Speaker 1: I like to remain you know, calm and collected during
Speaker 1: times of crisis.
Speaker 2: That seems to be a very rare trait, a very
Speaker 2: rare trait for anyone.
Speaker 1: Yeah, yeah, I mean it's it's it's tough when things
Speaker 1: are happening so quickly. Yes, and when something like this
Speaker 1: happens that really nobody saw coming. Was the thing. I mean,
Speaker 1: we were having meetings. I was having meetings the week
Speaker 1: before the Hamas attack on Israel where the question of
Speaker 1: sort of Middle East tensions or Middle East crisis would
Speaker 1: come up, and the general feeling was that, like, no,
Speaker 1: things look pretty quiet. We've got Saudi is Iran normalization.
Speaker 1: You know, oil seems to be flowing, although there's always
Speaker 1: the US OPEC problems. You have Saudi's and israelis kind
Speaker 1: of slowly moving towards normalization. Things seems pretty quiet, and
Speaker 1: then bam, something huge happens that nobody really anticipated.
Speaker 2: I did a deadlift one, okay, uh barges. This isn't special, except.
Speaker 3: I've decided I'm going to base my entire personality going
Speaker 3: forward on campaigning for a strategic pork reserve in the US.
Speaker 2: Where's the best with imposta?
Speaker 3: These are the important question, is it robots taking over
Speaker 3: the world. No.
Speaker 2: I think that like in a couple of years, the
Speaker 2: AI will do a really good job of making the
Speaker 2: odd launch podcast and people today, I don't really need
Speaker 2: to listen to Joe and Tracy anymore.
Speaker 1: We do have the perfect.
Speaker 3: Well in the meantime, this is lots more.
Speaker 2: A weekly chat about whatever is on our minds.
Speaker 3: This is one of those episodes where I feel like
Speaker 3: we need to get the recording date right at the top,
Speaker 3: which is October eighteenth, because things are moving so quickly
Speaker 3: and we are going to be discussing the Israel Hamas conflict,
Speaker 3: and there's just new headlines every hour, it feels like.
Speaker 2: So we are here in the studio with Gregory brew
Speaker 2: he is an analyst at the Eurasia Group. We've had
Speaker 2: him on the podcast before. We talked about Guyana last
Speaker 2: time we did Yeah, but.
Speaker 3: That was a happier story.
Speaker 2: I feel, yes, the country with the fastest growing oil,
Speaker 2: but the current crisis that we're seeing, the war that's
Speaker 2: going on. This is right in your wheelhouse because it's
Speaker 2: geopolitical and your background other than studying oil, which is
Speaker 2: what we talked to you about last time, in the
Speaker 2: history of oil. You have a expert on the history
Speaker 2: of Iran as well, so Tuck.
Speaker 1: Yeah, no, Yeah, It unfortunately happens to combine the two
Speaker 1: things that I've done the most work on, and whenever
Speaker 1: that happens, it generally doesn't tend to bode very well
Speaker 1: because it means there's you know, crises, there's disruptions, there's tensions,
Speaker 1: and yeah, I mean the crisis right now does seem
Speaker 1: to be contained to Israel and the violence in Gaza,
Speaker 1: but everyone is concerned about how this could spill over
Speaker 1: into oil. You saw a very surprising reaction this morning
Speaker 1: from Iran's foreign minister making a wild claim about an
Speaker 1: oil and bargo on Israel, suddenly sending oil prices up surprisingly.
Speaker 1: So I think there's a lot of I think there's jumpiness.
Speaker 1: I think there's concerns, broadly speaking, that this crisis could
Speaker 1: eventually spill over and start affecting oil.
Speaker 3: Wait, you said it was kind of a wild threat.
Speaker 3: Why And also how crazy is it that we're talking
Speaker 3: about an oil embargo, like exactly fifty years after the
Speaker 3: Arab oil embargo that like contributed to nineteen seventies inflation.
Speaker 3: I find that mind blowing like almost to the day.
Speaker 1: Right, Yeah, I mean history does seem to be rhyming, right.
