: You start really as rink in the oil industry. And 191 00:09:36,559 --> 00:09:38,920 Speaker 1: a lot of that is a one off. It can 192 00:09:38,960 --> 00:09:42,360 Speaker 1: be reversed. So you are doing less drilling, you could 193 00:09:42,559 --> 00:09:46,439 Speaker 1: increase drilling next year. You can't reverse that very very quickly. 194 00:09:46,640 --> 00:09:49,440 Speaker 1: The problem is when oil companies start to cut into 195 00:09:49,520 --> 00:09:52,920 Speaker 1: what I would say the bone, firing geologies, firing the 196 00:09:52,960 --> 00:09:55,840 Speaker 1: people who are gonna find the next oil field five 197 00:09:55,960 --> 00:09:57,720 Speaker 1: ten years from now, which is going to bring the 198 00:09:57,760 --> 00:10:00,760 Speaker 1: supply in the twenty and thirties. If we see that, 199 00:10:01,360 --> 00:10:04,360 Speaker 1: then we are going to damage the oil industry for 200 00:10:04,520 --> 00:10:05,280 Speaker 1: the years to come. 201 00:10:05,520 --> 00:10:08,160 Speaker 3: It's also interesting, I think we've seen the first wave 202 00:10:08,240 --> 00:10:11,040 Speaker 3: of those cuts. Have kind of done everything they can, 203 00:10:11,160 --> 00:10:13,920 Speaker 3: particularly in the majors, to shield their oil and gas businesses. 204 00:10:14,200 --> 00:10:16,640 Speaker 3: They've moved money away from things like renewable and power. 205 00:10:16,920 --> 00:10:19,280 Speaker 3: As Haavier says, to kind of prevent that cutting down 206 00:10:19,280 --> 00:10:22,040 Speaker 3: to the bone. But logic dictates that once you've stripped 207 00:10:22,040 --> 00:10:24,360 Speaker 3: everything else sits, it's the oil and gas that comes next. 208 00:10:25,200 --> 00:10:27,640 Speaker 2: Alex As we move from the Middle East to Texas 209 00:10:28,000 --> 00:10:30,920 Speaker 2: to US shale, what are those shale producers saying about 210 00:10:30,920 --> 00:10:33,200 Speaker 2: their prospects here in the medium to long term? 211 00:10:33,520 --> 00:10:35,920 Speaker 3: I would say different things depending on whether you talk 212 00:10:35,960 --> 00:10:38,840 Speaker 3: to them publicly or privately. We have sort of comments 213 00:10:38,880 --> 00:10:41,160 Speaker 3: that there's a lot of lobbying going on to the 214 00:10:41,240 --> 00:10:44,080 Speaker 3: US administration about how far prices are going to fall 215 00:10:44,120 --> 00:10:45,680 Speaker 3: and what that could mean in the long term in 216 00:10:45,720 --> 00:10:48,440 Speaker 3: terms of getting crews back onto fields and how quickly 217 00:10:48,480 --> 00:10:50,959 Speaker 3: you can do that. If and when prices rallied down 218 00:10:51,000 --> 00:10:54,240 Speaker 3: the line after this drop, you have an entire tariff environment, 219 00:10:54,320 --> 00:10:57,120 Speaker 3: right that is affecting the price of steel. The fundamental 220 00:10:57,160 --> 00:11:00,000 Speaker 3: costs of the things that help you reoil out the ground. 221 00:11:00,280 --> 00:11:02,160 Speaker 3: You need to drill it and then put it in 222 00:11:02,240 --> 00:11:04,640 Speaker 3: pipes and then exports it. And if the cost of 223 00:11:04,679 --> 00:11:06,840 Speaker 3: doing all that goes up materially, so does your break 224 00:11:06,840 --> 00:11:08,800 Speaker 3: even cost. And that means you're well struggles to be 225 00:11:08,840 --> 00:11:11,079 Speaker 3: profitable as price is full. In the same way it 226 00:11:11,080 --> 00:11:12,840 Speaker 3: would have done a few years ago. 227 