1 00:00:00,240 --> 00:00:02,640 Speaker 1: This is Tom Rowlands Reese and you're listening to Switched 2 00:00:02,640 --> 00:00:05,160 Speaker 1: on the podcast brought to you by bn EF. On 3 00:00:05,240 --> 00:00:09,280 Speaker 1: April second, the introduction of the Trump administration's Liberation Day 4 00:00:09,320 --> 00:00:12,879 Speaker 1: tariffs caused indices measuring US business and consumer sentiment to 5 00:00:12,960 --> 00:00:16,439 Speaker 1: fall and global GDP forecasts to be trimmed. Sensitive to 6 00:00:16,480 --> 00:00:19,759 Speaker 1: such fluctuations, oil price has declined steeply, with the Brent 7 00:00:19,800 --> 00:00:21,880 Speaker 1: index even reaching as low as sixty two dollars per 8 00:00:21,920 --> 00:00:24,200 Speaker 1: barrel on April fourth, and here at BNF we have 9 00:00:24,200 --> 00:00:26,639 Speaker 1: cut our forecasts for global demand growth of oil. This 10 00:00:26,720 --> 00:00:28,760 Speaker 1: decline in demand comes an nor quit time for global 11 00:00:28,800 --> 00:00:31,840 Speaker 1: oil markets, as recent announcements from OPEC plus members and 12 00:00:31,960 --> 00:00:34,520 Speaker 1: other major oil producing nations have signaled they are set 13 00:00:34,520 --> 00:00:37,120 Speaker 1: to join the US in ramping their production. What does 14 00:00:37,120 --> 00:00:38,680 Speaker 1: this mean for the near term future of the global 15 00:00:38,680 --> 00:00:41,560 Speaker 1: oil sector and the all important price per barrel? Today 16 00:00:41,560 --> 00:00:44,040 Speaker 1: I'm joined by bn EF's head of Oil Markets Research, 17 00:00:44,120 --> 00:00:46,920 Speaker 1: Wayne Tan and we discuss findings from his note Oil 18 00:00:46,920 --> 00:00:50,760 Speaker 1: Markets Monthly Tariff's OPEC Plus hike structural shift, which b 19 00:00:50,920 --> 00:00:52,839 Speaker 1: and EF clients can find at BNF go on the 20 00:00:52,840 --> 00:00:55,600 Speaker 1: Bloomberg terminal or on BNF dot com. All right, let's 21 00:00:55,600 --> 00:01:07,520 Speaker 1: get to talk about global oil markets with Wayne. Hi. Wayne, 22 00:01:07,520 --> 00:01:09,560 Speaker 1: thanks for coming on the podcast today. 23 00:01:09,840 --> 00:01:10,679 Speaker 2: Thanks for having me. 24 00:01:11,000 --> 00:01:15,400 Speaker 1: It's not exactly ever a particularly stable market. Oil is 25 00:01:15,440 --> 00:01:20,720 Speaker 1: always interesting. It's always subject to various geopolitical backs and 26 00:01:20,760 --> 00:01:23,479 Speaker 1: forth as well as the global economy. And so then 27 00:01:23,840 --> 00:01:27,960 Speaker 1: with that backdrop, we then have the Trump administration's Liberation 28 00:01:28,080 --> 00:01:30,720 Speaker 1: Day announcement, and so, I mean, my first question is 29 00:01:31,040 --> 00:01:33,280 Speaker 1: how has that been changing the market, particularly from a 30 00:01:33,280 --> 00:01:35,280 Speaker 1: demand perspective. We'll get to supply in a moment, but 31 00:01:35,560 --> 00:01:39,720 Speaker 1: how have these tariff announcements been impacting the demand risks 32 00:01:40,120 --> 00:01:41,360 Speaker 1: that impact oil? 33 00:01:41,640 --> 00:01:41,920 Speaker 2: Yeah? 34 00:01:41,920 --> 00:01:45,399 Speaker 3: Thanks Tom. I'd say that, like obviously, the world we 35 00:01:45,440 --> 00:01:48,040 Speaker 3: are heading into in the coming years would be quite 36 00:01:48,080 --> 00:01:50,880 Speaker 3: different from the one that we are quite accustomed to. 37 00:01:51,160 --> 00:01:55,120 Speaker 3: We are probably entering an era of de globalization. We 38 00:01:55,160 --> 00:01:58,240 Speaker 3: are all quite aware of the Liberasi and data tariffs 39 00:01:58,760 --> 00:02:01,720 Speaker 3: that Trump announced, and also the escalation of the trade 40 00:02:01,720 --> 00:02:05,240 Speaker 3: war between US and China, and so our job is 41 00:02:05,280 --> 00:02:09,920 Speaker 3: to quantify how those terraffs would impact oil sector for 42 00:02:10,000 --> 00:02:12,720 Speaker 3: oil demand, the way that we think about it is 43 00:02:13,080 --> 00:02:17,440 Speaker 3: WACH countries and WACH sectors are most reliant on. 44 00:02:17,440 --> 00:02:18,280 Speaker 2: Trade for growth. 45 00:02:18,520 --> 00:02:21,880 Speaker 3: So that would be developing countries in particular because those 46 00:02:21,919 --> 00:02:26,080 Speaker 3: countries are more dependent on trade for growth, and the 47 00:02:26,280 --> 00:02:29,399 Speaker 3: sectors that are more dependent on trade are manufacturing sectors. 48 00:02:29,560 --> 00:02:34,320 Speaker 3: And because the manufacturing sector, and we know automobile manufacturing 49 00:02:34,520 --> 00:02:36,920 Speaker 3: is a segment that has been hit pretty hard, the 50 00:02:37,000 --> 00:02:41,240 Speaker 3: consumption of raw materials also drops. So the consumption are steel, iron, 51 00:02:41,280 --> 00:02:43,880 Speaker 3: ore and whatnot also drops. And that also heats metals 52 00:02:43,880 --> 00:02:47,119 Speaker 3: and mining. So because the metals, mining and manufacturing sectors 53 00:02:47,240 --> 00:02:50,840 Speaker 3: are sectors that are energy intensive, so that has a 54 00:02:51,160 --> 00:02:54,919 Speaker 3: pronounced impact on oil demand and the type of oil 55 00:02:54,919 --> 00:02:57,800 Speaker 3: products that you will typically use in intric manufacturing sector 56 00:02:57,800 --> 00:03:00,520 Speaker 3: as well as the mining sectors are diesel, an AFTA, 57 00:03:00,680 --> 00:03:04,800 Speaker 3: fuel oil basically industrial fuels, but also bunker fuels. 58 00:03:04,919 --> 00:03:06,200 Speaker 2: So we are a. 59 00:03:06,120 --> 00:03:10,560 Speaker 3: Little bit more precautious in our outlook for diesel, fuel 60 00:03:10,600 --> 00:03:14,080 Speaker 3: oil and AFTA. We have cut so far three hundred 61 00:03:14,280 --> 00:03:17,399 Speaker 3: and ten thousand barrels per day of oil demand from 62 00:03:17,440 --> 00:03:19,360 Speaker 3: the libration day tarrafs alone. 63 00:03:19,639 --> 00:03:22,600 Speaker 1: And what is that as a percentage of global oil demand? 