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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 3: I'm Chillisenthal and I'm Tracy Alloway.

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Speaker 2: Tracy, we're recording this the morning of March nineteenth, around

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Speaker 2: nine am.

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Speaker 3: And that's how you know it's bad when you have

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Speaker 3: to throw in the hour and the minutes nine oh

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Speaker 3: seven am.

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Speaker 2: Nine o seven am. And I think the story right

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Speaker 2: now is just the degree to which people are realizing

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Speaker 2: more and more energy infrastructure in the region. We're talking

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Speaker 2: about their Iron War, of course, more and more energy

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Speaker 2: infrastructure in the region. I mean it's literally on fire.

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Speaker 3: Yeah. The thing that I've noticed, having recorded these sort

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Speaker 3: of emergency podcasts over the past, I guess two weeks

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Speaker 3: now is that we will talk about a hypothetical like,

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Speaker 3: you know, oh, what happens if Iran strikes the port

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Speaker 3: of Solala in Alan and then a couple days later

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Speaker 3: it happens, which gives you an indication of how quickly

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Speaker 3: things are progressing. And one thing that has happened in

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Speaker 3: just the past day or so since we recorded an

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Speaker 3: episode with Bob Brackett on net Gas is we had

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Speaker 3: Israel bombing Iran's infrastructure in the South Pars gas field. Yes,

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Speaker 3: and that was kind of a hypothetical that we talked

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Speaker 3: about with Bob and it happened shortly after. And then

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Speaker 3: after that we also had Iran bombing Katari energy assets

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Speaker 3: in the South Pars. So it's it's just progressing very quickly.

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Speaker 2: Our colleague Dylan Griffiths has put together a really excellent list.

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Speaker 2: I mean, the thing was so we did that episode

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Speaker 2: sort of near the beginning or I've lost track at

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Speaker 2: the time with Rory Johnston, and he said the closure

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Speaker 2: of the strain of hor Mooz was itself the sort

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Speaker 2: of hypothetical that was so extreme that it was almost

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Speaker 2: not worth contemplating. So I think, to your frame is

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Speaker 2: really excellent. All of these things that are just sort

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Speaker 2: of like you think about them as very bad possibilities,

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Speaker 2: and one by one they become realities. Our colleague Dylan

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Speaker 2: Griffiths has a really excellent just sort of list of

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Speaker 2: energy infrastructure damaged in Iran war piece and it just

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Speaker 2: goes down through the list. One of the refineries in

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Speaker 2: the world shut down as a precautionary measure, roz Tanura,

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Speaker 2: a refinery in Saudi Arabia, halted, various pipelines, gas facilities

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Speaker 2: and so forth. There's just a lot that's damaged, which

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Speaker 2: of course means that the strait of hormosal in one aspect,

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Speaker 2: maybe it gets opened. But then there's of course the

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Speaker 2: question of, like all the infrastructure that's been damaged, how

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Speaker 2: long it takes to come back online at anything near

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Speaker 2: full capacity?

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Speaker 3: Right, And this phraises two interesting questions. I think one

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Speaker 3: is that it seems like the US and maybe Israel

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Speaker 3: to some extent, weren't expecting Iran to hit back against

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Speaker 3: various energy infrastructure assets or even cities. This hard, right,

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Speaker 3: And I think Trump has said a couple of times

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Speaker 3: that he didn't expect Iran to, for instance, like go

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Speaker 3: after targets in the UAE and places like that, So

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Speaker 3: questions over what's happening there, like why did that become

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Speaker 3: a strategy? And then secondly, the thing I'm wondering is

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Speaker 3: how much financial pressure does this actually put on Iran

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Speaker 3: Because at the moment, yes, some of its big gas

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Speaker 3: producing things are getting hit and damaged, and it seems

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Speaker 3: like that's going to cause some fallout. But on the

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Speaker 3: other hand, if oil prices are spiking and if Iran

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Speaker 3: can still get out some oil to a certain extent

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Speaker 3: to places like China, Is that actually a fiscal windfall

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Speaker 3: for them? Like can they withstand some of this chaos

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Speaker 3: better than perhaps other places can?

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Speaker 4: Right?

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Speaker 2: And you know, for the US, obviously a lot of

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Speaker 2: this translates into higher prices at the pump for some

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Speaker 2: of the regioning golf countries. I mean, it's just ADP catastrophe, right,

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Speaker 2: And some of the estimates for what some of the

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Speaker 2: countries are expected to see a reduction in GDP, I

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Speaker 2: think I've seen numbers like fifteen percent, yeah, et cetera.

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Speaker 2: I mean we're talking about you know, that's depression levels,

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Speaker 2: declinents and so forth. And so the degree to which

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Speaker 2: this drives a serious wage between golf countries and the

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Speaker 2: United States is of course obviously a big part of

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Speaker 2: the story here anyway, And of course that makes the

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Speaker 2: logic of the strikes, right, I mean, that makes Iran's

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Speaker 2: logic seem very clear drive a wage between US and

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Speaker 2: its friends in the region and so forth, And so anyway,

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Speaker 2: we need to understand both better just how serious this

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Speaker 2: damage is the long term fallout, because this is very

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Speaker 2: important from economic story. And then the way to think

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Speaker 2: about this damage in the context of wor strategy itself,

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Speaker 2: and what constitutes success for Iran here as it tries

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Speaker 2: to defend, and how.

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Speaker 3: All of this is actually playing on the ground in Iran,

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Speaker 3: because of course we don't have very good insight at

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Speaker 3: any moment in time into domestic Iranian politics.

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Speaker 2: Definitely not all right, Well, we really do have the

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Speaker 2: perfect guests, someone we've spoken to before, someone we turned

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Speaker 2: to frequently when the discussion is about Iran or it's

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Speaker 2: about oil, and certainly some combination of the two. We're

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Speaker 2: gonna be speaking, of course, perfect guest. Greg Brews, Senior

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Speaker 2: analystic Erasier Group. He is the author of two books

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Speaker 2: that directly relate to this, Petroleum and progress in Iran,

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Speaker 2: Oil development of the Cold War and the struggle for

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Speaker 2: Iran oil autocracy in the Cold War. So, Greg, thank

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Speaker 2: you so much for coming back on odd Laws.

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Speaker 5: Hi Joe, Hi Tracy, thanks for having me back.

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Speaker 2: It must be nice. You know, you write these academic

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Speaker 2: books with academic prices, with names that sound like academic books,

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Speaker 2: and suddenly suddenly they're actually in demand. They're current event sudant,

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Speaker 2: which cannot be said for all academics.

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Speaker 5: They weren't relevant before, they were very boring, and only

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Speaker 5: a handful of people cared about them, and now the

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Speaker 5: number is slightly more than a handful.

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Speaker 2: Perhaps it's definitely more than a handful. Why don't we

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Speaker 2: just start off with this sort of very big picture,

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Speaker 2: which is, let's just put on your energy analyst hat

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Speaker 2: for a second, and then we'll get into all this

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Speaker 2: sort of understanding Iran more. You know from your energy

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Speaker 2: analyst hat, how shocked are you by the sort of

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Speaker 2: scale of destruction that we've seen with energy infrastructure over

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Speaker 2: the last couple of weeks.

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Speaker 5: So I think I'm officially shocked after the events of

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Speaker 5: the last twenty four hours where you saw both Israel

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Speaker 5: attack the South Pars gas field in Iran, which supplies

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Speaker 5: seventy percent of Iran's gas supply, and then quite quickly

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Speaker 5: within hours Iran responding by striking the Raslafan LNG processing

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Speaker 5: facility and Cutler. But of course, over the last few

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Speaker 5: weeks we've seen widespread strikes on energy targets throughout the region,

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Speaker 5: and then of course the closure of the Straight of

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Speaker 5: Four Moves, which, as you mentioned, and I've had very

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Speaker 5: similar experiences to Rory in this way. Over the last

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Speaker 5: few years, whenever anybody asked me, you know, he's Iran

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Speaker 5: going to close the straight of four moves, I would

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Speaker 5: say only as a last resort, only in the event

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Speaker 5: that the regime feels that its survival is being threatened.

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Speaker 5: And most of the time I've been saying, we're not

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Speaker 5: there yet. You know, whatever crisis this is, it's it's

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Speaker 5: not that bad. But this war, this attack was interpreted

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Speaker 5: by Iran as a threat to its survival, a threat

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Speaker 5: to the regime survival, and it responded in a way

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Speaker 5: that it has been saying it would respond for a

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Speaker 5: long time. So I have been shocked. But if I

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Speaker 5: were a better Iran and energy analyst, maybe I shouldn't

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Speaker 5: have been.

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Speaker 3: Well, okay, explain that further, because some people would say, intuitively,

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Speaker 3: if you strike Iran and immediately take out the supreme leader,

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Speaker 3: that immediately frames the conflict as an existential one for Iran. Right,

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Speaker 3: So why this reluctance to believe up until you know,

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Speaker 3: maybe a day or so ago, that they would go

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Speaker 3: this far in their response.

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Speaker 5: Well, I think the kind of collective understanding initially was

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Speaker 5: that even though the war began with Israel assassinating Supreme

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Speaker 5: Leader Ali Khamena, which incidentally, the Iranians kind of expected.

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Speaker 5: They had been making plans for the last several months

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Speaker 5: of what to do in the event that Kamene was assassinated.

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Speaker 5: But I think the collective understanding of the war initially

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Speaker 5: was that it was going to be a short war

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Speaker 5: because the United States and because President Donald Trump didn't

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Speaker 5: want a long war. So there was this belief that, Okay,

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Speaker 5: things are bad. Iran has been attacked, it's being heavily

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Speaker 5: bombed by the US and Israel, it's closing the straight

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Speaker 5: offord moves, but Trump is going to deescalate and it's

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Speaker 5: going to end like this isn't going to turn into

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Speaker 5: a prolonged conflict. That's part of the reason why oil

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Speaker 5: prices didn't really respond as aggressively initially as I think

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Speaker 5: they've responded since. Why you know, futures didn't move very

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Speaker 5: much in the first week or so of the war

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Speaker 5: because I think everyone was maybe in a state of

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Speaker 5: shock and denial that the situation was as bad as

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Speaker 5: it really was, and that things were going to be

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Speaker 5: wrapped up, things were going to be de escalated, and

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Speaker 5: I think on some one basis that was stemming from

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Speaker 5: historical experience, Like the war between Iran and Israel last

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Speaker 5: June was also very intense, but it ended very quickly

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Speaker 5: with a very very rapid ceasefire that allowed oil prices

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Speaker 5: to fall. And in the past Iran had done aggressive things,

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Speaker 5: that had fired missiles, that Israel had fired drones, but

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Speaker 5: usually in a calibrated kind of proportional way. And I

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Speaker 5: think there was over the first week of the war

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Speaker 5: there was this belief that, oh, Iran's not going to

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Speaker 5: go that far right, that they are going ultimately they're

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Speaker 5: going to be deterred from being too aggressive. And I

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Speaker 5: think on both sides this understanding that Trump was going

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Speaker 5: to de escalate quickly and that Iran was going to

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Speaker 5: be restrained. Both of those assumptions proved to be very inaccurate.