Speaker 1: I mean the attack, the Hamas attack happened exactly fifty
Speaker 1: years and one day.
Speaker 2: After the outbreak of.
Speaker 1: The Omkapur War in nineteen seventy three, so obvious parallels
Speaker 1: and I think so yeah, turning things back a bit,
Speaker 1: you know, Iran's foreign minister, who's currently in Saudi Arabia
Speaker 1: of all places, made kind of a wild claim in
Speaker 1: front of press. He said Iran was going to call
Speaker 1: on all Muslim countries, including countries like Saudi Arabia and
Speaker 1: the UAE and Kuwait, to embargo oil shipments to Israel,
Speaker 1: very clearly trying to replicate what happened in nineteen seventy three,
Speaker 1: or at least a version of it. And the reason
Speaker 1: why it strikes me and I think a lot of
Speaker 1: other analysts who watch Iran and oil closely, why it
Speaker 1: strikes me as kind of a wild claim is that,
Speaker 1: first of all, Iran doesn't sell any oil to Israel.
Speaker 1: Iran and Israel are antagonists, they're competitors, you know, and honestly,
Speaker 1: not many other Middle East countries sell oil to Israel
Speaker 1: either or at least what oil that they do sell.
Speaker 1: It's a fairly small amount, and there really isn't any
Speaker 1: appetite i think, within OPEC or the broader Middle East
Speaker 1: for another nineteen seventy three, certainly not for another embargo.
Speaker 1: So I saw those comments, and also, it needs to
Speaker 1: be said, Iranian officials, including the Foreign Minister Supreme Leader
Speaker 1: Ali Kramene, they've been talking a lot of tough talk
Speaker 1: over the last couple of days about how this crisis
Speaker 1: could escalate, about how Iran might have to get involved.
Speaker 1: So this kind of fits within that broader sort of
Speaker 1: rhetorical campaign that Iran's been running of the last couple
Speaker 1: of days, that they haven't really followed through with in
Speaker 1: terms of direct action. So I saw the comments and
Speaker 1: I thought like, well, Iran's talking tough, there's not going
Speaker 1: to be an embargo, but markets seems to react, right.
Speaker 1: Brent shot up from ninety one fifty to ninety two
Speaker 1: to fifty. It's come back down since then, but clearly
Speaker 1: there's there's wariness and jumpiness out there about how this
Speaker 1: crisis could start affecting the broader market.
Speaker 2: To reiterate for people listening, we're recording this on the eighteenth,
Speaker 2: and so, you know, who knows what will happen in
Speaker 2: this war, this crisis by the time people are listening
Speaker 2: to it. But this is why, you know, the oil
Speaker 2: perspective is obviously one that we're particularly interested. Brent is
Speaker 2: still below where it was like at the end of September.
Speaker 2: I mean, yeah, it's been a pickup in oil prices.
Speaker 2: I mean, first of all, could it be that the
Speaker 2: concern is not so much embargo, but that the more
Speaker 2: the rhetoric gets tightened up and perhaps something where the
Speaker 2: you know, sort of broadening out of the war itself.
Speaker 2: I know, there was a lot of talk about the
Speaker 2: Biden administration having been particularly rigorous about sanctions enforcement. You
Speaker 2: to listen what's going on with.
Speaker 1: The Yeah, totally so, I think, you know, as soon
Speaker 1: as the attack happened and this crisis started growing and
Speaker 1: started taking on the proportions that it has, the immediate
Speaker 1: thought was how was Iran involved? How will the US
Speaker 1: and Israel respond? Right, Iran backs Hamas has for years.