64 00:03:22,680 --> 00:03:24,640 Speaker 1: Just for those of us who are not following the 65 00:03:24,680 --> 00:03:26,320 Speaker 1: market as closely, it's. 66 00:03:26,160 --> 00:03:30,720 Speaker 3: Something like zero five percent. However, there was an escalation 67 00:03:30,880 --> 00:03:34,040 Speaker 3: of the TIFO tet terriers right between US and China, 68 00:03:34,320 --> 00:03:37,440 Speaker 3: and so a key segment of growth for oil demand 69 00:03:37,520 --> 00:03:41,880 Speaker 3: has been China's petrochemical sector. So the petrochlamical sector consumes 70 00:03:41,880 --> 00:03:44,800 Speaker 3: a lot of LPG, which is liquified petrolum gas as 71 00:03:44,800 --> 00:03:48,600 Speaker 3: well as ethane, and China imports a lot of natural 72 00:03:48,640 --> 00:03:51,520 Speaker 3: gas liquids from the US which they will then convert 73 00:03:51,560 --> 00:03:55,520 Speaker 3: into petrochemical fists such as lpgn ETHNE. So because we 74 00:03:55,720 --> 00:03:59,960 Speaker 3: no longer expect China to import much, if any natural 75 00:04:00,040 --> 00:04:02,720 Speaker 3: guessloicids from the US, we think that they would struggle 76 00:04:02,720 --> 00:04:03,800 Speaker 3: to replace. 77 00:04:03,840 --> 00:04:06,240 Speaker 2: NGAIL imports from the US. They would have to look 78 00:04:06,280 --> 00:04:08,160 Speaker 2: to our Middle Eastern suppliers. 79 00:04:08,200 --> 00:04:10,440 Speaker 3: But ultimately we think that they would struggle to replace 80 00:04:10,960 --> 00:04:14,160 Speaker 3: US in parts of NGLs. And so we further reduced 81 00:04:14,320 --> 00:04:17,560 Speaker 3: China's or demand, particularly in the petrochemical sector, by another 82 00:04:17,600 --> 00:04:20,120 Speaker 3: two hundred thousand verse perdy. So overall, our new es 83 00:04:20,120 --> 00:04:22,080 Speaker 3: demate right now is a little over half a million 84 00:04:22,160 --> 00:04:24,080 Speaker 3: verus per day of impact to demand. 85 00:04:24,279 --> 00:04:26,480 Speaker 1: And I mean, I know you mentioned that a lot 86 00:04:26,520 --> 00:04:30,560 Speaker 1: of this impact is concentrated in emerging markets. How much 87 00:04:30,600 --> 00:04:32,719 Speaker 1: downside risk for demand do you see in the US, 88 00:04:32,880 --> 00:04:36,400 Speaker 1: which is obviously itself a huge consumer of oil products. 89 00:04:36,680 --> 00:04:38,520 Speaker 1: I've got in my notes here that makes up over 90 00:04:38,560 --> 00:04:40,960 Speaker 1: twenty percent of global demand volume in twenty twenty four. 91 00:04:41,120 --> 00:04:44,560 Speaker 1: So I realized that there's how these tariffs affect everyone 92 00:04:44,560 --> 00:04:46,560 Speaker 1: who is in the US. But how does the tariffs 93 00:04:46,600 --> 00:04:49,360 Speaker 1: and the counter tariffs we're hearing about potentially effect demand 94 00:04:49,400 --> 00:04:50,400 Speaker 1: from the US. 95 00:04:50,720 --> 00:04:53,960 Speaker 3: There was actually like two over arching scenarios for this, 96 00:04:54,279 --> 00:04:57,200 Speaker 3: for the trade war or other, how every country in 97 00:04:57,240 --> 00:05:01,200 Speaker 3: the world would react to the libration day tariffs. First reaction, 98 00:05:01,800 --> 00:05:04,760 Speaker 3: which will be kind of good for the US, is 99 00:05:04,920 --> 00:05:08,719 Speaker 3: if everyone is sort of looking to make a deal 100 00:05:08,760 --> 00:05:12,440 Speaker 3: with the US right. The second outcome is if the 101 00:05:12,480 --> 00:05:15,159 Speaker 3: rest of the countries, particularly the media trading partners, are 102 00:05:15,200 --> 00:05:18,680 Speaker 3: a little bit more combative, so they are looking at 103 00:05:18,720 --> 00:05:22,400 Speaker 3: retatory measures such as from China, but also to some 104 00:05:22,480 --> 00:05:26,680 Speaker 3: extent the EU and Canada, and in that scenario US 105 00:05:26,720 --> 00:05:29,040 Speaker 3: actually gets hit a lot harder than the first scenario. 106 00:05:29,279 --> 00:05:33,240 Speaker 1: So the first scenario is where Trump's tariffs go according 107 00:05:33,240 --> 00:05:36,400 Speaker 1: to plan, and so US demand is a lot more solid. 108 00:05:36,520 --> 00:05:40,000 Speaker 1: And the second one is that the world responds aggressively, 109 00:05:40,200 --> 00:05:43,599 Speaker 1: and that would have a downside impact on US oil 110 00:05:43,640 --> 00:05:45,960 Speaker 1: demand and therefore global world demand precisely. 111 00:05:46,040 --> 00:05:50,240 Speaker 3: So it does seem like the second scenario is more 112 00:05:50,279 --> 00:05:52,800 Speaker 3: likely to happen in some shape or form, and so 113 00:05:52,839 --> 00:05:55,960 Speaker 3: we think that the risk to oil demand in the 114 00:05:56,080 --> 00:05:59,719 Speaker 3: US is pretty high. We actually estimate a demand impact 115 00:05:59,760 --> 00:06:02,120 Speaker 3: of around one hundred and fifty thousand births per day 116 00:06:02,279 --> 00:06:04,599 Speaker 3: downside to all the money in the US, and it 117 00:06:04,600 --> 00:06:08,560 Speaker 3: will be across different sectors because when you know, prices 118 00:06:08,640 --> 00:06:11,400 Speaker 3: increase due to the terriffs, people spend less and people 119 00:06:11,400 --> 00:06:15,160 Speaker 3: spend less, particular retail consumers span less, gasoline demand falls, 120 00:06:15,240 --> 00:06:18,440 Speaker 3: people lose their jobs, and people would also spend less 121 00:06:18,440 --> 00:06:19,159 Speaker 3: on air. 122 00:06:19,040 --> 00:06:22,400 Speaker 2: Travel and whatnot. So the impact will be across different segments. 123 00:06:22,440 --> 00:06:25,000 Speaker 3: And so you can see from our estimates and the 124 00:06:25,040 --> 00:06:28,680 Speaker 3: monthly report published that the negative impact of demand is 125 00:06:28,680 --> 00:06:31,200 Speaker 3: is pretty well distributed across the barrel. 