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Speaker 5: And now that we're in the third week of the war,

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Speaker 5: I think it's really settling in how bad this is,

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Speaker 5: how bad this is going to be, and how much

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Speaker 5: work it's going to take to de escalate.

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Speaker 2: Well, you know, obviously a big part of the reason

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Speaker 2: that we want to talk to you is we think

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Speaker 2: that you have greater insight into the sort of domestic

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Speaker 2: politics in Iran better than most energy analysts that you're

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Speaker 2: going to come across. But actually, let me flip the

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Speaker 2: question and maybe not go to your academic wheelhouse, but

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Speaker 2: just your take. You know, the expectation is Trump is

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Speaker 2: going to Taco because he can't stand oil at one

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Speaker 2: hundred dollars or more, and that this will prove to

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Speaker 2: be a forcing mechanism for him to one day just

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Speaker 2: declare victory. They'll say, you know what, We've taken out

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Speaker 2: enough infrastructure, they're no longer a threat. And as you mentioned,

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Speaker 2: he hasn't said, if anything, it seems like we're bringing

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Speaker 2: more assets to bear on the region. So this has

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Speaker 2: taken people by surprise. As of right now, print crude

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Speaker 2: trading for about one hundred and thirteen, very close to

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Speaker 2: the crazy highs of Monday, March ninth. Do you have

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Speaker 2: an idea for why perhaps the collective assumption of an

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Speaker 2: imminent Trump Taco has not borne out and why he

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Speaker 2: actually seems to be willing to accept some economic pain

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Speaker 2: and prolong this longer than just a you know, declaring

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Speaker 2: victory anytime.

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Speaker 5: Sure thing, I will say, the only thing that's somewhat

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Speaker 5: more challenging for an analyst in my position, and more

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Speaker 5: challenging than diving into the psychology of the Islamic Republic

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Speaker 5: is diving into the psychology of Donald Trump. But I'm

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Speaker 5: going to give it a shot. Ok So, yeah, again,

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Speaker 5: going off of historical experience, here was an individual, a

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Speaker 5: person who had been in the public eye for decades,

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Speaker 5: who always seemed to be preoccupied by the price of gasoline.

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Speaker 5: You go back over the last thirty forty years, Trump

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Speaker 5: is always talking about gas prices, right, keeping gas prices low.

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Speaker 5: How gas prices reflect poor governance, poor economic performance. You

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Speaker 5: got to keep gas prices low if you want to

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Speaker 5: be successful. He talked about it a lot in his

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Speaker 5: first term, he talked about it a lot last year,

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Speaker 5: coming up into this crisis. And then suddenly we're in

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Speaker 5: the context of a war straight Uforard mooses closed. Twenty

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Speaker 5: percent of the global oil supply is being disrupted or

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Speaker 5: shut in in some way. Gas prices are climbing to

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Speaker 5: highs that we haven't seen in years. Oil is over

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Speaker 5: one hundred, and then suddenly Trump is acting like that

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Speaker 5: doesn't matter, like he doesn't care. It's curious. I think

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Speaker 5: it comes down to a couple of things. I think

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Speaker 5: it comes down to in this context, he is maybe

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Speaker 5: more conscious of looking weak than taking the taco and

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Speaker 5: taking the short term win and seeing the economic indicators,

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Speaker 5: the financial indicators swing back in his favor. I think

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Speaker 5: the size and scale of this conflict, the fact that

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Speaker 5: it's not just sort of the adventure in Venezuela or

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Speaker 5: putting pressure on Russia. It's a war. There are dozens

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Speaker 5: of US warships, hundreds of planes, thousands of US personnel,

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Speaker 5: GCC states allies to the United States that are under

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Speaker 5: consistent fire. It's a big deal. And to taco now

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Speaker 5: would not only, I think, expose the President to criticism

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Speaker 5: in a way that maybe he hasn't been exposed over

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Speaker 5: previous foreign policy adventures, where he's always sort of managed

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Speaker 5: to escape looking very tough, you know, looking very assertive.

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Speaker 5: If he does back down right now, it feeds directly

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Speaker 5: into the Iranians narrative of victory, This sense that iran

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Speaker 5: is tougher, more resilient, more able to withstand, and that

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Speaker 5: eventually they will outlast not only in the United States

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Speaker 5: but more specifically the US president. That is entirely what

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Speaker 5: is driving Iron strategy. From the opening of the War.

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Speaker 4: Joe.

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Speaker 3: To Greg's point about Donald Trump having a long history

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Speaker 3: of talking about oil prices. Not many people know that

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Speaker 3: there is, in fact a deleted scene from Home Alone

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Speaker 3: two in which he stops to talk to m the

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Speaker 3: Colely Culkin about high prices at the pump.

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Speaker 2: Are you serious?

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Speaker 4: No?

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Speaker 5: Oh, yeah, they talk about gas taxes.

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Speaker 2: Yeah, that's right.

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Speaker 3: Just start rambling in the in the hotel halls.

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Speaker 2: Okay.

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Speaker 3: I realized this is kind of a difficult question because

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Speaker 3: I'm not even sure that Trump himself knows. But do

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Speaker 3: you get a sense of what victory actually looks like

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Speaker 3: in his mind for this particular situ situation.

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Speaker 5: So I think, and there's been some good reporting on this,

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Speaker 5: so I think we can accept it as fact, although

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Speaker 5: it's irrelevant for the reason syle state. Going into this,

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Speaker 5: there was a belief in the administration, and perhaps a

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Speaker 5: belief from the President himself, that there was an opportunity

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Speaker 5: in Iran to replicate the experience in Venezuela, that there

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Speaker 5: was a way to kill Ali Kamene, the Supreme Leader,

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Speaker 5: and that in the wake of his death, a group

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Speaker 5: of Iranian leaders would come to the fore and would

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Speaker 5: pursue policies that aligned with US interests. There was a

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Speaker 5: belief that that was possible. Now, the problem which they

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Speaker 5: encountered immediately was that the individuals they expected to lead

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Speaker 5: that political shift inside Iran were also killed alongside Ali

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Speaker 5: Khamene in the opening hours of the war. So the opening,

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Speaker 5: the opportunity to achieve of Venezuela disappeared in the opening hours,

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Speaker 5: leaving the president, I think in the United States with

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Speaker 5: a problem regarding war goals. Now they have done tremendous

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Speaker 5: damage to Iran's military capabilities, missiles, missile stockpiles, missile productions.

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Speaker 5: Iran's navy, as the White House loves to advertise, has

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Speaker 5: been taking tremendous damage. So Iran is absolutely being weakened

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Speaker 5: by this war. But I don't know if that's enough

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Speaker 5: for the President to justify the war. The war's scale,

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Speaker 5: the economic cost, the risks that were associated. If the

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Speaker 5: war ends with just Trump saying we've weakened Iran, We're

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Speaker 5: not gonna have to deal with them again, that's insufficient

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Speaker 5: because he is probably getting advice inside the White House

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Speaker 5: and from the Pentagon that if the war ends now,

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Speaker 5: Iran will likely rebuild. You know, they rebuilt the damage

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Speaker 5: that was done to them following last year's war. They

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Speaker 5: rebuilt most of that damage within six months. It'll probably

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Speaker 5: take them longer to rebuild the damage from this war,

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Speaker 5: but they will almost certainly do it. Also, if the

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Speaker 5: war ends now, Iran will leave probably feeling emboldened, having

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Speaker 5: felt that they're strategy of targeting, the straight targeting GCC

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Speaker 5: states worked. So if the war goal is just to

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Speaker 5: weaken Iran militarily, they've done that, but it's probably insufficient.

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Speaker 5: Right now, what I imagine the President is thinking about

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Speaker 5: is what can I do against Iran that allows me

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Speaker 5: to claim a more decisive victory and offers me a

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Speaker 5: politically and also strategically viable off rep The problem I

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Speaker 5: think that they're dealing with right now is that there

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Speaker 5: are no good options to pursue that outcome.

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Speaker 2: I'm trying to think about how to ask this question

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Speaker 2: in a way that doesn't look that's accurate and a

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Speaker 2: little bit sensitive. But I have this feeling, this sense,

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Speaker 2: and I'm very far from an Iran expert in Iranian

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Speaker 2: history expert, but I have this sense that Western commentators,

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Speaker 2: particularly older ones who perhaps sort of remember the Cold

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Speaker 2: War et cetera. Have this vision of Iranian society as

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Speaker 2: one in which there is a very broad mass of

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Speaker 2: people that are like deep down lit rolls who are

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Speaker 2: dying to cast off their hijabs, who want to dance lashivous,

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Speaker 2: lead to rock music and live as Westerners, et cetera,

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Speaker 2: And that there's this very small group of religious hardliners

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Speaker 2: oppressing them, that have no credibility within society, and that

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Speaker 2: the moment you decapitate these bearded mullahs, that everyone will

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Speaker 2: suddenly live the free, western liberal life that they've been

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Speaker 2: longing to for decades, et cetera, And that all you

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Speaker 2: needed to do is topple this First of all, is

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Speaker 2: that an accurate characterization of how many sort of think

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Speaker 2: tank thinkers in DC view Iran and how different is

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Speaker 2: that gap between the complexities and realities of essentially Iranian

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Speaker 2: domestic politics.

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Speaker 5: Well, I'll avoid naming names because a lot of the

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Speaker 5: think tank folks in DC are friends of mine, but

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Speaker 5: I will say this. You know, the Secretary of State,

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Speaker 5: Marco Rubio likes to say this a lot. I think

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Speaker 5: it's a line that he thinks conveys meaning and significance,

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Speaker 5: and I actually think he's right there is a huge

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Speaker 5: gap between the Iranian people and the Iranian regime of

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Speaker 5: the Islamic Republic. There's overwhelming evidence to suggest that most

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Speaker 5: Iranians don't support most of the policies that the regime pursue.

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Speaker 5: Both the social policies at home, very restrictive policies on

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Speaker 5: how you can dress, how you can act, the kinds

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Speaker 5: of businesses that can be operated. There are laws prohibiting

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Speaker 5: co ed activities. Increasingly, I should note that a lot

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Speaker 5: of these laws are being flouted openly. People are just

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Speaker 5: aren't obeying them anymore, and the regime is having a

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Speaker 5: hard time enforcing them. More broadly, there's resistance to a

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Speaker 5: lot of the policies the regime has pursued, backing foreign

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Speaker 5: proxies or regional proxies like Hesbulah or the Huthis in Yemen,

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Speaker 5: you know, spending money propping up Asad in Syria, spending

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Speaker 5: huge amounts of money building up a nuclear program which

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Speaker 5: resulted in incredibly onerous Western and US sanctions. And then

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Speaker 5: just the general sense that there are elections in Iran,

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Speaker 5: but they're not really free or fair. Lots of candidates

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Speaker 5: that people would vote for are barred from running for office.