Speaker 1: It's a major supporter of Hamas. It supplies it with
Speaker 1: weapons and funding and training. There still isn't any clear
Speaker 1: answer as to whether Iran was involved in the attack,
Speaker 1: and Iran has, as I mentioned, it's been talking tough,
Speaker 1: but it really hasn't been taking a direct role. But
Speaker 1: the bigger concern is, yes, will the US and Israel
Speaker 1: decide to retaliate against Iran for its support for Hamas
Speaker 1: And one of the major vectors that has been speculated
Speaker 1: on or discussed is this question of will the US
Speaker 1: titan restrictions on Iran's oil exports. It's been a big
Speaker 1: story this year, right the recovery of Iran as a
Speaker 1: major oil exporter. Exports were you know, around seven hundred
Speaker 1: thousand barrels a day last year. They're now in the
Speaker 1: range of one point five one point six million barrels
Speaker 1: a day today. Yeah, I mean, and Iran is still
Speaker 1: technically under sanction, right, so there's been a lot of
Speaker 1: discussion of has the US eased off sanctions is as
Speaker 1: part of a bigger deal between the US and Iran?
Speaker 1: And now that this crisis has broken out, will the
Speaker 1: US respond by tightening sanctions? And to me, it's a
Speaker 1: lot more complicated than just you know, President Biden having
Speaker 1: a big button on his desk sanctions, no sanctions, and
Speaker 1: then pushing it and suddenly Iran oil exports fall. Like
Speaker 1: the range of action that the US could take to
Speaker 1: cut off the flow of oil, It's not quite as
Speaker 1: simple as just adding new sanctions to Iran. Iran is
Speaker 1: already under heavy, heavy sanctions. It's also a question of,
Speaker 1: you know, if the US tries to do that, how
Speaker 1: will that affect the broader market? How will that affect prices?
Speaker 1: It'll certainly send prices up, and also how will it
Speaker 1: affect the one country who is taking almost all of
Speaker 1: Iran's oil China?
Speaker 2: Right, we talk.
Speaker 1: About have sanctions been lowered or reduced? Not really. What's
Speaker 1: been happening is that China and small Chinese refiners have
Speaker 1: been willing to take more and more Iranian oil at
Speaker 1: low prices. Right, Iran is putting a big discount on
Speaker 1: its crude, and they're taking this oil through somewhat shady means.
Speaker 1: There's ship to ship transfers, the oil is being disguised
Speaker 1: in Chinese customs data. China still technically doesn't take any
Speaker 1: Iranian oil. It all gets redirected through other venues. So
Speaker 1: there's a lot of shadiness to this oil trade, which
Speaker 1: makes imposing sanctions by the US a lot harder. But
Speaker 1: if you're cutting off the supply of oil to China,
Speaker 1: which is what tougher sanctions enforcement would do. The Chinese
Speaker 1: are bound to respond, right, They're not going to like that,
Speaker 1: and I think the Biden administration is wary of provoking China.
Speaker 1: And anything you do to disrupt Iran's oil exports is
Speaker 1: going to have an impact on the broader market and
Speaker 1: it's going to send oil prices up, and that's also
Speaker 1: something that the Biden administration doesn't really want to do.
Speaker 1: So you have operational constraints on how sanctions would even work.
Speaker 1: You have provoking the Chinese, you have potentially provoking the Iranians,
Speaker 1: and everything that you do is going to increase the
Speaker 1: price of oil, something that this administration has really been
Speaker 1: tried to trying to avoid. So I think it's in
Speaker 1: the conversation right, tougher sanctions on Iranian and oil exports.
Speaker 1: I still think the risk is fairly limited, and I
Speaker 1: think if the US were to consider doing it, it
Speaker 1: would be deterred by some of these more negative knock
Speaker 1: on effects.
Speaker 3: Yeah, what kind of response could you expect from opek here,
Speaker 3: because like it feels like there's been a lot of
Speaker 3: I mean, there's always internal drama at OPEK, but it
Speaker 3: feels like there's been even more recently with regards to
Speaker 3: you know, output and slack, extra capacity and things like that.
Speaker 3: But it's such a disparate group, like in any case,
Speaker 3: do you get a sense of like what they might
Speaker 3: do here?
Speaker 1: Yeah, I mean, that's a really it's an interesting question
Speaker 1: because of course OPEC's been pursuing you know, supply management,
Speaker 1: market management. They've been maintaining their cuts. The Saudia's have
Speaker 1: been adding additional voluntary cuts to try to push prices upward.