126 00:06:31,480 --> 00:06:33,360 Speaker 1: Before we started to talk about the US, I think 127 00:06:33,360 --> 00:06:36,560 Speaker 1: you said we've gotten estimated downside of was it two 128 00:06:36,640 --> 00:06:37,960 Speaker 1: hundred thousand barrels per day? 129 00:06:38,320 --> 00:06:39,680 Speaker 2: That's to North America. 130 00:06:39,760 --> 00:06:43,720 Speaker 3: So, because Canada is also very exposed to the US economy, 131 00:06:43,720 --> 00:06:45,960 Speaker 3: and if the US doesn't do very well moving ahead, 132 00:06:46,120 --> 00:06:47,720 Speaker 3: Canada would also. 133 00:06:47,520 --> 00:06:49,160 Speaker 2: Be hit pretty hard as well as Mexico. 134 00:06:49,200 --> 00:06:52,280 Speaker 3: Actually, so Mexico and Canada gets hit very hard if 135 00:06:52,279 --> 00:06:53,599 Speaker 3: the US economy is loose. 136 00:06:54,240 --> 00:06:56,800 Speaker 1: So Wayne, we talked about the demand risks and the 137 00:06:57,160 --> 00:06:59,839 Speaker 1: sort of the downside from the tariffs. That of course 138 00:07:00,200 --> 00:07:03,680 Speaker 1: ignores the fact that also these tariffs could potentially impact supply, 139 00:07:03,880 --> 00:07:07,440 Speaker 1: or this brilliant global trade war could impact supplies. So 140 00:07:07,480 --> 00:07:09,080 Speaker 1: tell us about that a little bit. 141 00:07:09,480 --> 00:07:13,640 Speaker 3: So when de month falls, oil prices fall, and that's 142 00:07:13,680 --> 00:07:16,800 Speaker 3: a natural headwind for oil production because where oil prices 143 00:07:16,800 --> 00:07:19,680 Speaker 3: are load producers are less incentivized to produce more right, 144 00:07:19,800 --> 00:07:22,560 Speaker 3: they'd rather keep you know, oil underground if they can, 145 00:07:22,800 --> 00:07:26,560 Speaker 3: or in storage. However, our analysis suggest that a lot 146 00:07:26,600 --> 00:07:29,880 Speaker 3: of the break events, particularly in the US, the show 147 00:07:29,920 --> 00:07:33,440 Speaker 3: oil plays well in the fifties or forties, even the thirties. 148 00:07:33,960 --> 00:07:34,520 Speaker 2: Some of the. 149 00:07:34,680 --> 00:07:38,000 Speaker 3: Other fast growing producers at Guiana, they have break events 150 00:07:38,040 --> 00:07:39,720 Speaker 3: of that is even lower than that. 151 00:07:39,840 --> 00:07:41,400 Speaker 2: It's like in the twenties and thirties. 152 00:07:41,600 --> 00:07:43,720 Speaker 1: Can can you just explain quickly what we mean by 153 00:07:43,920 --> 00:07:45,840 Speaker 1: break events, what these numbers mean. 154 00:07:46,360 --> 00:07:50,000 Speaker 3: So break even is the price point where a producer 155 00:07:50,440 --> 00:07:54,480 Speaker 3: is able to cover its operating costs of producing a 156 00:07:54,480 --> 00:07:55,120 Speaker 3: betre of oil. 157 00:07:55,360 --> 00:07:58,160 Speaker 1: So if we say a break even the twenty five 158 00:07:58,200 --> 00:08:01,120 Speaker 1: you mean when the oil price is above twenty five 159 00:08:01,160 --> 00:08:04,000 Speaker 1: dollars borol per day, that producers should be able to 160 00:08:04,040 --> 00:08:05,080 Speaker 1: operate profitably. 161 00:08:05,160 --> 00:08:05,720 Speaker 2: Is that right? 162 00:08:05,920 --> 00:08:08,360 Speaker 3: Yeah, at a break even, So any higher than a 163 00:08:08,400 --> 00:08:10,840 Speaker 3: break even point it would be in an operating profit 164 00:08:11,000 --> 00:08:14,400 Speaker 3: to be precise, Currently prices are still well above sixty. 165 00:08:14,640 --> 00:08:16,840 Speaker 2: When we look at WTIM brands. 166 00:08:16,480 --> 00:08:19,560 Speaker 3: We do not see a lot of negative impact to 167 00:08:20,000 --> 00:08:22,840 Speaker 3: global oil production at least as of right now, but 168 00:08:22,920 --> 00:08:24,960 Speaker 3: we do think that it would impact growth a lot 169 00:08:25,120 --> 00:08:27,320 Speaker 3: for next year, although we haven't really come out of 170 00:08:27,320 --> 00:08:30,680 Speaker 3: an estimate, but because prices are by and large are 171 00:08:30,720 --> 00:08:33,680 Speaker 3: lower now and they are much closer to break events now, 172 00:08:33,960 --> 00:08:37,040 Speaker 3: so it's quite likely that our companies will practice prudence 173 00:08:37,360 --> 00:08:40,439 Speaker 3: when it comes to expanding their production, and they could 174 00:08:40,559 --> 00:08:44,880 Speaker 3: more likely prioritize other things like dividend payouts, share buybacks, 175 00:08:45,080 --> 00:08:45,760 Speaker 3: that kind of stuff. 176 00:08:45,760 --> 00:08:48,200 Speaker 2: Physical discipline. So that's one part of the equation. 177 00:08:48,440 --> 00:08:51,120 Speaker 3: But on the supply side, the biggest factor so far, 178 00:08:51,520 --> 00:08:54,800 Speaker 3: and the main reason why oil prices haven't really crashed 179 00:08:55,120 --> 00:08:59,439 Speaker 3: as much as we anticipated, is because of President Trump 180 00:09:00,000 --> 00:09:06,239 Speaker 3: basically ended any foreign entities ability to export oil from Venezuela. 181 00:09:06,360 --> 00:09:10,080 Speaker 3: So we've actually cut our estimates of Venezuela's OI production 182 00:09:10,280 --> 00:09:13,280 Speaker 3: by about three hundred thousand barros per day from May onwards. 183 00:09:13,360 --> 00:09:17,040 Speaker 3: And any country that that intends to import Venezuelan oil 184 00:09:17,320 --> 00:09:20,520 Speaker 3: will be subjected to twenty five percent import terrifs from 185 00:09:20,520 --> 00:09:23,240 Speaker 3: the US. So they called that secondary tariffs. 186 00:09:23,480 --> 00:09:27,800 Speaker 1: So three hundred thousand barrels per day effectively cut from 187 00:09:27,840 --> 00:09:30,360 Speaker 1: the global market from Venezuela. And can you just remind 188 00:09:30,400 --> 00:09:33,040 Speaker 1: us what the number you said was the downside for 189 00:09:33,160 --> 00:09:36,760 Speaker 1: supply with all of this global turmoil. 