00:11:15,280 --> 00:11:18,920 Speaker 2: Coming up, we go back to Venezuela, how global conflicts 228 00:11:18,920 --> 00:11:22,000 Speaker 2: could impact oil prices going forward, and what it would 229 00:11:22,000 --> 00:11:36,600 Speaker 2: mean if prices get even lower. The story of the 230 00:11:36,640 --> 00:11:39,600 Speaker 2: current global market for oil is one of both oversupply 231 00:11:39,880 --> 00:11:44,000 Speaker 2: and unpredictability. From Russia and Iran to the US, China 232 00:11:44,040 --> 00:11:48,400 Speaker 2: and Venezuela. Geopolitical conflicts involving the market suppliers have created 233 00:11:48,440 --> 00:11:52,400 Speaker 2: a climate where major disruptions can arise quickly and without warning. 234 00:11:53,040 --> 00:11:57,000 Speaker 2: Case in point, the US blockade against Venezuela. That blockade 235 00:11:57,040 --> 00:12:00,520 Speaker 2: refers to sanctioned oil tankers coming in and out of Isela. 236 00:12:00,840 --> 00:12:04,400 Speaker 2: US official telling ABC News the Coastguard tried intercepting a 237 00:12:04,480 --> 00:12:08,440 Speaker 2: vessel that's part of Venezuela's quote illegal sanctions of asion. 238 00:12:08,559 --> 00:12:10,200 Speaker 3: There are a number of dark fleet vessels that have 239 00:12:10,320 --> 00:12:12,800 Speaker 3: not been sanctioned by the US. Now over the weekend, 240 00:12:12,880 --> 00:12:15,760 Speaker 3: the Trump administration boarded a vessel that was not sanctioned. 241 00:12:16,200 --> 00:12:19,880 Speaker 2: Here, I'm curious about countries that are facing international sanctions. 242 00:12:19,920 --> 00:12:22,200 Speaker 2: There are these hidden oil shipments, and I'm curious if 243 00:12:22,240 --> 00:12:24,079 Speaker 2: you could explain to what they are and how they 244 00:12:24,120 --> 00:12:26,320 Speaker 2: factor into this broader energy picture. 245 00:12:26,679 --> 00:12:29,640 Speaker 1: It's quite amazing, because when you are talking about hidden 246 00:12:29,840 --> 00:12:33,080 Speaker 1: oil shipments, you are still talking about an oil super 247 00:12:33,120 --> 00:12:37,040 Speaker 1: tanker which is about three hundred and fifty meters long 248 00:12:37,440 --> 00:12:40,320 Speaker 1: by sixty meters wide. So it's not the kind of 249 00:12:40,320 --> 00:12:42,880 Speaker 1: thing that you could hide. And obviously it shows up 250 00:12:43,200 --> 00:12:46,960 Speaker 1: on every satellite a picture that you know, different governments 251 00:12:47,000 --> 00:12:50,000 Speaker 1: have taken at at all times. But there are bezelts 252 00:12:50,080 --> 00:12:53,520 Speaker 1: that they have changed hunts multiple times that we don't 253 00:12:53,559 --> 00:12:56,520 Speaker 1: know who the ultimate owner of those oil tankers are. 254 00:12:57,080 --> 00:13:00,720 Speaker 1: They are bestelts that at times are using flag that 255 00:13:01,080 --> 00:13:03,960 Speaker 1: doesn't even exist or is not really registered on the 256 00:13:03,960 --> 00:13:06,880 Speaker 1: country that they pretend to be flying the flag. They 257 00:13:06,880 --> 00:13:10,560 Speaker 1: don't have insurance, they have a lot of fake paperwork, 258 00:13:11,120 --> 00:13:14,679 Speaker 1: and those tankers are used to shift oil out of 259 00:13:14,679 --> 00:13:19,880 Speaker 1: the way from Venezuela, Iran and Russia into the global markets, 260 00:13:19,960 --> 00:13:23,600 Speaker 1: and by that I mean mostly China. China is the 261 00:13:23,600 --> 00:13:25,079 Speaker 1: big buyer of those barrels. 