Speaker 1: And you know, curiously enough, this has been happening while
Speaker 1: Iran has been increasing its exports, and it's also been
Speaker 1: happening while Saudi and Iran pursue normalization. So there's you know,
Speaker 1: there seems to be some cross purposes here. There does
Speaker 1: seem to be a certain paradox and how the Saudis
Speaker 1: particularly are approaching managing this market. But in terms of
Speaker 1: what OPEK might do if the US suddenly cracked down
Speaker 1: in Iran in a way that would really reduce the
Speaker 1: flow right in a way that would create physical a
Speaker 1: change in the physical market to fundamentals, I don't know
Speaker 1: if OPEK or the Saudis would respond immediately because, as
Speaker 1: I said, anything that the US would do would send
Speaker 1: prices higher, and that's exactly what the Saudis want, right,
Speaker 1: They want a higher price floor. They want to rise
Speaker 1: prices maybe into the nineties, maybe close to one hundred.
Speaker 1: So initially I don't think they would do a whole lot, right.
Speaker 3: It feels like in the market there's still an assumption that,
Speaker 3: like well, OPEC could ramp up capacity if it needed to,
Speaker 3: But like to your point, Gragle, I don'uld see why
Speaker 3: they would want to in that scenario.
Speaker 2: Yeah.
Speaker 1: Yeah.
Speaker 2: Prior to the attack by Hamas, as you mentioned, one
Speaker 2: of the big stories had been the sort of loosening
Speaker 2: in some sense of the physical market for Ronnie and
Speaker 2: all the other I think it was a headline the
Speaker 2: day before the attack. I think it was from the
Speaker 2: Wall Street Journal about Saudi talking about maybe lifting its
Speaker 2: production as part of an Israel normalism. Yeah. Yeah, you
Speaker 2: had a very strong condemnation from the Kingdom of Saudi
Speaker 2: Arabia towards Israel about the bombing at the hospital, which,
Speaker 2: of course people don't really know what happened, but obviously
Speaker 2: the public stance from Saudi and other golf countries is
Speaker 2: pretty strong. What is Saudi's position here, How does it
Speaker 2: affect where it was going with its talks on Israel
Speaker 2: and so forth.
Speaker 1: Yeah, I mean, you have to remember, even though we've
Speaker 1: seen a lot over the last year or so on
Speaker 1: Saudi Israel normalization, and even with the you know, the
Speaker 1: so called Abraham Accords came together at the end of
Speaker 1: the Trump administration, right, Israel normalizing with a number of
Speaker 1: Arab states, you have to remember that formal relation between
Speaker 1: Israel and the rest of the Middle East or specifically
Speaker 1: the Arab world is still a very touchy, complicated issue.
Speaker 1: There's still a great deal of history of sentiment that
Speaker 1: Arab leaders, specifically, particularly in conservative Arab states like Saudi Arabia,
Speaker 1: they have to be sort of wary of managing. And
Speaker 1: I think the Saudi approach to this crisis has been
Speaker 1: trying to thread that needle.
Speaker 3: Right.
Speaker 1: You've seen Saudi condemnations of Israeli actions in Gaza, You've
Speaker 1: seen the Saudis, I mean MBS Muhammad bin Salman, the
Speaker 1: Crown Prince of Saudi Arabia. He took a phone call
Speaker 1: with President Raisi of Iran last week, the first time
Speaker 1: they ever spoke right, and he did that in the
Speaker 1: context of this crisis. So Saudi Arabia has been trying
Speaker 1: to sort of maintain a middle line of not appearing
Speaker 1: too friendly with Israel while also I think largely staying
Speaker 1: on the sidelines of the crisis. Now, what does that
Speaker 1: mean for this Israeli Saudi normalization. You mentioned the peace
Speaker 1: that came out right before the crisis. It kind of
Speaker 1: got buried this news that Saudi Arabia was opening up
Speaker 1: a little bit to this idea that it would try
Speaker 1: to lower oil prices as part of this grand bargain
Speaker 1: with the US and Israel. That news came out, it
Speaker 1: was greeted with a certain amount of skepticism because this
Speaker 1: generally speaking, that wouldn't really align up with how the
Speaker 1: Saudis have been trying to manage markets. But it did
Speaker 1: suggest that there was progress on this deal. Now, where's
Speaker 1: the deal now? Given the crisis is happening, the crisis
Speaker 1: is escalating, I would say that it's on ice, but
Speaker 1: it's not necessarily dead. I think the Saudi government has
Speaker 1: to take the line that it's taken for political concerns,
Speaker 1: for domestic concerns. It's concerned about regional stability. But in private,
Speaker 1: I would imagine that there is still quite a lot
Speaker 1: of interest from MBS in this deal because remember what
Speaker 1: were the terms of the deal being discussed. Saudi Arabia
Speaker 1: would get a security guarantee from the United States, it
Speaker 1: would get US support for a civilian nuclear program. Israel
Speaker 1: and Saudi Arabia would form a sort of a United
Speaker 1: security front to contain Aron. These are all things that
Speaker 1: Saudi Arabia NBS is interested in getting. I think he's
Speaker 1: still interested in getting them now. He just maybe isn't
Speaker 1: willing to talk about them publicly given the crisis that's happening.