190 00:09:36,640 --> 00:09:40,679 Speaker 3: It's roughly equivalent to half of the downside to demand 191 00:09:40,960 --> 00:09:43,439 Speaker 3: due to the terriffs as well as the tip for 192 00:09:43,520 --> 00:09:44,920 Speaker 3: tet between China and the US. 193 00:09:45,240 --> 00:09:48,120 Speaker 1: So it was around six hundred thousand was the downside 194 00:09:48,120 --> 00:09:51,920 Speaker 1: in demand, And we just think just from Venezuela and this, Yeah, 195 00:09:51,920 --> 00:09:54,800 Speaker 1: three hundred thousand. Also I read a new report that 196 00:09:54,840 --> 00:09:58,000 Speaker 1: there's also been threats to do something similar for Russian 197 00:09:58,000 --> 00:10:01,440 Speaker 1: oil and around as well, So yeah, took us through that. 198 00:10:01,840 --> 00:10:04,960 Speaker 2: Yeah, so I think it's more the res is higher 199 00:10:05,000 --> 00:10:05,520 Speaker 2: for Iran. 200 00:10:05,640 --> 00:10:09,240 Speaker 3: So basically President Donald US President Donna Trump is threatening 201 00:10:09,320 --> 00:10:13,480 Speaker 3: similar terrors on Iran and Russia, and so the market 202 00:10:13,559 --> 00:10:16,240 Speaker 3: is gradually pricing in that risk, which is why I 203 00:10:16,400 --> 00:10:19,040 Speaker 3: price US sticked up in the last few days. Basically, 204 00:10:19,040 --> 00:10:23,040 Speaker 3: traders are gradually pricing in risks of supply disruption from 205 00:10:23,080 --> 00:10:25,320 Speaker 3: those two countries, in particularly Iran. 206 00:10:25,800 --> 00:10:28,080 Speaker 1: This is so interesting it kind of will lead on 207 00:10:28,080 --> 00:10:30,080 Speaker 1: to my next question, which which I'll get into it 208 00:10:30,120 --> 00:10:33,959 Speaker 1: in a moment. But in effect, US foreign foreign policy, 209 00:10:34,160 --> 00:10:39,480 Speaker 1: specifically President Donald Trump's foreign policy has had an impact 210 00:10:39,600 --> 00:10:42,440 Speaker 1: on the outlook for global oil demand via his tariff 211 00:10:42,480 --> 00:10:45,240 Speaker 1: strategy and how that is going to affect global economy 212 00:10:45,240 --> 00:10:48,400 Speaker 1: generally and the disruptions there, and then also through specific 213 00:10:48,720 --> 00:10:53,080 Speaker 1: geopolitical leavers. His policies are impacting the outlook for supply 214 00:10:53,160 --> 00:10:56,679 Speaker 1: by about an equal amount. So the price outlook I'm 215 00:10:56,679 --> 00:11:00,760 Speaker 1: presuming isn't changing that much in the near term. Certainly, 216 00:11:00,800 --> 00:11:04,480 Speaker 1: the US's impact on the market is a lot more 217 00:11:04,520 --> 00:11:08,400 Speaker 1: significant than it was, which kind of leads me to 218 00:11:08,920 --> 00:11:13,400 Speaker 1: asking about OPEK and their decision of OPEK plus to 219 00:11:13,480 --> 00:11:16,000 Speaker 1: accelerate the easing of production cuts for the month of 220 00:11:16,040 --> 00:11:18,640 Speaker 1: me and I want to just pick up on something 221 00:11:18,679 --> 00:11:24,840 Speaker 1: you said earlier about suppliers practicing fiscal discipline, returning dividends 222 00:11:24,880 --> 00:11:30,640 Speaker 1: to shareholders, and that became the paradigm for the oil market, 223 00:11:30,720 --> 00:11:33,480 Speaker 1: to my understand particularly the shale industry, which was at 224 00:11:33,480 --> 00:11:36,960 Speaker 1: the time the marginal barrel around twenty twenty, because there 225 00:11:37,000 --> 00:11:39,520 Speaker 1: was a drop in global oil demand because of the 226 00:11:39,559 --> 00:11:44,840 Speaker 1: COVID pandemic, and then OPEK plus agreed to increase output, 227 00:11:44,880 --> 00:11:48,040 Speaker 1: which absolutely crashed the oil price and was sort of 228 00:11:48,120 --> 00:11:51,160 Speaker 1: devastating for those shell producers which up until that point 229 00:11:51,200 --> 00:11:54,679 Speaker 1: had been getting cheap capital with the understanding that expansion 230 00:11:54,840 --> 00:11:57,120 Speaker 1: of supply was the goal. Son after that it was 231 00:11:57,480 --> 00:12:00,840 Speaker 1: they were very much rained in and were operating in 232 00:12:00,880 --> 00:12:04,000 Speaker 1: a much more conservative fashion and following that paradigm that 233 00:12:04,040 --> 00:12:07,880 Speaker 1: you described, fiscal discipline, return value to shareholders. So where 234 00:12:07,920 --> 00:12:10,560 Speaker 1: I'm going with this is, at the time, it really 235 00:12:10,559 --> 00:12:13,079 Speaker 1: felt like, in this moment of chaos and the COVID 236 00:12:13,120 --> 00:12:16,080 Speaker 1: pandemic and the US at the time exerting itself more 237 00:12:16,120 --> 00:12:18,800 Speaker 1: on global oil markets, OPEK did this thing that kind 238 00:12:18,800 --> 00:12:21,720 Speaker 1: of really reminded everyone who was in charge and sort 239 00:12:21,720 --> 00:12:24,960 Speaker 1: of set the narrative along terms that were favorable to 240 00:12:25,040 --> 00:12:27,960 Speaker 1: OPEK and in particular sort of really slowed down this 241 00:12:28,000 --> 00:12:30,000 Speaker 1: expansion of US shale. Do you think this is a 242 00:12:30,040 --> 00:12:33,040 Speaker 1: similar kind of play that in the middle all of 243 00:12:33,080 --> 00:12:35,360 Speaker 1: this chaos that's happening, all of this this change and 244 00:12:35,360 --> 00:12:37,640 Speaker 1: a lot of it centering around the US, OPEK is 245 00:12:37,840 --> 00:12:41,240 Speaker 1: increasing output and really reminding the oil market. You know, 246 00:12:41,280 --> 00:12:42,120 Speaker 1: who's in charge. 247 00:12:42,360 --> 00:12:43,160 Speaker 2: That's a great question. 248 00:12:43,200 --> 00:12:45,520 Speaker 3: Actually, I mean the way that we think about it 249 00:12:45,559 --> 00:12:48,880 Speaker 3: is the OPEK PLUS, which stands for the Organization of 250 00:12:48,960 --> 00:12:53,079 Speaker 3: Petroleum Exporting Countries history over arching strategies. 251 00:12:53,280 --> 00:12:55,080 Speaker 2: So the first is what you mentioned. 