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Speaker 5: There are candidates, There are politicians who have spoken out

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Speaker 5: on the subjects of reform, on democratization. They are silenced,

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Speaker 5: they're arrested or put under house arrest. So it's an

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Speaker 5: incredibly restrictive political environment and one that a lot of

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Speaker 5: Iranians don't support. On the sort of broader ideological frame,

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Speaker 5: there is a core of support for the Islamic Republic

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Speaker 5: as a political experiment. There is still this group of

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Speaker 5: people inside the country. It's hard to estimate precisely their size,

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Speaker 5: but one estimate you can go on is when there

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Speaker 5: are elections for president, for instance, there was one in

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Speaker 5: twenty twenty four, the super hardline candidate, the candidate who

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Speaker 5: is extremely anti US, who's all for doubling down on

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Speaker 5: hijab and other tough social policies. That candidate usually gets

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Speaker 5: fourteen to fifteen million votes. And when the regime has demonstrations,

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Speaker 5: when there are official days of celebration, when they come

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Speaker 5: out and they hold marches, very often these marches are

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Speaker 5: pretty well attended. People do show up. The regime can

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Speaker 5: probably count on the support of a hard core of

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Speaker 5: maybe ten to fifteen to twenty percent of the population.

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Speaker 5: That's probably enough for them to stay in power. The

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Speaker 5: other aspect of this, and you know this is it's

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Speaker 5: not a uniquely Iranian story. Decades of repression and you know,

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Speaker 5: monitoring political dissent, restricting the political environment. What that means

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Speaker 5: is that there's really no organized political opposition inside Iran.

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Speaker 5: There's no opposition candidate or opposition leader who's fighting the

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Speaker 5: good fight. There are some individuals, but they're not really

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Speaker 5: at the level that they could organize an alternative government.

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Speaker 5: The other aspect of it is there are whole institutions

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Speaker 5: that are built into the fabric of the Islamic Republic,

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Speaker 5: the IERGC, the Islamic Revolutionary Guard core kind of being

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Speaker 5: the most important, but it's really just one of many

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Speaker 5: who exist solely to preserve the regime from internal and

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Speaker 5: external threats. They also happen to have all of the guns.

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Speaker 5: So as with other authoritarian governments, not just today, but

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Speaker 5: going back, you know, fifty sixty years, this is an environment,

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Speaker 5: This is a political context where the mass of people

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Speaker 5: don't really support the government and would love to see

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Speaker 5: a different government, but it's difficult for them to implement

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Speaker 5: change given the obstacles that they face, and unfortunately January

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Speaker 5: was illustrative of all of those realities. The attempt to

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Speaker 5: effect change through popular demonstration was put down with overwhelming

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Speaker 5: and lethal force.

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Speaker 3: Just going back to Trump and potential off ramps here,

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Speaker 3: I mean, one thing we know about Trump is that

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Speaker 3: he really seems to like owning stuff, right, and he

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Speaker 3: seems to like taking stuff that he doesn't necessarily have

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Speaker 3: explicit sovereignty over. And there happened some rumblings recently about

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Speaker 3: possibly taking the strait of or Moves and having some

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Speaker 3: sort of coalition with allies where they would control that

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Speaker 3: particular passage. First of all, did you get the sense

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Speaker 3: that that's actually an off ramp that he's thinking seriously about?

403
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Speaker 3: And then secondly, is that realistically an option for the

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Speaker 3: US to do, given that its allies in particular don't

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Speaker 3: seem to be particular fans of the Trump administration at

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Speaker 3: this moment in time.

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Speaker 5: Yeah, So on the first question, I think, again speaking

408
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Speaker 5: to how kind of problematic the context of this crisis

409
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Speaker 5: is for Trump politically and strategically, if he chooses to

410
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Speaker 5: de escalate, you know, he looks weak and he hands

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Speaker 5: her on a pretty significant win. I also think that

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Speaker 5: it's it's difficult for him to de escalate with the

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Speaker 5: situation and Horror Moves being what it is, with traffic

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Speaker 5: at a standstill, and you know, to make matters worse,

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Speaker 5: the Iranians allowing certain ships through. Right, They've been making

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Speaker 5: bilateral deals with Pakistan, with India to allow a couple

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Speaker 5: of ships through at a time, demonstrating for all intents

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Speaker 5: and purposes that they control the Strait of Horror Moves,

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Speaker 5: not the United States or not anyone else. So I

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Speaker 5: think it's very problematic for Trump to decide to wind

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Speaker 5: down bad operations, wind down this war against Iran without

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Speaker 5: having dealt with the Strait in some way. The problem

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Speaker 5: is there are no good ways of doing that. They're

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Speaker 5: trying to degrade Iran's capabilities, you know, bombing its drones,

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Speaker 5: bombing its missiles, to a point where ships will feel

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Speaker 5: comfortable moving through the strait. But it's taking them a

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Speaker 5: long time to do that because Iran has a lot

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Speaker 5: of missiles, and it has a lot of drones, and

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Speaker 5: the geography of the Strait of Hormuz, parts of it

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Speaker 5: are extremely mountainous. Iran has spent decades building positions to

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Speaker 5: do this. I mean again, it speaks back to their strategy.

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Speaker 5: They've been preparing for this for a long time. This

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Speaker 5: is a war that they've been thinking about fighting for

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Speaker 5: a very long time. So it's taking the US a

435
00:23:39,119 --> 00:23:41,119
Speaker 5: while to weake in Iran to the point that the

436
00:23:41,160 --> 00:23:44,080
Speaker 5: tankers and the other ships feel comfortable using the strait

437
00:23:44,440 --> 00:23:47,159
Speaker 5: On the question of an international coalition, you know, bringing

438
00:23:47,160 --> 00:23:50,960
Speaker 5: in more states, more countries, bringing in more ships would

439
00:23:51,000 --> 00:23:54,280
Speaker 5: make this easier. The problem, of course, is that the

440
00:23:54,359 --> 00:23:58,040
Speaker 5: United States, the Trump administration, doesn't have the best relationship

441
00:23:58,240 --> 00:24:01,800
Speaker 5: with most of its European allies. There was an attempt

442
00:24:01,840 --> 00:24:04,520
Speaker 5: initially to put together an international group to bring in

443
00:24:04,560 --> 00:24:07,320
Speaker 5: the French, bring in the British, bring in others, and

444
00:24:07,359 --> 00:24:11,159
Speaker 5: the Europeans were initially on board. The problem though, is

445
00:24:11,160 --> 00:24:15,520
Speaker 5: that that shifted with Trump using this maybe as a

446
00:24:15,520 --> 00:24:18,159
Speaker 5: source of leverage of trying to get the Europeans to

447
00:24:18,280 --> 00:24:21,480
Speaker 5: actively join the war and bomb the Iranians, not just

448
00:24:21,520 --> 00:24:25,879
Speaker 5: protect ships, also using this to maybe move the Europeans

449
00:24:25,920 --> 00:24:29,159
Speaker 5: on issues like NATO funding, on issues like Russia Ukraine,

450
00:24:29,359 --> 00:24:31,720
Speaker 5: and so the Europeans moved from saying okay, we'll help

451
00:24:31,800 --> 00:24:34,560
Speaker 5: you too. You're on your own, you know, we'll come

452
00:24:34,600 --> 00:24:36,399
Speaker 5: and help move ships through the Strait, but only if

453
00:24:36,400 --> 00:24:40,920
Speaker 5: there's de escalation. So it's another aspect of the kind

454
00:24:41,000 --> 00:24:44,520
Speaker 5: of strategic trap that the United States finds itself in.

455
00:24:44,640 --> 00:24:49,280
Speaker 5: It's fighting an enemy who can't really be fully deterred

456
00:24:49,359 --> 00:24:54,359
Speaker 5: or degraded, an enemy that is resisting being coerced or

457
00:24:54,720 --> 00:24:58,920
Speaker 5: forced into capitulating, an enemy that can't undergo a political

458
00:24:59,040 --> 00:25:01,399
Speaker 5: change through decapitation, you know, like they're killing leaders, but

459
00:25:01,440 --> 00:25:04,040
Speaker 5: those leaders are just being replaced very often by more

460
00:25:04,080 --> 00:25:08,280
Speaker 5: hardline figures. And the problems associated with reopening the strait

461
00:25:08,280 --> 00:25:11,280
Speaker 5: are just proving to be I think, far more challenging

462
00:25:11,800 --> 00:25:15,000
Speaker 5: than they had expected, if they had expected to deal

463
00:25:15,040 --> 00:25:17,359
Speaker 5: with this at all. There's evidence to suggest that the

464
00:25:17,400 --> 00:25:20,600
Speaker 5: administration didn't really think too much about war moves when

465
00:25:20,600 --> 00:25:21,480
Speaker 5: it launched this war.

466
00:25:21,800 --> 00:25:23,840
Speaker 2: Can you talk to us about just I mean, you

467
00:25:23,880 --> 00:25:26,520
Speaker 2: mentioned the European allies. Can you talk to us just

468
00:25:26,600 --> 00:25:30,359
Speaker 2: about the future of America's relationship with some of the

469
00:25:31,119 --> 00:25:35,480
Speaker 2: golf friends, the UAE, Saudi, et cetera, and the degree

470
00:25:35,640 --> 00:25:39,760
Speaker 2: to which this could permanently alter the trajectory of that relationship.

471
00:25:40,200 --> 00:25:43,000
Speaker 2: I mean, they didn't start this war, and now all

472
00:25:43,080 --> 00:25:46,320
Speaker 2: they have all this damage to their economy exactly exactly.

473
00:25:46,320 --> 00:25:49,040
Speaker 5: And it also, you know, it speaks to the longer

474
00:25:49,160 --> 00:25:52,200
Speaker 5: term issues that this war represents, because if you assume

475
00:25:52,400 --> 00:25:54,760
Speaker 5: that the war is going to end in some kind

476
00:25:54,800 --> 00:25:57,719
Speaker 5: of limited fashion, right, the Islamic Republic's not going to collapse,

477
00:25:57,720 --> 00:25:59,760
Speaker 5: there's not going to be a regime change. The war's

478
00:25:59,760 --> 00:26:01,399
Speaker 5: going to end with Iran still having a couple of

479
00:26:01,440 --> 00:26:04,480
Speaker 5: drones and missiles left over, very weakened, but still there.

480
00:26:04,920 --> 00:26:07,679
Speaker 5: The issue for the GCC, for the Gulf States with

481
00:26:07,800 --> 00:26:11,920
Speaker 5: that scenario is that it's extremely dangerous. They are now

482
00:26:12,000 --> 00:26:18,000
Speaker 5: facing a regional power that is comfortable attacking them aggressively

483
00:26:18,880 --> 00:26:20,760
Speaker 5: if it gets attacked, even if they had nothing to

484
00:26:20,800 --> 00:26:23,240
Speaker 5: do with it. And again it's part of Iran's strategy.