Speaker 1: So I think the deal, Yeah, the deal is on ice,
Speaker 1: but it's not dead. It will take some time to
Speaker 1: revive it though. I mean, like this crisis could go
Speaker 1: on for weeks, it could go on for months. The
Speaker 1: worst things get in Gaza, the harder it will be
Speaker 1: for governments like Saudi Arabia to look friendly with Israel.
Speaker 1: And that all works against a deal in the short term.
Speaker 1: But I wouldn't say that it's dead. I mean NBS
Speaker 1: is going to be in charge in Saudi Arabia for
Speaker 1: a long time. He can afford to wait for this
Speaker 1: crisis to subside or potentially even blow over, and revisit
Speaker 1: a deal with Israel at some point in the future.
Speaker 1: But I don't think we're going to see much talk
Speaker 1: about it anytime soon.
Speaker 3: I have a q slightly off topic, but not really
Speaker 3: your research on Iran. I'm assuming you never actually got
Speaker 3: to go to the country given existing sanctions, but I'm
Speaker 3: just curious, like what the actual process was like of
Speaker 3: gathering that information, and like did you travel, did you
Speaker 3: talk to people on the ground, that sort of a shing.
Speaker 1: I love these kinds of questions because it reminds me of,
Speaker 1: you know, being a historian, which is my training. Before
Speaker 1: I came to Yourrasier group, I was at Yale. I
Speaker 1: was mostly working on my next book, so I wasn't
Speaker 1: able to go to Iran. That's right. I'm an American national,
Speaker 1: and at the time that I was doing my research,
Speaker 1: this was twenty seventeen or so, it was dangerous. I
Speaker 1: think for researchers who were Americans to go to Iran,
Speaker 1: you ran the risk of physical harm, you ran the
Speaker 1: risk of arrest. There have been Americans who have gone
Speaker 1: to Iran to do historical research who have been arrested
Speaker 1: and have remained in prison for years. I mean what
Speaker 1: we just saw the recent prisoner exchange between the United
Speaker 1: States and Iran. Some of those individuals, none of them
Speaker 1: were historians, but they had some of them had been
Speaker 1: held in prison for nearly ten years for really no reason.
Speaker 1: So it wasn't possible for me to go to Iran
Speaker 1: to do research. But that being said, I was doing
Speaker 1: research on the fifties and sixties, you know, the Cold War,
Speaker 1: and there's actually quite a lot of information of documentary
Speaker 1: evidence in Farsi, in Persian that's available in the US
Speaker 1: in Europe. A lot of it is in the form
Speaker 1: of memoirs or interviews, but there are sort of collections
Speaker 1: of documents that you can find that have been published.
Speaker 1: So I, you know, writing the book that I wrote,
Speaker 1: which was mostly about oil the Cold War US Iranian relations,
Speaker 1: I tried to use as many of those sources as
Speaker 1: I could, right, I really really strove to incorporate an
Speaker 1: Iranian perspective as much as I could, because I thought
Speaker 1: that perspective was important. Even if I wasn't able to
Speaker 1: go to Iran and do research there, I still felt that,
Speaker 1: you know, I couldn't write just another book about the
Speaker 1: US and oil I had to incorporate to the Iranians.