262 00:13:25,320 --> 00:13:29,000 Speaker 2: Have you're picking up on geopolitics, We've got the conflict 263 00:13:29,400 --> 00:13:33,160 Speaker 2: in Ukraine continuing, Russia under sanction as a result of that. 264 00:13:33,240 --> 00:13:36,040 Speaker 2: Then off the coast of South America you've got now 265 00:13:36,040 --> 00:13:40,640 Speaker 2: a blockhade in place. How do these stand to affect 266 00:13:40,640 --> 00:13:42,400 Speaker 2: the price of oil here in the months to come. 267 00:13:43,000 --> 00:13:46,520 Speaker 1: Well, I mean that is the big headline race that 268 00:13:46,640 --> 00:13:50,560 Speaker 1: oil traders talk about. You could have your best modeling 269 00:13:50,640 --> 00:13:53,400 Speaker 1: of the global economy, your best modeling or supply and demand, 270 00:13:53,880 --> 00:13:58,000 Speaker 1: but you cannot really anticipate what President Trump in the US, 271 00:13:58,040 --> 00:14:01,240 Speaker 1: President put In in Russia and Persida Maduro in Venezuela 272 00:14:01,280 --> 00:14:04,120 Speaker 1: are gonna do and how that's gonna play out. If 273 00:14:04,120 --> 00:14:06,800 Speaker 1: we think that the situation between Russia and Ukraine, the 274 00:14:06,880 --> 00:14:10,160 Speaker 1: world is going towards a solution. Perhaps no immediately, but 275 00:14:10,480 --> 00:14:12,640 Speaker 1: there is at least a process that is going on 276 00:14:12,960 --> 00:14:16,520 Speaker 1: and negotiation. I think that the market is expecting that 277 00:14:16,840 --> 00:14:19,440 Speaker 1: probably we are not gonna see any more sanzios or 278 00:14:19,520 --> 00:14:24,040 Speaker 1: any enforcement of sanzios, and therefore supply from Russia should 279 00:14:24,120 --> 00:14:28,400 Speaker 1: probably be as as it is today, up and down 280 00:14:28,440 --> 00:14:32,680 Speaker 1: a bit. Venezuela. The production is so small in Venezuela's 281 00:14:32,680 --> 00:14:35,040 Speaker 1: about a million dollars a day used to produce three 282 00:14:35,080 --> 00:14:37,640 Speaker 1: and a half that even if Venezuela was to go 283 00:14:37,720 --> 00:14:41,200 Speaker 1: to zero, it will not really change the global market 284 00:14:41,240 --> 00:14:45,160 Speaker 1: that much. But Venezuela is a massive race long term 285 00:14:45,680 --> 00:14:48,960 Speaker 1: for more oil. If Maduda goes and there is no 286 00:14:49,040 --> 00:14:51,440 Speaker 1: damage to the oil fields, those are too big. If 287 00:14:51,760 --> 00:14:55,840 Speaker 1: but let's assume that Maduda goes and the opposition gets power. 288 00:14:56,480 --> 00:15:00,120 Speaker 1: Most likely international oil companies get invited into the and 289 00:15:00,680 --> 00:15:04,680 Speaker 1: over time Venezuela can produce a lot more oil than today. 290 00:15:05,000 --> 00:15:08,720 Speaker 1: I think that if we see act in Venezuela in 291 00:15:08,800 --> 00:15:13,000 Speaker 1: which Madudo goes, the market is gonna sell and he's 292 00:15:13,000 --> 00:15:13,920 Speaker 1: gonna sell hard. 293 00:15:14,720 --> 00:15:16,000 Speaker 2: Alex, let me have you take a bite of that 294 00:15:16,120 --> 00:15:18,920 Speaker 2: as well. So if President Trump had this kind of 295 00:15:19,160 --> 00:15:23,440 Speaker 2: pie in the sky outcome whereby Venezuela opens up, it's 296 00:15:23,480 --> 00:15:26,280 Speaker 2: producing more oil. Maybe if there's a deal with Russia 297 00:15:26,280 --> 00:15:28,160 Speaker 2: those sanctions are lifted, we have this world that's a 298 00:15:28,320 --> 00:15:30,920 Speaker 2: wash and cheap oil. It's only going to get cheaper. 