485
00:26:23,280 --> 00:26:25,560
Speaker 5: They're trying to impose as much pain as they can

486
00:26:25,880 --> 00:26:28,919
Speaker 5: on everybody in order to raise the costs of this

487
00:26:29,000 --> 00:26:31,320
Speaker 5: ever happening. Again. They're thinking not only about this war,

488
00:26:31,359 --> 00:26:33,720
Speaker 5: but they're thinking about future wars. They're trying to restore deterrence,

489
00:26:34,160 --> 00:26:36,040
Speaker 5: and this puts the GCC states in a very very

490
00:26:36,080 --> 00:26:39,879
Speaker 5: awkward position. On the one hand, many of them would

491
00:26:39,960 --> 00:26:42,359
Speaker 5: like to see this war end more conclusively, with the

492
00:26:42,400 --> 00:26:46,680
Speaker 5: threat of Iran not just degraded, but neutralized, because leaving

493
00:26:46,760 --> 00:26:49,399
Speaker 5: it in place is so dangerous to them. On the

494
00:26:49,440 --> 00:26:53,240
Speaker 5: other hand, they likely know that that's impossible, that this

495
00:26:53,320 --> 00:26:55,919
Speaker 5: isn't going to end with regime change, So what do

496
00:26:56,000 --> 00:26:59,600
Speaker 5: they do? I think counterintuitively, in the short term, most

497
00:26:59,640 --> 00:27:02,000
Speaker 5: of them are are going to pursue closer relationships with

498
00:27:02,040 --> 00:27:05,360
Speaker 5: the United States because they have no other choice. They

499
00:27:05,400 --> 00:27:08,000
Speaker 5: need to improve their security. Most of them right now

500
00:27:08,040 --> 00:27:11,360
Speaker 5: are relying on US support for their air defenses. They

501
00:27:11,400 --> 00:27:14,680
Speaker 5: need the US to restock their supply of interceptors, they

502
00:27:14,720 --> 00:27:17,119
Speaker 5: need the US to help them shoot down Iranian drones

503
00:27:17,200 --> 00:27:21,000
Speaker 5: Iranian missiles. Also, historically all of the states of the

504
00:27:21,040 --> 00:27:24,800
Speaker 5: GCC depend on the United States for protection. They have

505
00:27:24,960 --> 00:27:27,960
Speaker 5: their own militaries, they are generally not regarded as being

506
00:27:28,119 --> 00:27:32,520
Speaker 5: extremely capable, so they do need ties to the US

507
00:27:33,040 --> 00:27:37,000
Speaker 5: to secure themselves, and this war has, if anything, made

508
00:27:37,040 --> 00:27:40,480
Speaker 5: that relationship with US all the more important. But that's

509
00:27:40,520 --> 00:27:43,520
Speaker 5: not enough because they've now seen that if the US

510
00:27:43,560 --> 00:27:45,840
Speaker 5: attacks Iran, they will be on the front lines, so

511
00:27:45,880 --> 00:27:48,280
Speaker 5: they're likely going to have to balance that somehow. They're

512
00:27:48,320 --> 00:27:51,159
Speaker 5: likely going to have to balance that by perhaps pursuing

513
00:27:51,160 --> 00:27:54,040
Speaker 5: closer relationships with each other. You know, there was already

514
00:27:54,080 --> 00:27:59,040
Speaker 5: kind of some momentum before this war on regional security relationships,

515
00:27:59,320 --> 00:28:03,000
Speaker 5: Saudi and e Egypt becoming closer, the UAE and Israel

516
00:28:03,040 --> 00:28:07,199
Speaker 5: pursuing closer ties. Saudi and Pakistan have a mutual defense

517
00:28:07,359 --> 00:28:10,199
Speaker 5: treaty now, like they will come to each other's protection,

518
00:28:10,240 --> 00:28:11,959
Speaker 5: they will come to each other's aid if they're attacked,

519
00:28:11,960 --> 00:28:14,359
Speaker 5: although Pakistan is not attacking Iran, even though Iran is

520
00:28:14,359 --> 00:28:17,120
Speaker 5: attacking Saudi Arabia, So the full value of that agreement

521
00:28:17,160 --> 00:28:20,000
Speaker 5: is maybe somewhat suspect, but that I think is another

522
00:28:20,119 --> 00:28:23,560
Speaker 5: potential avenue that they may go down. They may look

523
00:28:23,600 --> 00:28:27,120
Speaker 5: to one another to improve their security rather than depending

524
00:28:27,119 --> 00:28:29,399
Speaker 5: on the United States, which is proving to be in

525
00:28:29,440 --> 00:28:31,840
Speaker 5: the short term a crucial ally but in the long

526
00:28:31,920 --> 00:28:34,080
Speaker 5: term a very problematic partner.

527
00:28:34,240 --> 00:28:37,199
Speaker 3: So on that note, why did Iran actually decide to

528
00:28:37,280 --> 00:28:40,920
Speaker 3: go after countries that did not attack them, you know,

529
00:28:41,000 --> 00:28:45,000
Speaker 3: golf countries X Israel and the United States, Because again,

530
00:28:45,120 --> 00:28:48,760
Speaker 3: like it's never really done this before, and the expectation

531
00:28:49,000 --> 00:28:52,640
Speaker 3: certainly of people who moved to places like Dubai and

532
00:28:52,720 --> 00:28:55,760
Speaker 3: Abu Dhabi and count myself in that bracket was that

533
00:28:56,040 --> 00:28:58,680
Speaker 3: Iran probably wasn't going to ever target them.

534
00:28:59,040 --> 00:29:02,960
Speaker 5: It relates to Iran's broader strategy, not only its strategy

535
00:29:03,000 --> 00:29:06,120
Speaker 5: for surviving this war, but its strategy for improving its

536
00:29:06,160 --> 00:29:10,440
Speaker 5: deterrence and reducing the possibility of this happening again of

537
00:29:10,480 --> 00:29:13,840
Speaker 5: future attacks. The bigger scenario that the Iranians are more

538
00:29:13,880 --> 00:29:17,120
Speaker 5: concerned about is a scenario where Iran turns into Lebanon

539
00:29:17,440 --> 00:29:20,600
Speaker 5: or Iran turns into Syria, a country that you can

540
00:29:20,680 --> 00:29:23,360
Speaker 5: just bomb, that Israel can just bomb whenever it wants to.

541
00:29:24,120 --> 00:29:27,400
Speaker 5: They're very, very concerned about that becoming the new status quo.

542
00:29:27,840 --> 00:29:30,440
Speaker 5: So that is what's driving their strategy. They want to

543
00:29:30,480 --> 00:29:33,720
Speaker 5: restore deterrence, and their way of doing that is indicating

544
00:29:34,120 --> 00:29:38,400
Speaker 5: to everyone, the United States, Israel, the GCC, but the

545
00:29:38,520 --> 00:29:44,000
Speaker 5: entire world that attacking us is not worth it, that

546
00:29:44,120 --> 00:29:48,680
Speaker 5: we will respond by imposing more pain, more costs on

547
00:29:48,800 --> 00:29:51,720
Speaker 5: you than you can impose on us. The Iranians love

548
00:29:51,760 --> 00:29:53,360
Speaker 5: to demonstrate this, they love to talk about this, and

549
00:29:53,360 --> 00:29:56,000
Speaker 5: I think they are illustrating it that they are more resilient,

550
00:29:56,120 --> 00:29:58,000
Speaker 5: that they can take the hit, that it doesn't matter

551
00:29:58,000 --> 00:30:00,280
Speaker 5: that the US and Israel have air superiority over Iran.

552
00:30:00,320 --> 00:30:03,480
Speaker 5: It doesn't matter that they're killing leaders or striking targets

553
00:30:03,600 --> 00:30:05,479
Speaker 5: in the hundreds and the thousands that at the end

554
00:30:05,480 --> 00:30:09,520
Speaker 5: of the day, the Iranian governments, the Iranian military is

555
00:30:09,560 --> 00:30:12,800
Speaker 5: more resilient and can outlast any of its competitors. Now,

556
00:30:12,840 --> 00:30:15,840
Speaker 5: the reason why they're striking the GCC is there are

557
00:30:15,840 --> 00:30:21,040
Speaker 5: two reasons for this. One more immediately, the GCC is

558
00:30:21,480 --> 00:30:25,800
Speaker 5: a more tempting target. These are soft targets energy infrastructure.

559
00:30:26,040 --> 00:30:28,600
Speaker 5: It's fairly easy to do damage to a level that

560
00:30:28,680 --> 00:30:31,360
Speaker 5: causes the facilities to have to be shut down for repairs.

561
00:30:31,960 --> 00:30:35,400
Speaker 5: The GCC do have air defenses, but the targets the

562
00:30:35,440 --> 00:30:38,560
Speaker 5: Iranians have been going after are not hardened in the

563
00:30:38,600 --> 00:30:42,280
Speaker 5: way that you know US bases or Israel are hardened.

564
00:30:42,320 --> 00:30:45,240
Speaker 5: Israel is extremely well defended with its multi layered air

565
00:30:45,280 --> 00:30:48,760
Speaker 5: defense systems, with its civil defense systems. Israel is kind

566
00:30:48,760 --> 00:30:50,880
Speaker 5: of a fortress state in many ways because it has

567
00:30:51,080 --> 00:30:53,920
Speaker 5: sort of lived under the thread of outside attack for

568
00:30:53,920 --> 00:30:56,920
Speaker 5: so long. The GCC isn't like that, And on top

569
00:30:56,960 --> 00:30:59,320
Speaker 5: of that, it speaks directly tracy to what you're saying.

570
00:30:59,360 --> 00:31:01,920
Speaker 5: The Iranians are trying to show the GCC states and

571
00:31:01,960 --> 00:31:07,680
Speaker 5: particularly the UAE. Your model of economic development, this idea

572
00:31:07,720 --> 00:31:10,480
Speaker 5: that you can turn the golf into an island of stability,

573
00:31:11,000 --> 00:31:16,400
Speaker 5: with tourism, with finance, with tech, with hotels, all of

574
00:31:16,440 --> 00:31:20,440
Speaker 5: that will go away if we keep being attacked. If

575
00:31:20,440 --> 00:31:22,800
Speaker 5: the US and Israel keep bombing us, we are going

576
00:31:22,840 --> 00:31:25,320
Speaker 5: to turn the Golf into a live fire zone, and

577
00:31:25,400 --> 00:31:29,440
Speaker 5: eventually that will make your economic development plans impossible to achieve.

578
00:31:30,880 --> 00:31:33,320
Speaker 5: So they're imposing all these pain They're imposing all this costs.

579
00:31:33,320 --> 00:31:36,720
Speaker 5: The second reason they're doing this is they are indicating

580
00:31:36,720 --> 00:31:39,600
Speaker 5: to the GCC that their relationship with the United States

581
00:31:39,640 --> 00:31:42,040
Speaker 5: is untenable. That so long as they allow the US

582
00:31:42,080 --> 00:31:44,160
Speaker 5: to have bases in the region, so long as they

583
00:31:44,200 --> 00:31:47,560
Speaker 5: allow the US to support their security, that from the

584
00:31:47,560 --> 00:31:50,239
Speaker 5: point of view of Iran, they are US allies, they

585
00:31:50,240 --> 00:31:53,160
Speaker 5: are US instruments, and that makes them legitimate targets.