Speaker 2: So what is your forthcoming book.
Speaker 1: Well, it's very much in progress, Joe. But what I'm
Speaker 1: going to try to do, so my last book was
Speaker 1: about the US and Iran specifically in the Cold War.
Speaker 1: I wrote another I co wrote another book about the
Speaker 1: nineteen fifty three coup in Iran, which also celebrated an
Speaker 1: anniversary this year. But my next book is going to
Speaker 1: be about oil and the US more broadly in the
Speaker 1: twentieth century. What I'd really like to do is examine
Speaker 1: how oil has helped sort of form the foundation for
Speaker 1: American power in the twentieth century, and how the oil
Speaker 1: industry companies like Exon Mobil, but also smaller companies that
Speaker 1: are operating in Texas and other places, how they served
Speaker 1: as tools of US foreign policy and formed a part
Speaker 1: of the US conception of national security. So oil national
Speaker 1: security in the twentieth century is kind of the broad focus,
Speaker 1: but it's still, you know, in the early stages. So
Speaker 1: I'll let you know what I make more progress.
Speaker 2: All right, Well, we'll be back on for that, yeah,
Speaker 2: I hope. So, speaking of going back to the market, reaction.
Speaker 2: There's like a couple interesting things. I mean, I'm in
Speaker 2: a way, I've been surprised that, you know, you expressed
Speaker 2: surprise oil popped on these headlines which you didn't think
Speaker 2: had much teeth to them. In general, though, I've been
Speaker 2: surprised Tracy at like most markets for the last you know,
Speaker 2: ten days lighter than I might have expected overall, across oil,
Speaker 2: across raids, across stocks, which are more or less flat
Speaker 2: or actually slightly up over the last two weeks. Is
Speaker 2: not what I would have guess, given the intensity of
Speaker 2: the headlines and the just uncertainty of world.
Speaker 3: This is going now, I know what you mean. Although
Speaker 3: I do think today, hold on, I'm just looking at this.
Speaker 3: It looks like today is like kind of the first
Speaker 3: day where we've seen a significant pop in gold, which
Speaker 3: is like a classic yes war reaction, asset flight to
Speaker 3: safe haven kind of thing. True, So that's interesting to see.
Speaker 3: It does feel like today with that explosion, the deadly
Speaker 3: explosion at that hospital, it feels like things have like
Speaker 3: shifted a little bit, even though there's no certainty about
Speaker 3: what exactly just happened.
Speaker 1: Yeah, we're still trying to piece together precisely what happened right,
Speaker 1: whether it was a rocket misfire, whether it was something
Speaker 1: caused from the Israeli side, something caused from Hamas or
Speaker 1: another group active in Gaza. I think the evidence is
Speaker 1: still kind of coming together, but there was an immediate
Speaker 1: reaction to the explosion across the Arab world. There were
Speaker 1: spontaneous protests in places like Jordan, in the West Bank,
Speaker 1: even in Iran, where the struggle in Palistine or the
Speaker 1: issue of the Palestinian people is followed quite closely. And
Speaker 1: you saw, as Joe mentioned, quite quick condemnations of the
Speaker 1: Israeli action from governments across the region.
Speaker 2: And to some extent that's for a domestic audience that
Speaker 2: the public protests and then the leadership feels it has
Speaker 2: to take.
Speaker 1: Us oide totally. A lot of it is out of
Speaker 1: concern for how the public, how the so called Arab
Speaker 1: street is, how it's referred to, how the public will
Speaker 1: respond to violence in Gaza. You know, perceived attacks by
Speaker 1: Israel against Palestinians tend to have ripple effects across the
Speaker 1: public opinion across the entire Arab world. So you saw
Speaker 1: that quite quickly, and then you saw Arab governments issuing
Speaker 1: condemnations I think maybe to get ahead of public opinion
Speaker 1: even before the evidence could confirm exactly what had happened
Speaker 1: at the hospital, and that has caused a shift. I mean,
Speaker 1: you saw President Biden was supposed to go to Jordan
Speaker 1: to meet with various Arab leaders. That meeting apparently is
Speaker 1: now off the table, so he is flying to Israel
Speaker 1: to just meet with the Israeli government, which is not
Speaker 1: going to look good I think for the President broadly speaking,
Speaker 1: as he tries to contain this crisis.