252 00:12:55,440 --> 00:12:58,320 Speaker 3: We just to protect market share or even to expand 253 00:12:58,320 --> 00:13:03,040 Speaker 3: the market share by increasingduction, which crashes prices oil prices 254 00:13:03,040 --> 00:13:05,280 Speaker 3: so that non no pepe plass producers will be more 255 00:13:05,320 --> 00:13:07,720 Speaker 3: careful right with exercise fiscal discipline. 256 00:13:08,120 --> 00:13:10,800 Speaker 2: There are two other oter strategies that we can think of. 257 00:13:11,000 --> 00:13:14,480 Speaker 3: So the second one is actually cutting production, right the 258 00:13:14,520 --> 00:13:18,360 Speaker 3: obvious one, and that's to support prices to hopefully increase 259 00:13:18,400 --> 00:13:21,199 Speaker 3: overall revenue. And that is what OPAC class has been 260 00:13:21,240 --> 00:13:25,520 Speaker 3: doing for almost the entire period since COVID hit, so 261 00:13:25,840 --> 00:13:29,920 Speaker 3: they have been basically putting a restraint on production since then. 262 00:13:30,280 --> 00:13:33,120 Speaker 3: There's actually a third one, which is to preserve unity 263 00:13:33,160 --> 00:13:37,040 Speaker 3: within OPEC plus. So what we've seen in especially in 264 00:13:37,080 --> 00:13:41,960 Speaker 3: the last two months. Is Kazakhstan overproducing significantly against their 265 00:13:42,040 --> 00:13:45,320 Speaker 3: production quotas. The problem that Kazakhstan is facing is actually 266 00:13:45,320 --> 00:13:48,280 Speaker 3: because they have a lot of independent oil producers. Basically, 267 00:13:48,320 --> 00:13:51,120 Speaker 3: they have US and European oil companies operating in the 268 00:13:51,120 --> 00:13:54,520 Speaker 3: country and they do not have any incentive to abide 269 00:13:54,559 --> 00:13:57,960 Speaker 3: by Kazakhstans or black class targets, right they are like 270 00:13:58,040 --> 00:14:01,040 Speaker 3: they only care about profit and loss. So Kazakhstan has 271 00:14:01,080 --> 00:14:05,000 Speaker 3: been overproducing and they actually had new capacity coming online 272 00:14:05,080 --> 00:14:07,800 Speaker 3: in its largest oil field, the tank Is Feel and 273 00:14:07,800 --> 00:14:10,680 Speaker 3: that actually boosted production in the last couple of months. 274 00:14:10,840 --> 00:14:13,800 Speaker 3: Since February and March it grew by even more, and 275 00:14:13,840 --> 00:14:16,680 Speaker 3: so that created a lot of feelings of unfairness within 276 00:14:16,720 --> 00:14:20,240 Speaker 3: old back Plus, why is Kazakhstan able to overproduce by 277 00:14:20,240 --> 00:14:23,440 Speaker 3: so much? And so I think the group as a whole, 278 00:14:23,680 --> 00:14:26,200 Speaker 3: particularly Saudi Arabia, which which kind of leads the group 279 00:14:26,240 --> 00:14:28,760 Speaker 3: and has most to lose if O back plast unity 280 00:14:28,760 --> 00:14:32,760 Speaker 3: falls apart, a push for an easing of production cards 281 00:14:32,880 --> 00:14:36,000 Speaker 3: so as to kind of preserve that unity within the 282 00:14:36,040 --> 00:14:39,480 Speaker 3: member countries, because we've seen what happens when the unity 283 00:14:39,520 --> 00:14:42,680 Speaker 3: falls apart. So back in March or April twenty twenty, 284 00:14:42,800 --> 00:14:45,760 Speaker 3: Saudia and Russia couldn't agree to a production target, and 285 00:14:45,840 --> 00:14:49,720 Speaker 3: so overnight they produced however much they wanted or supplied 286 00:14:49,800 --> 00:14:51,840 Speaker 3: rules by I think it was something like ten million 287 00:14:51,880 --> 00:14:55,280 Speaker 3: barrels per day just overnight, and that obviously was inconvenient 288 00:14:55,320 --> 00:14:58,800 Speaker 3: timing because demand was also crashing, and so that led 289 00:14:58,800 --> 00:15:01,520 Speaker 3: to negative aidprisers. So I think what OPEC PLUSZ is 290 00:15:01,520 --> 00:15:03,680 Speaker 3: trying to do is to avoid that from happening. And 291 00:15:03,720 --> 00:15:06,239 Speaker 3: that really stemmed from Kazakhstan overproducing. 292 00:15:06,640 --> 00:15:08,920 Speaker 1: So that's interesting. So it's not really like I was, 293 00:15:09,160 --> 00:15:11,720 Speaker 1: you know, my theory, which was this is another decisive 294 00:15:11,840 --> 00:15:15,000 Speaker 1: move to bring oil producers globally in line. This is 295 00:15:15,040 --> 00:15:19,320 Speaker 1: more of a gentle concession to some of OPEC plus's 296 00:15:19,360 --> 00:15:22,800 Speaker 1: own members to try and have targets that are achievable 297 00:15:22,840 --> 00:15:25,520 Speaker 1: that everyone can say is fair. It may very well. 298 00:15:25,320 --> 00:15:28,080 Speaker 2: Be partly due to preserving market. 299 00:15:27,760 --> 00:15:31,160 Speaker 3: Share, but the key, I would say, the key change 300 00:15:31,520 --> 00:15:34,360 Speaker 3: is that Kazakhstan started to really ramp up production in 301 00:15:34,360 --> 00:15:37,000 Speaker 3: the last two months. I mean, you could argue that 302 00:15:37,120 --> 00:15:40,640 Speaker 3: OPEK plus could have increased production last year, right, why 303 00:15:40,640 --> 00:15:43,680 Speaker 3: didn't they do so earlier? Because non OPEC plus suppli 304 00:15:43,680 --> 00:15:46,080 Speaker 3: has been growing over the last few years already. Why 305 00:15:46,120 --> 00:15:48,280 Speaker 3: didn't OPEK plus do anything right? Why do the opet 306 00:15:48,280 --> 00:15:51,000 Speaker 3: plas only choose to take action one day after the 307 00:15:51,040 --> 00:15:53,440 Speaker 3: LIB version day tarries were announced, which is such a 308 00:15:53,480 --> 00:15:56,760 Speaker 3: sensitive timing. And I think that that's slightly because Kazakhstan 309 00:15:56,800 --> 00:15:59,040 Speaker 3: started to ramp up production a lot, and that is 310 00:15:59,040 --> 00:16:01,040 Speaker 3: a pretty recent devent, got it. 311 00:16:01,200 --> 00:16:03,960 Speaker 1: I suppose sort of a broader question I have before 312 00:16:04,000 --> 00:16:06,240 Speaker 1: we move on to was we're on the topic of OPEK, 313 00:16:06,400 --> 00:16:09,160 Speaker 1: but this idea of you know, OPEK has operated on 314 00:16:09,320 --> 00:16:12,320 Speaker 1: unity