586
00:31:53,600 --> 00:31:55,680
Speaker 3: Yeah, Joe, just on the UAE, I think this is

587
00:31:55,720 --> 00:31:58,360
Speaker 3: a really important point to stress because I think a

588
00:31:58,400 --> 00:32:02,320
Speaker 3: lot of people don't realize that they're not seeing everything

589
00:32:02,400 --> 00:32:04,760
Speaker 3: that's happening in places liked you buy and ab a

590
00:32:04,800 --> 00:32:07,000
Speaker 3: Dabby at the moment because you have, you know, very

591
00:32:07,080 --> 00:32:10,640
Speaker 3: strict state control on the images that are allowed to

592
00:32:10,680 --> 00:32:12,720
Speaker 3: come out there, and in fact, I think we've seen

593
00:32:12,760 --> 00:32:16,080
Speaker 3: at least one person arrested for sharing a photo of

594
00:32:16,240 --> 00:32:19,800
Speaker 3: a drone strike or something like that. So stuff is

595
00:32:19,920 --> 00:32:22,720
Speaker 3: happening there, and it's stuff that if you're an expat

596
00:32:22,800 --> 00:32:25,920
Speaker 3: who came to that city thinking that it is safe

597
00:32:26,080 --> 00:32:29,480
Speaker 3: and secure, you never really would have imagined.

598
00:32:29,600 --> 00:32:32,680
Speaker 2: By the way headline breaking just now from Reuter's Iran's

599
00:32:32,720 --> 00:32:37,000
Speaker 2: attacks damage seventeen percent of cutters e g. Capacity for

600
00:32:37,160 --> 00:32:38,920
Speaker 2: three to five years.

601
00:32:39,160 --> 00:32:50,280
Speaker 4: Wow.

602
00:32:55,160 --> 00:32:57,840
Speaker 2: Greg tell us about KRG Island. I've never heard of

603
00:32:57,840 --> 00:32:58,800
Speaker 2: it before a week ago.

604
00:32:59,120 --> 00:33:01,120
Speaker 5: It's a place that's very close to my heart, Joe,

605
00:33:01,160 --> 00:33:03,520
Speaker 5: because it's I researched a little bit about it when

606
00:33:03,560 --> 00:33:05,800
Speaker 5: I wrote my book, which is all about, you know,

607
00:33:05,880 --> 00:33:08,640
Speaker 5: the fifties, the sixties, the sort of origins of Iran's

608
00:33:08,800 --> 00:33:12,080
Speaker 5: oil industry. I didn't get around actually mentioning it though, unfortunately,

609
00:33:12,120 --> 00:33:14,240
Speaker 5: I think I had to cut that reference for space.

610
00:33:14,360 --> 00:33:16,120
Speaker 3: Hey when that happens, Yeah.

611
00:33:15,920 --> 00:33:17,400
Speaker 5: I know, it's a real real bummer.

612
00:33:17,520 --> 00:33:19,280
Speaker 2: So Carg Island is I just want to say, Carg

613
00:33:19,320 --> 00:33:23,720
Speaker 2: Island has the name of like alleged like for thousands

614
00:33:23,720 --> 00:33:27,000
Speaker 2: of years, invaders have tried to take carg Island, the

615
00:33:27,040 --> 00:33:31,560
Speaker 2: lost treasure. Every every all the great civilizations have met

616
00:33:31,600 --> 00:33:34,480
Speaker 2: their demise on Carg Island. It has that sort of

617
00:33:34,680 --> 00:33:38,680
Speaker 2: sound like great powers all like taking the Nia. But anyway,

618
00:33:38,720 --> 00:33:39,960
Speaker 2: tell us what carg Island is.

619
00:33:40,360 --> 00:33:44,960
Speaker 5: Sure, they're ghosts hot to the very day. So Carg

620
00:33:45,040 --> 00:33:47,960
Speaker 5: Island is a very small island. It's smaller than Manhattan.

621
00:33:48,480 --> 00:33:50,680
Speaker 5: It's just off the coast of Iran, about fifty miles

622
00:33:50,680 --> 00:33:52,120
Speaker 5: off the coast. It's at the north end of the

623
00:33:52,120 --> 00:33:55,440
Speaker 5: Persian Gulf, so a little bit close to Kuwait, that neighborhood.

624
00:33:55,920 --> 00:34:01,520
Speaker 5: And it is Iran's principal oil exporting terminal. It handles

625
00:34:02,000 --> 00:34:05,320
Speaker 5: around eighty to ninety percent of Iran's crude exports. Iran

626
00:34:05,360 --> 00:34:07,640
Speaker 5: exports around one point five one point six million barrels

627
00:34:07,640 --> 00:34:10,560
Speaker 5: a day. Almost all of it goes through Karg and

628
00:34:10,600 --> 00:34:12,439
Speaker 5: there are kind of two big reasons for that. Because

629
00:34:12,520 --> 00:34:15,680
Speaker 5: Iran does have other export ports that it can export

630
00:34:15,760 --> 00:34:19,640
Speaker 5: crude products, LPG from Karg is the big one. The

631
00:34:19,680 --> 00:34:23,880
Speaker 5: two reasons for it is it's designed to handle vlccs,

632
00:34:23,960 --> 00:34:27,640
Speaker 5: the biggest oil tankers. It has several berths that can

633
00:34:27,640 --> 00:34:29,600
Speaker 5: handle I think up to seven tankers at a time,

634
00:34:29,840 --> 00:34:33,240
Speaker 5: so it's a very large facility. It was originally built incidentally,

635
00:34:33,280 --> 00:34:36,000
Speaker 5: it was built in the early nineteen sixties by Western

636
00:34:36,000 --> 00:34:38,920
Speaker 5: companies that were active in Iran at the time, specifically

637
00:34:38,960 --> 00:34:43,000
Speaker 5: because it was favorable for birthing the largest tankers. So

638
00:34:43,040 --> 00:34:45,120
Speaker 5: that's what this is what it was originally designed for.

639
00:34:45,320 --> 00:34:48,520
Speaker 5: It's also close to Iran's main oil fields, so it's

640
00:34:48,640 --> 00:34:51,640
Speaker 5: fed by a number of pipelines from the coast that

641
00:34:51,719 --> 00:34:54,480
Speaker 5: bring crude directly from Iran's major oil fields in the

642
00:34:54,480 --> 00:34:59,120
Speaker 5: province of Khozistan and southwest Iran. So geographically it's well positioned.

643
00:34:59,440 --> 00:35:02,240
Speaker 5: Theities there are designed to handle a lot of oil

644
00:35:02,320 --> 00:35:05,080
Speaker 5: better than any other facility in Iran, and that's what

645
00:35:05,120 --> 00:35:08,560
Speaker 5: makes it so important, and that's why the US is

646
00:35:08,600 --> 00:35:12,359
Speaker 5: so interested in it, because there is a belief, there

647
00:35:12,440 --> 00:35:16,719
Speaker 5: is a theory that if you seize KRG Island, or

648
00:35:16,760 --> 00:35:18,400
Speaker 5: if you destroy it, but I think they're thinking more

649
00:35:18,440 --> 00:35:22,320
Speaker 5: about taking it, then you have sufficient leverage over Iran

650
00:35:22,440 --> 00:35:23,919
Speaker 5: that you can get them to do what you want.

651
00:35:24,080 --> 00:35:27,200
Speaker 5: Because you've cut off their financial lifeline, you've eliminated their

652
00:35:27,200 --> 00:35:30,600
Speaker 5: ability to export oil air go, they will be forced

653
00:35:30,960 --> 00:35:33,320
Speaker 5: to do what you want. In order to start exporting

654
00:35:33,360 --> 00:35:36,560
Speaker 5: oil again. That's the thinking. The problem I have with

655
00:35:36,640 --> 00:35:38,160
Speaker 5: that theory is that I don't think it's right.

656
00:35:38,560 --> 00:35:39,359
Speaker 3: I say more.

657
00:35:39,800 --> 00:35:42,520
Speaker 5: Okay, So, first of all, as I mentioned, Iran has

658
00:35:42,520 --> 00:35:45,200
Speaker 5: other means of exporting oil. It has other export terminals.

659
00:35:45,320 --> 00:35:47,600
Speaker 5: There's one at the town of Josk east of the

660
00:35:47,600 --> 00:35:51,320
Speaker 5: Strait of Hormuz that the Iranians have built up precisely

661
00:35:51,360 --> 00:35:54,000
Speaker 5: because they're concerned about their reliance on Karg. It's smaller,

662
00:35:54,000 --> 00:35:56,200
Speaker 5: but it can still handle probably about a million barrels

663
00:35:56,200 --> 00:35:58,759
Speaker 5: a day with the other terminals operating, So if they

664
00:35:58,760 --> 00:36:00,960
Speaker 5: lose carg they can still export. But let's say that

665
00:36:01,000 --> 00:36:03,279
Speaker 5: the US goes all out and takes out all these

666
00:36:03,360 --> 00:36:05,800
Speaker 5: terminals right, either bombs them or sends in the Marines

667
00:36:05,840 --> 00:36:08,200
Speaker 5: to storm the beaches and seize the terminals, and Iran

668
00:36:08,200 --> 00:36:11,920
Speaker 5: suddenly can't export any oil. From these ports, Iran still

669
00:36:11,960 --> 00:36:15,440
Speaker 5: has a limited capability of exporting oil by rail. They

670
00:36:15,440 --> 00:36:17,719
Speaker 5: have a rail link with Russia. They're trying to build

671
00:36:17,760 --> 00:36:20,279
Speaker 5: out a rail link with China. Now they can't move much,

672
00:36:20,840 --> 00:36:23,839
Speaker 5: but open source in Iranian media has revealed that they

673
00:36:23,880 --> 00:36:27,279
Speaker 5: have several hundred oil tanker cars that are sufficient for

674
00:36:27,400 --> 00:36:30,680
Speaker 5: moving probably the equivalent of one hundred to one hundred

675
00:36:30,719 --> 00:36:33,000
Speaker 5: and fifty thousand barrels of oil a day if they

676
00:36:33,000 --> 00:36:36,080
Speaker 5: were running all out. The other element of this is

677
00:36:36,080 --> 00:36:39,960
Speaker 5: is that Iran has, because it's been operating under sanction

678
00:36:40,080 --> 00:36:42,880
Speaker 5: for so long, Iran, or I should say that regime

679
00:36:43,360 --> 00:36:47,280
Speaker 5: has means of moving oil that are not as easily observed.

680
00:36:47,480 --> 00:36:51,400
Speaker 5: So oil gets smuggled out, particularly through Iraq. It gets

681
00:36:51,440 --> 00:36:55,520
Speaker 5: loaded onto smaller tankers and smuggled out that Iran is

682
00:36:55,520 --> 00:36:58,719
Speaker 5: a very very large refining base, and it's been very

683
00:36:58,760 --> 00:37:02,640
Speaker 5: profitable for groups attached to the Islamic Revolutionary guardcore to

684
00:37:03,000 --> 00:37:06,360
Speaker 5: buy crude inside Iran, refine it, and then smuggle it

685
00:37:06,400 --> 00:37:09,200
Speaker 5: out of the country and sell it for huge profits

686
00:37:09,520 --> 00:37:12,359
Speaker 5: because oil is subsidized inside Iran, so you can get

687
00:37:12,400 --> 00:37:14,000
Speaker 5: it for virtually nothing and then you can sell it

688
00:37:14,000 --> 00:37:16,560
Speaker 5: in other So there's other ways that they can move

689
00:37:17,120 --> 00:37:19,960
Speaker 5: energy and move oil without having to rely on KARG.