Speaker 3: So we have a question from our discord. It is
Speaker 3: from Materials Dan, which is you know, a good name
Speaker 3: for materials Dan, and he's asking about materials So he's asking,
Speaker 3: how does the conflict affect relative demand for different products
Speaker 3: like petrol, kerosene, distillates.
Speaker 1: Huh, that's a good question. You're gonna make you do
Speaker 1: this in real time, one that I would expect from
Speaker 1: Materials Dan. Thanks Dan. Right now. Yeah, like market is
Speaker 1: kind of taking it in stride the product market. I think,
Speaker 1: I think people are still I think it's real important
Speaker 1: to look at the picture that was coming together in
Speaker 1: fundamentals and sentiment before the crisis broke out. There's been
Speaker 1: some signs that Chinese demand in the fall was a
Speaker 1: little stronger than some head thought. That's maybe encouraging a
Speaker 1: more bullish outlook for twenty twenty four. As far as
Speaker 1: products are concerned, the crisis hasn't really spilled out into
Speaker 1: markets quite yet. Yeah, right, there hasn't been actual physical disruptions.
Speaker 1: There's been some movement in Brent, I think caused by
Speaker 1: positions shifting, although those came, you know, after the calamitous
Speaker 1: eleven dollars plunge that Brent took right before the crisis happened,
Speaker 1: so you know, you saw sentiment shifting there. The crisis
Speaker 1: hasn't really affected physical flows quite yet. It has caused
Speaker 1: I think a slight spike in some prices in disease,
Speaker 1: but I think the factors to still focus on are
Speaker 1: the fundamentals and the supply picture, the suply demand picture.
Speaker 1: Moving into twenty twenty four, where I still think there's
Speaker 1: a lot of uncertainty there, right. Could the US slip
Speaker 1: into a minor recession, could demand fall off in the EU?
Speaker 1: Will China keep having the problems it's been having. This
Speaker 1: is pushing back against a little bit of the bullishness
Speaker 1: that OPEC I think was putting out for the end
Speaker 1: of this year about where prices were going to be.
Speaker 3: Joe, you know one physical disruption that has happened. It's
Speaker 3: actually not an oil but our old friend Evergreen declared
Speaker 3: force masure on a container ship on an Israel which
Speaker 3: I guess isn't really surprising. It's funny, how like, whenever
Speaker 3: there seems to be a physical disruption of any sort,
Speaker 3: like you will find Evergreen and their fleet of interestingly
Speaker 3: named ships. This one was called the ever Cozy affected
Speaker 3: in one way or another.
Speaker 1: Oh, man, I think about that weekly. The suis Yeah,
Speaker 1: it's your Roman Empire. Yeah it's my Roman Empire. But
Speaker 1: I think about Roman Empire daily, as I think we all.
Speaker 2: I never got into that.
Speaker 1: There's still time.
Speaker 2: I'm looking at the ever Cozy is built in twenty
Speaker 2: twenty one. Oh, that's interesting. So this is a relatively
Speaker 2: newer ship that was built. It was built in twenty
Speaker 2: twenty one, built at the peak of the shipping boom
Speaker 2: and now global freight prices. This is interesting. Despite the
Speaker 2: strength of the US consumer generally, you would think that
Speaker 2: you know, the particularly still strong, very strong goods demand.
Speaker 2: I think you would expect like freight and trucking prices
Speaker 2: to be more robust than they have been, but they
Speaker 2: really have it. I think I saw global container freight
Speaker 2: rates fell to a five year low.