and discipline, and I wouldn't say, you know, it's 315 00:16:12,360 --> 00:16:16,240 Speaker 1: ever been perfect, But I've always wondered whether that unity 316 00:16:16,280 --> 00:16:19,240 Speaker 1: and discipline is possible in a world of falling oil 317 00:16:19,280 --> 00:16:23,360 Speaker 1: demand or slow or slower growth, because that organization has 318 00:16:23,440 --> 00:16:26,160 Speaker 1: always existed in a world where year on year oil 319 00:16:26,160 --> 00:16:28,800 Speaker 1: demand pretty much every year has grown. So maybe this 320 00:16:28,880 --> 00:16:31,640 Speaker 1: sort of discipline around production is has always been maybe 321 00:16:31,760 --> 00:16:35,640 Speaker 1: easier to stomach because the growth has enabled high prices 322 00:16:35,840 --> 00:16:38,520 Speaker 1: and without having to cut too hard. I realized, you know, 323 00:16:38,760 --> 00:16:43,280 Speaker 1: there's this specific issue around non government independent producers operating 324 00:16:43,320 --> 00:16:46,520 Speaker 1: in Kazakhstan, But is it maybe a omen of what 325 00:16:46,560 --> 00:16:50,440 Speaker 1: could potentially happen with OPEK as oil demand growth slows 326 00:16:50,480 --> 00:16:52,760 Speaker 1: with you know, the electric vehicles revolution and maybe even 327 00:16:52,800 --> 00:16:55,600 Speaker 1: peaks and starts to decline. Is this unity really going 328 00:16:55,640 --> 00:16:58,200 Speaker 1: to persist? Is it possible for OPEC to continue to 329 00:16:58,240 --> 00:17:00,480 Speaker 1: operate the way it has in the last have many 330 00:17:00,520 --> 00:17:03,480 Speaker 1: decades for the next you know, two or three decades 331 00:17:03,880 --> 00:17:07,479 Speaker 1: given what we we fail about you know, global oil demand. 332 00:17:08,080 --> 00:17:14,560 Speaker 3: Well, OPEC class producers are mostly export to growth regions, 333 00:17:14,560 --> 00:17:18,400 Speaker 3: particularly in the East of Swiss, so that includes Asia, 334 00:17:18,680 --> 00:17:22,560 Speaker 3: which by and large is still a key growth region 335 00:17:22,720 --> 00:17:27,520 Speaker 3: for oil demand, so the pie for them is still expanding. 336 00:17:27,800 --> 00:17:31,399 Speaker 3: We are right to say that globally oil demand growth 337 00:17:31,480 --> 00:17:34,439 Speaker 3: is slowing, but it is still growing and we do 338 00:17:34,520 --> 00:17:39,080 Speaker 3: not expect oil demand for geometrically to pay until like 339 00:17:39,280 --> 00:17:42,080 Speaker 3: the early to mid twenty thirties as of now our 340 00:17:42,119 --> 00:17:46,520 Speaker 3: current estimates, so that's still a long runway until we 341 00:17:46,560 --> 00:17:47,439 Speaker 3: get to that point. 342 00:17:47,760 --> 00:17:48,919 Speaker 2: I think that. 343 00:17:49,400 --> 00:17:53,600 Speaker 3: OPAC class would still be incentivized to preserve the unity 344 00:17:53,840 --> 00:17:57,200 Speaker 3: in the coming years, even in the coming months, even 345 00:17:57,240 --> 00:17:59,920 Speaker 3: in the immediate term, because if they do not do that, 346 00:18:00,320 --> 00:18:03,080 Speaker 3: everyone loses out right, well, all. 347 00:18:02,960 --> 00:18:05,960 Speaker 1: Of OPEC plus loses out, I mean, everyone else could 348 00:18:05,960 --> 00:18:07,280 Speaker 1: benefit from really cheap oil. 349 00:18:08,200 --> 00:18:11,359 Speaker 3: Yeah, Like, basically, a lot of these member countries don't 350 00:18:11,480 --> 00:18:17,600 Speaker 3: have these spare government reserves to tie through an extended 351 00:18:17,720 --> 00:18:21,880 Speaker 3: period of very low oil prices, and so as much 352 00:18:21,960 --> 00:18:25,240 Speaker 3: as they could go on a more aggressive strategy to 353 00:18:25,440 --> 00:18:28,960 Speaker 3: really ramp up production to price out non OPEC past producers, 354 00:18:29,359 --> 00:18:31,360 Speaker 3: they may not have the ability to do so. And 355 00:18:31,640 --> 00:18:34,840 Speaker 3: it is in ORPEC plus self interest to continue to 356 00:18:34,920 --> 00:18:37,720 Speaker 3: maintain united going ahead because it benefits all of them. 357 00:18:37,800 --> 00:18:38,240 Speaker 2: Basically. 358 00:18:38,520 --> 00:18:41,040 Speaker 1: Yeah, So what I'm I'm kind of hearing from you, 359 00:18:41,040 --> 00:18:44,000 Speaker 1: We're in this moment of a lot of turmoil around 360 00:18:44,000 --> 00:18:48,240 Speaker 1: oil markets. We've got the US both imposing tariffs, also 361 00:18:48,520 --> 00:18:54,879 Speaker 1: taking positions on Venezuela, Russia, Iran. It's a very dicey moment, 362 00:18:55,000 --> 00:18:58,119 Speaker 1: and then we have maybe on the horizon this prospect 363 00:18:58,320 --> 00:19:01,600 Speaker 1: of a slow down in growth and then declining demand. 364 00:19:01,920 --> 00:19:05,120 Speaker 1: So right now, the thing that you're saying is critical 365 00:19:05,160 --> 00:19:07,040 Speaker 1: to OPEC plus that a lot of it's focused on 366 00:19:07,200 --> 00:19:09,880 Speaker 1: is just building that unity because it's going to need 367 00:19:09,920 --> 00:19:12,960 Speaker 1: it more than ever as the market dynamics change. Is 368 00:19:13,160 --> 00:19:16,360 Speaker 1: that what I'm hearing is OPEC plus's current actions are 369 00:19:16,359 --> 00:19:18,560 Speaker 1: not about flexing its muscles for the rest of the world. 370 00:19:18,720 --> 00:19:22,000 Speaker 1: It's about growing that sort of consensus among the group. 371 00:19:22,480 --> 00:19:26,520 Speaker 3: Yeah, precisely, when growth are slower, there is less room. 372 00:19:26,400 --> 00:19:28,280 Speaker 2: For chaos right within the group. 373 00:19:28,359 --> 00:19:31,479 Speaker 3: Yeah, because if our demand grows significantly and your production 374 00:19:31,560 --> 00:19:34,120 Speaker 3: increas significantly, that impact wouldn't be as bed as if 375 00:19:34,280 --> 00:19:37,360 Speaker 3: demand growth slows and supply grows significantly. 