690
00:37:20,280 --> 00:37:23,000
Speaker 5: A lot of those ways are controlled by the IRGC,

691
00:37:23,920 --> 00:37:26,640
Speaker 5: which would probably become even more powerful in the event

692
00:37:26,719 --> 00:37:30,280
Speaker 5: that Iran loses Karg because suddenly they have greater control

693
00:37:30,280 --> 00:37:33,799
Speaker 5: over a smaller fiscal pie. And this also speaks to

694
00:37:33,840 --> 00:37:37,520
Speaker 5: the psychology of the event. The Americans, i think assume,

695
00:37:37,600 --> 00:37:40,160
Speaker 5: or perhaps elements of the Trump administration assume, Oh, if

696
00:37:40,160 --> 00:37:42,359
Speaker 5: we take KRG, then they have to do what we say,

697
00:37:42,400 --> 00:37:44,520
Speaker 5: because they're going to want to export oil again. I

698
00:37:44,520 --> 00:37:47,960
Speaker 5: think that misunderstands that, let's say, psychological characteristics of not

699
00:37:48,000 --> 00:37:51,040
Speaker 5: only the Islamic Republic, but also of the Iranian state.

700
00:37:51,920 --> 00:37:56,280
Speaker 5: They will respond extremely negatively to US soldiers on Iranian soil.

701
00:37:57,120 --> 00:37:59,960
Speaker 5: They will respond very negatively to any overt attempt to

702
00:38:00,080 --> 00:38:03,759
Speaker 5: force capitulation. And I think it's certainly for the short

703
00:38:03,840 --> 00:38:06,200
Speaker 5: term and probably for the medium and long term as well.

704
00:38:06,640 --> 00:38:10,440
Speaker 5: They would rather live under greater financial pressure and an

705
00:38:10,480 --> 00:38:14,840
Speaker 5: inability to export oil in volume than to capitulate to

706
00:38:14,920 --> 00:38:20,120
Speaker 5: a US pressure campaign that involves the invasion of Iranian territory.

707
00:38:20,880 --> 00:38:23,280
Speaker 3: This reminds me of something that I wanted to ask

708
00:38:23,480 --> 00:38:25,440
Speaker 3: exactly on this point, which is, I think one of

709
00:38:25,480 --> 00:38:30,040
Speaker 3: the like underappreciated facts of this particular situation is that

710
00:38:30,600 --> 00:38:33,600
Speaker 3: Iran's been sanctioned for a while. Yeah, and this gray

711
00:38:33,680 --> 00:38:39,600
Speaker 3: market infrastructure already exists, and so I'm curious, but assuming

712
00:38:39,640 --> 00:38:42,360
Speaker 3: that if the US were to try to crack down

713
00:38:42,680 --> 00:38:45,279
Speaker 3: on some of that sanctioned oil and the way it

714
00:38:45,360 --> 00:38:50,080
Speaker 3: actually gets out of the country. Would you expect that

715
00:38:50,160 --> 00:38:55,360
Speaker 3: gray market system to start to break or would you

716
00:38:55,480 --> 00:38:58,480
Speaker 3: expect to see it sort of like I guess, maybe

717
00:38:59,080 --> 00:39:02,400
Speaker 3: formalized to an extent, or grow even stronger in the

718
00:39:02,400 --> 00:39:04,800
Speaker 3: face of US pressure, like on carg Island.

719
00:39:05,200 --> 00:39:07,920
Speaker 5: Well, it's been a long running dilemma for the United States,

720
00:39:08,080 --> 00:39:12,040
Speaker 5: which is, you know, how to make sanctions work on Iran.

721
00:39:12,120 --> 00:39:13,600
Speaker 5: I mean, part of the reason why we're now in

722
00:39:13,640 --> 00:39:16,120
Speaker 5: a shooting war with Iran is because sanctions didn't work.

723
00:39:16,360 --> 00:39:19,520
Speaker 5: Sanctions were designed to change Iran's behavior, to force them

724
00:39:19,719 --> 00:39:23,240
Speaker 5: to make concessions. Iran found ways around the sanctions, refused

725
00:39:23,239 --> 00:39:25,880
Speaker 5: to make concessions, and the US felt, i think, compelled

726
00:39:25,880 --> 00:39:28,160
Speaker 5: to some extent to use military force, although I think

727
00:39:28,160 --> 00:39:30,200
Speaker 5: there were lots of other reasons on top of that.

728
00:39:30,800 --> 00:39:33,440
Speaker 5: If the US were to, let's say, take Carg but

729
00:39:33,560 --> 00:39:39,319
Speaker 5: also to try to really vigorously eliminate Iran's ability to

730
00:39:39,360 --> 00:39:41,560
Speaker 5: export oil, first of all, I think it would have

731
00:39:41,600 --> 00:39:43,960
Speaker 5: to be pretty comprehensive, and I think it would have

732
00:39:43,960 --> 00:39:45,200
Speaker 5: to be pretty aggressive, and it would have to be

733
00:39:45,239 --> 00:39:49,200
Speaker 5: sustained for quite a while. Patrolling Iran's coastlines about twelve

734
00:39:49,239 --> 00:39:52,600
Speaker 5: hundred kilometers long, stopping any and all ships that are

735
00:39:52,640 --> 00:39:57,880
Speaker 5: trying to exit Iran's export terminals, clamping down on overland routes.

736
00:39:58,080 --> 00:40:01,200
Speaker 5: Iran smuggles oil through Iraq. It also smuggles a certain

737
00:40:01,200 --> 00:40:03,759
Speaker 5: amount of oil through Turkey and into the Caucuses and

738
00:40:03,800 --> 00:40:07,840
Speaker 5: into Pakistan. That trade is much more difficult for the

739
00:40:07,920 --> 00:40:10,480
Speaker 5: US to interdict. So and that's where a lot of

740
00:40:10,480 --> 00:40:13,319
Speaker 5: this illicit kind of gray market activity happens on top

741
00:40:13,360 --> 00:40:16,440
Speaker 5: of the black market activity. So I think the upshot

742
00:40:16,480 --> 00:40:19,279
Speaker 5: of trying to cut off the flow of oil with

743
00:40:19,360 --> 00:40:22,200
Speaker 5: the means that the US has, including military force and interdiction,

744
00:40:22,920 --> 00:40:26,480
Speaker 5: only incentivizes the Iranians to turn to these alternative roots.

745
00:40:26,640 --> 00:40:28,960
Speaker 5: At the same time, what you're doing on the market

746
00:40:29,000 --> 00:40:32,399
Speaker 5: level is you're putting more upward pressure on prices. You're

747
00:40:32,440 --> 00:40:35,359
Speaker 5: creating an environment of higher prices, which only further incentivizes

748
00:40:35,400 --> 00:40:37,400
Speaker 5: grey in black market activity because now the profits are

749
00:40:37,400 --> 00:40:37,879
Speaker 5: even better.

750
00:40:38,320 --> 00:40:44,480
Speaker 2: It's interesting any country that has some heavily subsidized domestic

751
00:40:44,880 --> 00:40:47,759
Speaker 2: price of anything, we're going to keep the domestic price

752
00:40:47,800 --> 00:40:51,239
Speaker 2: of gasoline or oil low below the global market price.

753
00:40:51,480 --> 00:40:53,960
Speaker 2: I mean that should have Bananaza for smugglers, right, I mean,

754
00:40:54,040 --> 00:40:56,440
Speaker 2: like that must be just like the more you press

755
00:40:56,520 --> 00:40:59,680
Speaker 2: that button, the greater the incentive is for someone to

756
00:40:59,719 --> 00:41:02,040
Speaker 2: find that and move it onto the world market. I mean,

757
00:41:02,080 --> 00:41:04,719
Speaker 2: I think this was of course a story in the

758
00:41:04,800 --> 00:41:07,759
Speaker 2: sort of late Soviet era. You have these like price controls,

759
00:41:07,800 --> 00:41:11,400
Speaker 2: and then you have these quasi state companies just absolutely

760
00:41:11,440 --> 00:41:14,399
Speaker 2: making a fortune finding a way to like, you know,

761
00:41:14,800 --> 00:41:18,000
Speaker 2: sell the locally made toaster in Europe or whatever it is,

762
00:41:18,480 --> 00:41:20,839
Speaker 2: just make a fortune. I hadn't really thought about that though,

763
00:41:20,960 --> 00:41:24,279
Speaker 2: in the context of Iranian oil. All right, let's just

764
00:41:24,320 --> 00:41:27,600
Speaker 2: go back to the pure energy question. I mentioned the

765
00:41:27,680 --> 00:41:29,720
Speaker 2: damage that we've already seen in just a few weeks

766
00:41:29,760 --> 00:41:35,080
Speaker 2: of the war to LNG exports and et cetera. There

767
00:41:35,120 --> 00:41:37,799
Speaker 2: has been this obvious mismatching expectations a lot of people

768
00:41:37,880 --> 00:41:41,080
Speaker 2: think Trump would fold. Perhaps the reason oil isn't higher

769
00:41:41,480 --> 00:41:45,600
Speaker 2: currently right now is still this sort of embedded expectation

770
00:41:45,760 --> 00:41:49,080
Speaker 2: that Trump can't take this much longer. Let's just say

771
00:41:49,160 --> 00:41:52,400
Speaker 2: it goes on, like how bad could this get? And

772
00:41:52,440 --> 00:41:54,840
Speaker 2: do you think that still today the price of oil

773
00:41:55,400 --> 00:41:58,880
Speaker 2: reflects perhaps an unrealistic expectation that this war is going

774
00:41:58,960 --> 00:42:02,400
Speaker 2: to end soon, And how much do things just compound

775
00:42:02,880 --> 00:42:06,319
Speaker 2: and metastasize the longer this goes on, And where might

776
00:42:06,360 --> 00:42:07,759
Speaker 2: we see the price of some of this stuff? What

777
00:42:07,800 --> 00:42:09,439
Speaker 2: does it look like in your crystal ball?

778
00:42:10,080 --> 00:42:14,080
Speaker 5: So I think expectations are definitely shifting, or have shifted

779
00:42:14,280 --> 00:42:16,440
Speaker 5: to the belief that this is likely going to go

780
00:42:16,480 --> 00:42:18,560
Speaker 5: on for a while, and that the supply effect is

781
00:42:18,600 --> 00:42:20,600
Speaker 5: now such that prices are going to stay high for

782
00:42:20,640 --> 00:42:22,840
Speaker 5: the rest of this year, high relative to what we

783
00:42:22,880 --> 00:42:24,719
Speaker 5: thought that they would be. Right when we entered twenty

784
00:42:24,719 --> 00:42:27,120
Speaker 5: twenty six, there was this broad expectation that this was

785
00:42:27,160 --> 00:42:28,880
Speaker 5: going to be a pretty soft market, that there was

786
00:42:28,920 --> 00:42:31,360
Speaker 5: going to be an imbalance and supply over demand. Demand

787
00:42:31,360 --> 00:42:34,239
Speaker 5: growth was going to be pretty soft, pretty sluggish, and

788
00:42:34,239 --> 00:42:35,600
Speaker 5: that was going to keep prices low. It's going to

789
00:42:35,640 --> 00:42:38,080
Speaker 5: keep them in the sixties, maybe in the fifties per barrel.