299 00:15:30,960 --> 00:15:32,360 Speaker 2: Play that out for us if you would sort of 300 00:15:32,360 --> 00:15:33,320 Speaker 2: what that would look like. 301 00:15:33,560 --> 00:15:36,560 Speaker 3: Well, I think when I talk to whether it's traders, investors, 302 00:15:36,720 --> 00:15:39,400 Speaker 3: people involved in companies in the oil market, there are 303 00:15:39,400 --> 00:15:41,800 Speaker 3: two things that come up with that. On the Venezuela side. 304 00:15:41,840 --> 00:15:45,040 Speaker 3: The first question is, well, if Maduro does go, what 305 00:15:45,160 --> 00:15:48,080 Speaker 3: does the post Maduro world look like? And no one 306 00:15:48,120 --> 00:15:49,760 Speaker 3: really has an answer for that at the moment, But 307 00:15:49,840 --> 00:15:52,200 Speaker 3: I think clearly there there is a short term risk 308 00:15:52,280 --> 00:15:54,560 Speaker 3: of a small supplier squeeze and a long term risk 309 00:15:54,640 --> 00:15:57,320 Speaker 3: of a large increase in production if there was a 310 00:15:57,360 --> 00:16:00,160 Speaker 3: smooth transition there. But again it's a massive if the 311 00:16:00,200 --> 00:16:02,480 Speaker 3: Russian side. You ask people, what would you do if 312 00:16:02,480 --> 00:16:04,120 Speaker 3: there was a peace deal tomorrow? Would you go back 313 00:16:04,120 --> 00:16:06,960 Speaker 3: to dealing with Russia? Again, the question is, well, what 314 00:16:07,040 --> 00:16:08,920 Speaker 3: does the world look like tomorrow after this peace deal? 315 00:16:09,120 --> 00:16:12,000 Speaker 3: Has everyone lifted sanctions? Has just the US lifted sanctions? 316 00:16:12,080 --> 00:16:14,040 Speaker 3: Have the US and the UK lifted sanctions but not 317 00:16:14,080 --> 00:16:16,320 Speaker 3: the EU? And within that you kind of get a 318 00:16:16,320 --> 00:16:19,640 Speaker 3: sense of the difficulty Western companies would have in going 319 00:16:19,680 --> 00:16:22,360 Speaker 3: back to sort of dealing with Russia. Very quickly, we 320 00:16:22,400 --> 00:16:25,400 Speaker 3: had the Total CEO on TV saying, I've diversified my 321 00:16:25,440 --> 00:16:27,840 Speaker 3: business towards the US and away from Russia. I need 322 00:16:27,880 --> 00:16:31,320 Speaker 3: long term stability. It's unlikely I'd go back there anytime soon. 323 00:16:31,480 --> 00:16:34,480 Speaker 4: We were quite in the big universa in Russia almost 324 00:16:34,480 --> 00:16:38,000 Speaker 4: fifteen billion dollars in this moment. There was some reasons. 325 00:16:38,040 --> 00:16:40,320 Speaker 4: We have made a big write off of four assets there. 326 00:16:40,760 --> 00:16:43,600 Speaker 4: So you know, the world is big. So today we 327 00:16:43,640 --> 00:16:46,120 Speaker 4: have shifted from Russia through the. 328 00:16:46,200 --> 00:16:49,400 Speaker 3: US However, there is a lot of Russian oil on 329 00:16:49,440 --> 00:16:52,960 Speaker 3: the water, and if all of that oil becomes unsanctioned 330 00:16:53,040 --> 00:16:56,240 Speaker 3: or unrestricted, what you effectively get is a giant release 331 00:16:56,240 --> 00:16:58,440 Speaker 3: from emergency oil reserves, which is what happened in twenty 332 00:16:58,440 --> 00:17:01,120 Speaker 3: twenty two. Right. Price has got very high, and governments 333 00:17:01,160 --> 00:17:03,360 Speaker 3: across the world said these prices are too high. Will 334 00:17:03,360 --> 00:17:06,000 Speaker 3: release some urgency oil stocks, flood oil onto the market 335 00:17:06,160 --> 00:17:08,160 Speaker 3: so that we can lower prices at the pump. Again. 