376 00:19:38,080 --> 00:19:40,240 Speaker 1: Use an expression earlier, by the way, which I've never 377 00:19:40,280 --> 00:19:42,280 Speaker 1: heard before. I presume this is an oil market thing, 378 00:19:42,280 --> 00:19:44,280 Speaker 1: but I'm going to try and use this in conversation. 379 00:19:44,440 --> 00:19:47,440 Speaker 1: Think you said east of Suez? Is that? Did you 380 00:19:47,480 --> 00:19:50,200 Speaker 1: say east of Sewers? So speaking of east of Sewers, 381 00:19:50,800 --> 00:19:53,720 Speaker 1: let's talk about China, the world's second largest economy, which 382 00:19:53,800 --> 00:19:59,040 Speaker 1: obviously is a significant part of future demand growth, but 383 00:19:59,240 --> 00:20:03,760 Speaker 1: is also a major driver of future demand destruction, particularly 384 00:20:04,040 --> 00:20:07,719 Speaker 1: because of the country's integral role in the emerging electric 385 00:20:07,840 --> 00:20:12,360 Speaker 1: vehicle market. So China's adopting electric vehicles at pace, how 386 00:20:12,400 --> 00:20:14,879 Speaker 1: significant a shift are we seeing away from internal combustion 387 00:20:14,960 --> 00:20:15,720 Speaker 1: engine vehicles. 388 00:20:16,119 --> 00:20:20,320 Speaker 3: We actually track the seales of cars by different field 389 00:20:20,320 --> 00:20:23,280 Speaker 3: type or what we call drive trains in China pretty closely, 390 00:20:23,480 --> 00:20:27,439 Speaker 3: and with what we saw is that the sales of 391 00:20:27,680 --> 00:20:31,359 Speaker 3: gasoline cars in China actually picked eight years ago in 392 00:20:31,480 --> 00:20:35,400 Speaker 3: twenty seventeen, and it's been declining really really quickly since then, 393 00:20:35,680 --> 00:20:39,120 Speaker 3: just under ten percent every year compounded, and that is 394 00:20:39,160 --> 00:20:43,240 Speaker 3: if you include hybrid non pluging gasoline hybrid cars, right, 395 00:20:43,280 --> 00:20:45,760 Speaker 3: So it's falling very quickly, and a lot of that 396 00:20:45,920 --> 00:20:49,919 Speaker 3: seals have been replaced by battery electric vehicle and we 397 00:20:50,000 --> 00:20:53,440 Speaker 3: include plug in hybrids as well in that category. And 398 00:20:53,480 --> 00:20:56,000 Speaker 3: the reason why the seals, we think the sales of 399 00:20:56,160 --> 00:20:58,520 Speaker 3: evs have been very strong, obviously, is due to policies 400 00:20:58,560 --> 00:21:02,640 Speaker 3: upon in China, particularly something called the vehicle scrab page program, 401 00:21:02,840 --> 00:21:07,159 Speaker 3: where the government actually provides this subsidy for consumers to 402 00:21:07,280 --> 00:21:11,920 Speaker 3: trade in their old gasoline car for a new EV 403 00:21:12,320 --> 00:21:15,280 Speaker 3: or even a smaller gasoline car. And they have actually 404 00:21:15,320 --> 00:21:18,200 Speaker 3: extended that program for the rest of twenty twenty five. 405 00:21:18,280 --> 00:21:22,000 Speaker 3: And they also did something else, so this scrappage program 406 00:21:22,160 --> 00:21:26,040 Speaker 3: actually extends to trucks as well, but previously the subsidies 407 00:21:26,160 --> 00:21:29,959 Speaker 3: did not cover energy trucks, but in the recent update, 408 00:21:30,160 --> 00:21:33,720 Speaker 3: the government expanded subsidies to lergy trucks as well. So 409 00:21:33,880 --> 00:21:36,560 Speaker 3: energy trucks is a key displacer if I could call 410 00:21:36,640 --> 00:21:41,399 Speaker 3: it dead of diesel trucks, because obviously energy trucks have 411 00:21:41,520 --> 00:21:44,640 Speaker 3: very high energy density, and the cause of operating energy 412 00:21:44,680 --> 00:21:47,320 Speaker 3: truck in China has actually been lower than diesel trucks, 413 00:21:47,359 --> 00:21:50,000 Speaker 3: which is why energy trucks got so popular recently. And 414 00:21:50,119 --> 00:21:52,520 Speaker 3: with the extension of this scrappage program, it is going 415 00:21:52,560 --> 00:21:55,679 Speaker 3: to accelerate the shift away from theseel trucks even faster. 416 00:21:56,119 --> 00:21:59,199 Speaker 1: So in a way, there's a two ProMED assault on 417 00:21:59,440 --> 00:22:03,679 Speaker 1: China's gasoline demand. One is electric vehicles, one is energy trucks. 418 00:22:04,400 --> 00:22:07,719 Speaker 3: There are also other trends, particularly in the passenger car 419 00:22:07,800 --> 00:22:11,639 Speaker 3: segment or in the road transport segment. So typically when 420 00:22:11,720 --> 00:22:15,840 Speaker 3: the country grows, or rather in its early stages of development, 421 00:22:16,119 --> 00:22:20,679 Speaker 3: the growth in passenger car mileage tends to grow in 422 00:22:20,760 --> 00:22:24,480 Speaker 3: tandem with GDP or GDP B capital. And when we 423 00:22:24,640 --> 00:22:27,600 Speaker 3: are when we reach a certain stage of majority, which 424 00:22:27,600 --> 00:22:30,119 Speaker 3: we think China is right now, you know, people start 425 00:22:30,200 --> 00:22:32,600 Speaker 3: to move to cities, and when you move to cities 426 00:22:32,640 --> 00:22:35,520 Speaker 3: there are alternative modes of transport. You also get things 427 00:22:35,560 --> 00:22:40,240 Speaker 3: like route optimization and whatnot, and growth in vehicle marlelage 428 00:22:40,280 --> 00:22:43,960 Speaker 3: starts to fall behind economic growth, right, they no longer 429 00:22:44,160 --> 00:22:47,080 Speaker 3: correlate strongly with each other, and this is also a 430 00:22:47,160 --> 00:22:50,200 Speaker 3: key hit wind for China. There's also a second one 431 00:22:50,240 --> 00:22:52,600 Speaker 3: where we actually found in our research. This is actually 432 00:22:52,600 --> 00:22:57,679 Speaker 3: published in our last Electric Vehicle Outlook, where the annual 433 00:22:57,720 --> 00:23:00,760 Speaker 3: mileage of an EVY battery electric vehicle it's actually sixty 434 00:23:00,800 --> 00:23:04,120 Speaker 3: six percent higher than an Internet combustion engine car, an 435 00:23:04,280 --> 00:23:07,119 Speaker 3: ice car, or a gasoline car. So and ev is 436 00:23:07,240 --> 00:23:12,080 Speaker 3: able