790
00:42:38,200 --> 00:42:40,760
Speaker 5: That has all changed now. I think seeing oil prices

791
00:42:40,800 --> 00:42:42,960
Speaker 5: fall below seventy five dollars barrel by the end of

792
00:42:43,000 --> 00:42:45,840
Speaker 5: the year is pretty unlikely, even if this conflict wraps

793
00:42:45,920 --> 00:42:49,400
Speaker 5: up very quickly. I mean, looking at three things, the

794
00:42:49,440 --> 00:42:51,600
Speaker 5: front month, the Brent front month being at about one

795
00:42:51,680 --> 00:42:54,279
Speaker 5: hundred and thirteen one hundred and twelve. I think that's

796
00:42:54,400 --> 00:43:01,240
Speaker 5: approaching realistic expectations. Because Hormuz is still closed, some amount

797
00:43:01,280 --> 00:43:04,440
Speaker 5: of crude is getting out via Saudi and UAE pipelines,

798
00:43:04,480 --> 00:43:07,040
Speaker 5: but those pipelines are vulnerable and they could be disrupted.

799
00:43:07,080 --> 00:43:08,840
Speaker 5: And as we've seen, the Iranians have the ability to

800
00:43:08,880 --> 00:43:11,680
Speaker 5: do pretty significant damage to energy infrastructure if they really

801
00:43:11,680 --> 00:43:13,880
Speaker 5: go for it. I mean, Joe, you mentioned the damage

802
00:43:13,920 --> 00:43:17,520
Speaker 5: done to the Kutour facility last night. That was I

803
00:43:17,560 --> 00:43:21,760
Speaker 5: believe one missile that got through and caused enough damage

804
00:43:21,760 --> 00:43:23,279
Speaker 5: that they'll have to keep the facility off for a

805
00:43:23,320 --> 00:43:27,000
Speaker 5: long time and has now cut production for years to

806
00:43:27,000 --> 00:43:30,040
Speaker 5: some extent. So that's one missile, and they could I

807
00:43:30,040 --> 00:43:31,600
Speaker 5: think they could do more if they wanted. They could

808
00:43:31,640 --> 00:43:34,400
Speaker 5: go after tankers more aggressively, like they're keeping their powder

809
00:43:34,480 --> 00:43:36,520
Speaker 5: dry in the straight up four mouse. For the most part,

810
00:43:36,719 --> 00:43:39,640
Speaker 5: right they're usually they're mostly operating off of threats, So

811
00:43:39,800 --> 00:43:42,080
Speaker 5: if things were to get worse, which they very well could,

812
00:43:42,480 --> 00:43:45,359
Speaker 5: prices could go higher. The other price point to look

813
00:43:45,400 --> 00:43:47,960
Speaker 5: at is spot price for physical cargoes coming out of

814
00:43:47,960 --> 00:43:50,120
Speaker 5: the region. Right, if the front month is around one

815
00:43:50,200 --> 00:43:53,040
Speaker 5: hundred and eleven, and that's the futures. The price of

816
00:43:53,080 --> 00:43:56,720
Speaker 5: a barrel of Omani crude right now, you go to Aman,

817
00:43:56,760 --> 00:43:58,760
Speaker 5: you buy a barrel of oil is over one hundred

818
00:43:58,760 --> 00:44:02,160
Speaker 5: and fifty dollars a barrow. That's the premium that's now

819
00:44:02,160 --> 00:44:04,319
Speaker 5: being placed on Middle East production out of Oman, out

820
00:44:04,360 --> 00:44:07,760
Speaker 5: of the UAE, and those prices are coming through Asia

821
00:44:08,080 --> 00:44:10,480
Speaker 5: and the Asians are now bidding up the price of

822
00:44:10,560 --> 00:44:12,719
Speaker 5: oil coming from other markets. So you're going to start

823
00:44:12,760 --> 00:44:15,880
Speaker 5: seeing that reflected elsewhere. Oil coming out of the US

824
00:44:16,000 --> 00:44:18,160
Speaker 5: is going to start ticking up, Oil coming out of

825
00:44:18,600 --> 00:44:21,080
Speaker 5: other production hubs is going to start ticking up. The

826
00:44:21,120 --> 00:44:22,759
Speaker 5: final point that I would say, the final sort of

827
00:44:22,800 --> 00:44:24,279
Speaker 5: price point that I would look at, is when you

828
00:44:24,280 --> 00:44:26,160
Speaker 5: look at the curve, when you look at prices over

829
00:44:26,160 --> 00:44:28,839
Speaker 5: the next twelve months, all of them are higher than

830
00:44:28,840 --> 00:44:31,040
Speaker 5: they were a week ago, and they're still coming up.

831
00:44:31,239 --> 00:44:34,480
Speaker 5: They're still rising. The expectations are that this isn't going

832
00:44:34,520 --> 00:44:37,000
Speaker 5: to end soon, and even if it does, the size

833
00:44:37,000 --> 00:44:39,360
Speaker 5: of the physical disruption that we've seen so far is

834
00:44:39,400 --> 00:44:43,839
Speaker 5: going to create constraints on supply going through the next

835
00:44:43,880 --> 00:44:48,600
Speaker 5: twelve months. And that's even with releases from strategic petroleum reserves.

836
00:44:48,680 --> 00:44:52,160
Speaker 5: Right the US releasing oil. Other Ia members releasing oil.

837
00:44:52,640 --> 00:44:55,040
Speaker 5: That's going to alleviate the pressure somewhat. But at the

838
00:44:55,080 --> 00:44:56,840
Speaker 5: same time, those are stockpiles that are going to have

839
00:44:56,880 --> 00:44:59,560
Speaker 5: to be refilled, and I think everybody is going to

840
00:44:59,560 --> 00:45:03,400
Speaker 5: be very concerned about having a low inventory of oil

841
00:45:03,560 --> 00:45:05,640
Speaker 5: when this war is over, because everyone's going to be

842
00:45:05,640 --> 00:45:09,399
Speaker 5: thinking about this happening again if the Iranians survive, which

843
00:45:09,400 --> 00:45:10,080
Speaker 5: they are likely to.

844
00:45:10,360 --> 00:45:13,319
Speaker 3: Also, doesn't it take a while for oil released from

845
00:45:13,320 --> 00:45:15,680
Speaker 3: the SPR to actually get into the market, which I

846
00:45:15,680 --> 00:45:17,120
Speaker 3: think is also underappreciated.

847
00:45:17,480 --> 00:45:20,200
Speaker 5: Yes, it's slow, it's a slow process. The US can

848
00:45:20,239 --> 00:45:22,319
Speaker 5: only they say that they can release one point four

849
00:45:22,320 --> 00:45:24,800
Speaker 5: million barrels a day, it's probably more like one million

850
00:45:24,840 --> 00:45:28,920
Speaker 5: barrels a day, and it eats into US crewed export capacity.

851
00:45:29,360 --> 00:45:31,520
Speaker 5: So if you're releasing oil from the SPR, you're kind

852
00:45:31,520 --> 00:45:34,640
Speaker 5: of holding back on crude exports from commercial producers because

853
00:45:34,640 --> 00:45:37,440
Speaker 5: they all come out of the same infrastructure. The SPR

854
00:45:37,480 --> 00:45:41,040
Speaker 5: releases are more a signal. They're more saying to inventories,

855
00:45:41,320 --> 00:45:43,520
Speaker 5: you know, here's oil that will be on the market

856
00:45:43,560 --> 00:45:45,400
Speaker 5: over the next three to four months to make up

857
00:45:45,400 --> 00:45:49,280
Speaker 5: for a physical shortfall, an actual shortfall of supply because

858
00:45:49,360 --> 00:45:52,240
Speaker 5: if there weren't spr releases and everyone was just forced

859
00:45:52,280 --> 00:45:57,440
Speaker 5: to eat the supply loss, which is approximately ten million

860
00:45:57,440 --> 00:45:59,840
Speaker 5: barrels a day right now. I mean that's ten percent

861
00:45:59,880 --> 00:46:02,719
Speaker 5: of global supply. That is just not getting to where

862
00:46:02,760 --> 00:46:03,279
Speaker 5: it needs to go.

863
00:46:04,640 --> 00:46:06,919
Speaker 3: So I just have one last question, since the theme

864
00:46:06,960 --> 00:46:08,879
Speaker 3: of this conversation or one of the themes, has been

865
00:46:08,880 --> 00:46:12,799
Speaker 3: this idea of hypotheticals turning into reality, just going back

866
00:46:12,840 --> 00:46:17,719
Speaker 3: to the old strait of Hormuz closure thought experiment that

867
00:46:17,840 --> 00:46:22,040
Speaker 3: probably everyone in oil and gas has dedicated some time

868
00:46:22,080 --> 00:46:26,440
Speaker 3: to in recent decades. Now that it's actually happening, is

869
00:46:26,480 --> 00:46:30,080
Speaker 3: there anything about the situation that has surprised you as

870
00:46:30,080 --> 00:46:31,040
Speaker 3: it's been playing out?

871
00:46:31,400 --> 00:46:35,000
Speaker 5: And you know, honestly, what's been surprising to me. Two

872
00:46:35,080 --> 00:46:37,360
Speaker 5: things that have been surprising to me how little the

873
00:46:37,400 --> 00:46:40,280
Speaker 5: Iranians have needed to do to Hormones to keep it shut.

874
00:46:41,160 --> 00:46:45,239
Speaker 5: They've struck about a dozen tankers, they haven't sunk any

875
00:46:45,280 --> 00:46:47,960
Speaker 5: as far as I know, they haven't laid more than

876
00:46:48,000 --> 00:46:51,440
Speaker 5: a few mines. As far as anyone is aware, activity

877
00:46:51,480 --> 00:46:53,560
Speaker 5: at Hormoz has been pretty quiet. Because as soon as

878
00:46:53,600 --> 00:46:55,239
Speaker 5: the war began, and as soon as the Iranian said

879
00:46:55,239 --> 00:46:58,080
Speaker 5: straight at Hormos is now closed. All the shippers stopped,

880
00:46:58,520 --> 00:47:02,120
Speaker 5: nothing was moving. The threat was enough to keep it closed,

881
00:47:02,160 --> 00:47:05,160
Speaker 5: which I thought was surprising. The second surprising point, and

882
00:47:05,200 --> 00:47:07,319
Speaker 5: this kind of feeds into the first, is that I

883
00:47:07,560 --> 00:47:10,080
Speaker 5: was told my understanding was that this was a scenario

884
00:47:10,120 --> 00:47:12,480
Speaker 5: the US Navy had prepared for. They had lots of

885
00:47:12,480 --> 00:47:14,759
Speaker 5: plans in place. They knew what they needed to do

886
00:47:14,960 --> 00:47:17,560
Speaker 5: to keep Hormuz open in the event that the Iranians

887
00:47:17,600 --> 00:47:20,040
Speaker 5: tried to shut it. And then the Iranians shut the

888
00:47:20,040 --> 00:47:24,000
Speaker 5: straight up Hormuz, and the US response has been insufficient.