336 00:17:08,640 --> 00:17:10,720 Speaker 3: All this Russian oil at sea, if sanctions are lifted, 337 00:17:10,800 --> 00:17:13,160 Speaker 3: is effectively a giant version of that, and I think 338 00:17:13,200 --> 00:17:15,160 Speaker 3: that's the interesting thing to watch in the coming months. 339 00:17:15,200 --> 00:17:18,199 Speaker 3: It won't be a wholesale the deal is done, we 340 00:17:18,240 --> 00:17:20,840 Speaker 3: go back to life before the invasion of Ukraine, but 341 00:17:20,960 --> 00:17:23,800 Speaker 3: it will really create the possibility to kind of remove 342 00:17:23,880 --> 00:17:25,760 Speaker 3: some of the sand in the gears of the Russian 343 00:17:25,760 --> 00:17:28,600 Speaker 3: oil machine and get that oil flowing to market a 344 00:17:28,600 --> 00:17:30,080 Speaker 3: lot quicker than it had been previously. 345 00:17:30,720 --> 00:17:33,679 Speaker 2: Have your last question to you President Trump at the 346 00:17:33,680 --> 00:17:37,440 Speaker 2: White House touting cheap gas prices, saying he wants gas 347 00:17:37,440 --> 00:17:41,120 Speaker 2: to get even cheaper. I'm curious if this pricing dynamic holds, 348 00:17:41,240 --> 00:17:44,600 Speaker 2: if oil remains cheap or gets cheaper. How does that 349 00:17:44,640 --> 00:17:47,320 Speaker 2: play out for the US and for other consumer economies. 350 00:17:48,160 --> 00:17:53,600 Speaker 1: While it's relief for consumers, relief for families, it really ease, 351 00:17:53,840 --> 00:17:57,040 Speaker 1: particularly in America. Is different in Europe and in the 352 00:17:57,040 --> 00:18:00,159 Speaker 1: European Union and the Eurosone and the UK because of 353 00:18:00,200 --> 00:18:03,240 Speaker 1: the role of taxation in gasoline. But it will really 354 00:18:03,960 --> 00:18:06,919 Speaker 1: unblock a path to lower interest rates, which is what 355 00:18:07,119 --> 00:18:11,840 Speaker 1: I think ultimately Trump is interested. Trump only wants cheap 356 00:18:11,920 --> 00:18:16,119 Speaker 1: oil because he thinks that as one prerequisite to get 357 00:18:16,600 --> 00:18:20,239 Speaker 1: lower interest rates at cheaper price of the money. And 358 00:18:20,280 --> 00:18:23,240 Speaker 1: I think that he's fixated on that. He has put 359 00:18:23,280 --> 00:18:26,240 Speaker 1: a lot of emphasies on trying to control the Federal Reserve, 360 00:18:26,640 --> 00:18:28,840 Speaker 1: and I think he's going to keep pushing until he 361 00:18:28,880 --> 00:18:32,000 Speaker 1: gets exactly what he wants, and for that he needs 362 00:18:32,000 --> 00:18:35,200 Speaker 1: to sustain the prices at current levels or even push 363 00:18:35,240 --> 00:18:35,680 Speaker 1: it lower. 364 00:18:41,600 --> 00:18:44,120 Speaker 2: This is the Big Take from Bloomberg News. I'm David Gerra. 365 00:18:44,400 --> 00:18:46,679 Speaker 2: To get more from The Big Take and unlimited access 366 00:18:46,720 --> 00:18:49,680 Speaker 2: to all of Bloomberg dot Com, subscribe today at Bloomberg 367 00:18:49,720 --> 00:18:53,160 Speaker 2: dot com slash podcast offer. If you like this episode, 368 00:18:53,320 --> 00:18:55,359 Speaker 2: make sure to follow and review The Big Take wherever 369 00:18:55,359 --> 00:18:57,800 Speaker 2: you listen to podcasts. It helps people find the show. 370 00:18:58,200 --> 00:19:00,679 Speaker 2: Thanks for listening. We'll be back tomorrow.