to meet a disproportionate share of road transport demand 437 00:23:12,160 --> 00:23:14,800 Speaker 3: as compared to a gasoline car. And that's because a 438 00:23:14,840 --> 00:23:18,639 Speaker 3: lot of taxis in China or right hailing services use 439 00:23:18,680 --> 00:23:21,480 Speaker 3: an EVY because of the much lower operating costs. So 440 00:23:21,520 --> 00:23:26,200 Speaker 3: all of these things mean that gasoline demand in China 441 00:23:26,800 --> 00:23:29,560 Speaker 3: is likely to suffer structural decline. And we think that 442 00:23:29,640 --> 00:23:33,560 Speaker 3: the country's gasoline consumption picked in doing dentitry so about 443 00:23:33,560 --> 00:23:34,800 Speaker 3: two years ago, got it. 444 00:23:34,880 --> 00:23:37,479 Speaker 1: So that's pretty significant the global oil market, with the 445 00:23:37,520 --> 00:23:41,240 Speaker 1: world's second largest economy now having entered the phase of 446 00:23:41,400 --> 00:23:46,440 Speaker 1: declining gasoline demand, which probably won't reverse ever given technology trends. 447 00:23:46,640 --> 00:23:50,920 Speaker 3: Yeah, most likely for China. Obviously, the transitions accelerated to 448 00:23:51,000 --> 00:23:54,600 Speaker 3: the policy, but there's also an interesting argument where because 449 00:23:54,680 --> 00:23:57,840 Speaker 3: there is now an excess of supply of fuels which 450 00:23:57,880 --> 00:24:02,560 Speaker 3: will be exported to economies around China, like Southeast Asia 451 00:24:02,720 --> 00:24:07,000 Speaker 3: in particular, that's going to make gasoline cars or guessing 452 00:24:07,080 --> 00:24:09,920 Speaker 3: fuel more affordable, right because there's a structural or capacity 453 00:24:09,960 --> 00:24:12,840 Speaker 3: in the production of transportation fuels now. So so that 454 00:24:12,880 --> 00:24:15,399 Speaker 3: could that could lower the cost of fuels at a 455 00:24:15,480 --> 00:24:19,200 Speaker 3: pump for other regional markets, regional markets where it's still 456 00:24:19,280 --> 00:24:22,320 Speaker 3: not yet electrified by a large extent, where where they 457 00:24:22,359 --> 00:24:25,040 Speaker 3: still don't really have a lot of charging infrastructure to 458 00:24:25,160 --> 00:24:27,240 Speaker 3: make the shift to electric vehicles. 459 00:24:27,400 --> 00:24:30,560 Speaker 1: Yet that's interesting, I mean a final thought that could 460 00:24:30,760 --> 00:24:33,480 Speaker 1: lead to a sort of almost like a race, what 461 00:24:33,480 --> 00:24:36,760 Speaker 1: what can get cheaper quicker gasoline because of it's it's 462 00:24:36,800 --> 00:24:40,879 Speaker 1: a structural oversupply as as demand is eroded versus the 463 00:24:40,880 --> 00:24:45,000 Speaker 1: technologies that are eroding that demand, i e. Batteries ev charging, 464 00:24:45,880 --> 00:24:48,679 Speaker 1: you know, as those industries continue to scale. And I 465 00:24:48,680 --> 00:24:51,720 Speaker 1: don't obviously I don't think we can answer that question here, 466 00:24:51,800 --> 00:24:54,399 Speaker 1: but it kind of is a nice point to end on, 467 00:24:54,480 --> 00:24:57,439 Speaker 1: I think, because what you talked me through is a 468 00:24:57,480 --> 00:25:01,480 Speaker 1: fascinating jigsaw of factors. We have. The short term impacts 469 00:25:01,520 --> 00:25:05,920 Speaker 1: of these tariffs of the Trump administrations very I wouldn't 470 00:25:05,920 --> 00:25:09,440 Speaker 1: say decisive because they are subject to change, but certainly 471 00:25:09,600 --> 00:25:13,119 Speaker 1: very bold moves on the international stage which are creating 472 00:25:13,240 --> 00:25:16,680 Speaker 1: uncertainty in the global oil market. Then we have OPEC, 473 00:25:16,960 --> 00:25:19,760 Speaker 1: which is trying to go through a I guess a 474 00:25:19,800 --> 00:25:22,879 Speaker 1: phase of a family counseling to try and rebuild the 475 00:25:23,000 --> 00:25:25,439 Speaker 1: unity that it used to have. Particularly with all of 476 00:25:25,480 --> 00:25:27,959 Speaker 1: these challenges, it's that the oil market is currently facing 477 00:25:28,000 --> 00:25:30,040 Speaker 1: and are on the horizon. And then we have this 478 00:25:30,200 --> 00:25:34,840 Speaker 1: slow burn of Chinese oil demand declining which is just 479 00:25:34,920 --> 00:25:38,880 Speaker 1: beginning to get started. And that backdrop is fascinating as well. 480 00:25:38,920 --> 00:25:41,200 Speaker 1: And it's really difficult to know how the sort of 481 00:25:41,200 --> 00:25:43,280 Speaker 1: the knock on effect will be on both the future 482 00:25:43,320 --> 00:25:46,520 Speaker 1: of the oil industry but on industries such as electric 483 00:25:46,600 --> 00:25:48,600 Speaker 1: vehicles and so on and so on. So this is 484 00:25:48,640 --> 00:25:51,080 Speaker 1: a really interesting time. I hope we get to do 485 00:25:51,119 --> 00:25:54,359 Speaker 1: this podcast again in a year or maybe even less 486 00:25:54,359 --> 00:25:56,199 Speaker 1: to sort of return to some of these themes and 487 00:25:56,240 --> 00:25:58,920 Speaker 1: talk about what happened. But Wayne, thank you so much 488 00:25:58,960 --> 00:25:59,879 Speaker 1: for joining us today. 489 00:26:00,119 --> 00:26:03,280 Speaker 3: Yeah, thanks for having me. Tom suddenly look forward to 490 00:26:03,320 --> 00:26:04,200 Speaker 3: the next podcast. 491 00:26:13,200 --> 00:26:16,320 Speaker 1: Today's episode of Switched On was produced by cam Gray 492 00:26:16,520 --> 00:26:20,199 Speaker 1: with production assistance from Kamala Shelling. Bloomberg NIF is a 493 00:26:20,240 --> 00:26:23,359 Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This 494 00:26:23,440 --> 00:26:26,160 Speaker 1: recording does not constitute, nor should it be construed, as 495 00:26:26,200 --> 00:26:29,919 Speaker 1: investment in vice, investment recommendations, or a recommendation as to 496 00:26:29,960 --> 00:26:32,840 Speaker 1: an investment or other strategy. 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