889
00:47:25,160 --> 00:47:27,640
Speaker 5: It's not only that they haven't done enough to open

890
00:47:27,640 --> 00:47:29,920
Speaker 5: the straight it's that they didn't seem to have expected

891
00:47:29,920 --> 00:47:32,759
Speaker 5: this at all, that the Iranians would respond to this

892
00:47:32,840 --> 00:47:35,680
Speaker 5: kind of an attack by playing their principal trump card.

893
00:47:36,000 --> 00:47:41,719
Speaker 5: So between the effectiveness of the Iranian strategy and the

894
00:47:41,840 --> 00:47:45,840
Speaker 5: lack of a strong US response, a strong US effective

895
00:47:45,880 --> 00:47:48,040
Speaker 5: response has been really surprising to me.

896
00:47:48,440 --> 00:47:52,120
Speaker 2: Greg Brew fascinating conversation, Love catching up with you, truly

897
00:47:52,160 --> 00:47:54,719
Speaker 2: the perfect guest. Thank you so much for coming back

898
00:47:54,760 --> 00:47:55,280
Speaker 2: on Lautlove.

899
00:47:55,800 --> 00:47:57,040
Speaker 5: Thank you so much for having me back.

900
00:48:10,600 --> 00:48:13,759
Speaker 2: Greg's just the best. It's so good. I mean, you know,

901
00:48:14,200 --> 00:48:15,880
Speaker 2: all of our guests are perfect guests.

902
00:48:16,640 --> 00:48:18,200
Speaker 3: That's right, that's right.

903
00:48:18,360 --> 00:48:21,280
Speaker 2: But Greg Greg is the perfect guest.

904
00:48:21,200 --> 00:48:24,240
Speaker 3: Truly, the perfect gest. No, that was a fascinating converse.

905
00:48:24,280 --> 00:48:26,920
Speaker 3: I mean, I think he laid out very clearly the

906
00:48:27,000 --> 00:48:31,319
Speaker 3: strategic difficulties that the US now faces. And actually, you know,

907
00:48:31,520 --> 00:48:34,799
Speaker 3: you mentioned carg Island, sounding like you know, a place

908
00:48:34,800 --> 00:48:35,640
Speaker 3: where great powers.

909
00:48:35,760 --> 00:48:40,600
Speaker 2: Yeah, like Julius Caesar's demise at Caryland the great you know.

910
00:48:41,040 --> 00:48:43,279
Speaker 3: So I was thinking, like, one of the things that

911
00:48:43,360 --> 00:48:46,640
Speaker 3: still amazes me is that geography still matters in the world, right,

912
00:48:46,760 --> 00:48:49,640
Speaker 3: Like you have all this high tech, high tech missiles,

913
00:48:49,719 --> 00:48:53,400
Speaker 3: high tech drones, but actually we're still limited by geography

914
00:48:53,440 --> 00:48:54,000
Speaker 3: in many ways.

915
00:48:54,120 --> 00:48:57,120
Speaker 2: I had that felt when he mentioned how mountainous the

916
00:48:57,360 --> 00:49:00,879
Speaker 2: areas were around the Strait of Horr Moon, Just like, Okay,

917
00:49:00,960 --> 00:49:04,800
Speaker 2: why can't the US simply take out around's capacity to

918
00:49:04,920 --> 00:49:08,040
Speaker 2: fire drones and missiles at the ships going through. Well,

919
00:49:08,120 --> 00:49:11,120
Speaker 2: it's heavily fortified, deep in the mountains in the area,

920
00:49:11,280 --> 00:49:14,160
Speaker 2: not easy to spot, not easy to target, et cetera.

921
00:49:14,680 --> 00:49:19,440
Speaker 2: So yes, geography, geology, et cetera, extremely important.

922
00:49:19,280 --> 00:49:22,000
Speaker 3: To this question. The other thing I was thinking, this

923
00:49:22,160 --> 00:49:24,520
Speaker 3: is a very serious conversation. And this is not a

924
00:49:24,719 --> 00:49:27,440
Speaker 3: very serious comment, but you know, he mentioned very large

925
00:49:27,520 --> 00:49:31,040
Speaker 3: crude carriers, the LCCs. I love how literal that name is.

926
00:49:31,080 --> 00:49:34,239
Speaker 3: Whenever I hear anyone mention that, I just think, like,

927
00:49:35,120 --> 00:49:37,480
Speaker 3: there was a guy one day who invented the ship

928
00:49:37,640 --> 00:49:39,200
Speaker 3: and he was like, you know what, we're not going

929
00:49:39,280 --> 00:49:41,400
Speaker 3: to call it like a brig or a schooner or something.

930
00:49:41,440 --> 00:49:42,840
Speaker 3: We're just going to call it what it is, a

931
00:49:43,120 --> 00:49:45,000
Speaker 3: very large crude carrier.

932
00:49:45,200 --> 00:49:47,839
Speaker 2: That is very funny. Actually, look, there was a lot

933
00:49:47,920 --> 00:49:49,239
Speaker 2: there the other thing, and I think it was the

934
00:49:49,360 --> 00:49:52,880
Speaker 2: last point is this idea that and it's sort of ominous,

935
00:49:53,560 --> 00:49:56,839
Speaker 2: which is everyone sort of assumed that the Navy would

936
00:49:56,840 --> 00:49:59,400
Speaker 2: have had yeah, straight and form moves playing, given the

937
00:49:59,480 --> 00:50:03,800
Speaker 2: amount of time and energy that's been thought about contingencies

938
00:50:03,880 --> 00:50:07,440
Speaker 2: and what a disaster this would be. And yet and

939
00:50:07,480 --> 00:50:10,400
Speaker 2: then it closes, and it's like, oh, what what are

940
00:50:10,440 --> 00:50:12,120
Speaker 2: we doing? We're going to have a plan, you know,

941
00:50:12,200 --> 00:50:15,400
Speaker 2: it's very everything felt so far as we are planning

942
00:50:15,480 --> 00:50:17,560
Speaker 2: to have a plan and so forth. And so the

943
00:50:17,680 --> 00:50:20,200
Speaker 2: idea that you'd start this war was at least the

944
00:50:20,320 --> 00:50:23,600
Speaker 2: possibility of the street being closed, and then it's closed

945
00:50:23,640 --> 00:50:26,480
Speaker 2: and you basically do nothing and nothing passes at all.

946
00:50:27,080 --> 00:50:30,640
Speaker 2: Pretty worrisome. I suppose both a sort of immediate and

947
00:50:30,760 --> 00:50:34,240
Speaker 2: long term level about what that the state of planning

948
00:50:34,320 --> 00:50:37,760
Speaker 2: and then the state of military capacity for what should

949
00:50:37,760 --> 00:50:41,840
Speaker 2: have been at least a possibility understood from the very beginning.

950
00:50:42,000 --> 00:50:44,880
Speaker 3: Yes, And also there's just an asymmetry at play here,

951
00:50:44,960 --> 00:50:48,320
Speaker 3: which is like every day that goes on that sees

952
00:50:48,480 --> 00:50:52,360
Speaker 3: some significant energy asset, whether it's in Iran or in

953
00:50:53,000 --> 00:50:57,800
Speaker 3: Katar or elsewhere in the Gulf region, that like echoes

954
00:50:57,960 --> 00:51:01,759
Speaker 3: for months, yes, right, Like the daily time frame for

955
00:51:01,920 --> 00:51:05,120
Speaker 3: those assets getting destroyed is very short. So just in

956
00:51:05,440 --> 00:51:07,680
Speaker 3: two or three weeks we've seen a lot of stuff

957
00:51:07,960 --> 00:51:11,560
Speaker 3: get damaged, but the time frame for the actual impacts

958
00:51:11,960 --> 00:51:14,520
Speaker 3: of all of that to come to fruition and ripple

959
00:51:14,640 --> 00:51:18,080
Speaker 3: throughout the economy are very very long, Yes, And so

960
00:51:18,600 --> 00:51:22,080
Speaker 3: I just think like the every day this goes on,

961
00:51:22,920 --> 00:51:26,600
Speaker 3: with every additional bit of infrastructure damage, it just gets

962
00:51:26,680 --> 00:51:27,239
Speaker 3: worse and worse.

963
00:51:27,280 --> 00:51:29,080
Speaker 2: It gets worse and worse. And as you said, there's

964
00:51:29,080 --> 00:51:32,320
Speaker 2: a one missile right in some of these instances, and

965
00:51:32,400 --> 00:51:36,279
Speaker 2: you're talking about years of damage to infrastructure, which are

966
00:51:36,320 --> 00:51:40,640
Speaker 2: pretty ominous for any sort of expectation that again Trump

967
00:51:40,680 --> 00:51:43,399
Speaker 2: could taco right, he could declare war and still talk

968
00:51:43,440 --> 00:51:48,680
Speaker 2: about years of repercussions from this. So yes, pretty serious consequences.

969
00:51:48,239 --> 00:51:48,680
Speaker 5: To all of this.

970
00:51:48,880 --> 00:51:50,480
Speaker 3: All right, on that note, shall we leave it there?

971
00:51:50,640 --> 00:51:51,359
Speaker 2: Let's leave it there.

972
00:51:51,640 --> 00:51:54,040
Speaker 3: This has been another episode of the Authoughts podcast. I'm

973
00:51:54,120 --> 00:51:56,880
Speaker 3: Tracy Alloway. You can follow me at Tracy Alloway.

974
00:51:56,680 --> 00:51:58,920
Speaker 2: And I'm Joe Wisenthal. You can follow me at the

975
00:51:59,000 --> 00:52:02,719
Speaker 2: Stalwart Well our guest Gregory Brew at Gbrew twenty four,

976
00:52:02,920 --> 00:52:06,080
Speaker 2: follow our producers Carmen Rodriguez at Carmen Arman, dash O

977
00:52:06,120 --> 00:52:09,160
Speaker 2: Bennett a Dashbot, and Kale Brooks at Kilbrooks. And for

978
00:52:09,280 --> 00:52:11,880
Speaker 2: more odd Lots content, go to Bloomberg dot com slash

979
00:52:11,960 --> 00:52:13,920
Speaker 2: odd Lots. Were have a daily newsletter and all of

980
00:52:13,960 --> 00:52:16,440
Speaker 2: our episodes, and you can chat about all these topics

981
00:52:16,440 --> 00:52:19,600
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982
00:52:19,800 --> 00:52:20,600
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983
00:52:20,760 --> 00:52:22,960
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984
00:52:23,040 --> 00:52:25,960
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985
00:52:26,040 --> 00:52:29,080
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986
00:52:29,360 --> 00:52:31,480
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987
00:52:31,520 --> 00:52:34,200
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988
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989
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990
00:52:39,719 --> 00:52:40,040
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991
00:53:05,239 --> 00:53:05,279
Speaker 5: In