Speaker 3: Yeah, we're going to have to do another freight episode,
Speaker 3: I think definitely, because a lot of people were predicting
Speaker 3: that it would be bad, but it has indeed turned
Speaker 3: out to be quite bad.
Speaker 2: A lot of we have to do an episode at
Speaker 2: a time when a prediction turned out to be true
Speaker 2: because it sounds like what you're saying medium term for
Speaker 2: this crisis, this war, what are you looking for? What
Speaker 2: are going to be the sort of tells in terms
Speaker 2: of how long this could go on?
Speaker 3: So far?
Speaker 1: Yeah, I mean it's in an interesting phase right now
Speaker 1: because it's coming up on two weeks. A week and
Speaker 1: a half or so since the attack. Israel has been
Speaker 1: Bombardi Gaza and has been planning an offensive but still
Speaker 1: hasn't gone in. And I think a lot of the
Speaker 1: medium term fallout from this crisis will depend on what
Speaker 1: the Israeli offensive in Gazo looks like and what their
Speaker 1: goal is. They still haven't said what they want to do.
Speaker 1: I mean they want to destroy Hamas, that's clear. But
Speaker 1: how do you do that without Do you have to
Speaker 1: occupy Gaza? Do you have to carve it up into
Speaker 1: separate zones? Does the IDF have to occupy parts of
Speaker 1: the territory or push the population out? There's the refugee problem,
Speaker 1: right where do you move hundreds of thousands of Gazas
Speaker 1: if Egypt won't take them, if they can't be moved
Speaker 1: into Israeli territory? How do you launch a huge offensive
Speaker 1: when there's so many civilians in the line of fire. So,
Speaker 1: while the IDF continues to plan this offensive, I think
Speaker 1: everyone's kind of in a holding pattern because the scale
Speaker 1: of the offensive may determine how or how or if
Speaker 1: other actors get involved. And there I would look specifically
Speaker 1: at what Hezbolah in Lebanon is doing. I mean, Hesbelah
Speaker 1: is a you know, lar large armed militia. It dominates
Speaker 1: large portions of Lebanon. It's very closely tied to Iran.
Speaker 1: And there's been this constant skirmishing happening between Hesbelah and
Speaker 1: the Israeli military since the attack took place, sort of
Speaker 1: kind of each side's warning the other to back off
Speaker 1: right in case either side tries to take advantage of
Speaker 1: this crisis, and if things start to get really bad
Speaker 1: in Gaza, if the Israeli offensive sort really starts to
Speaker 1: push at what Middle East public opinion will accept, you
Speaker 1: may start to see signs that Hesbelah could escalate. There
Speaker 1: you have a US threat too, right the US has
Speaker 1: moved two carrier groups into the Eastern Mediterranean. President Biden
Speaker 1: and Secretary Blincoln have made very clear that the US
Speaker 1: is going to back Israel. They've sent very clear deterrent
Speaker 1: signs against Iran to not get involved. So there's a
Speaker 1: potential risk for the US to become entangled in this
Speaker 1: depending on how bad things get. But right now, I
Speaker 1: think everyone is kind of holding their breadth to see
Speaker 1: what the outcome of Biden's visit is, what the Israeli
Speaker 1: offensive in Gaza looks like, and also how regional public
Speaker 1: opinion continues to digest not just the disaster at the hospital,
Speaker 1: but the continued bombings of Gaza and the outcomes there.
Speaker 3: Greg you mentioned Hezbolah, and I just got a flashback
Speaker 3: to one of the books that I read when I
Speaker 3: was heading out to Abu Dhabi and trying to do
Speaker 3: a crash course in Middle East history, which is pretty
Speaker 3: much impossible. That's the thing I learned. But there's this
Speaker 3: great book. It had one of the most fantastic titles
Speaker 3: that I've ever seen. It was called the Media Relations
Speaker 3: Department of Hezbolah which is you a Happy Birthday. Unexpected
Speaker 3: Encounters in the Changing Middle East. And it is funny
Speaker 3: because I think back to that book and like, so
Speaker 3: much has changed, even you know, in the past ten
Speaker 3: years since that book was published or so. But it
Speaker 3: just feels like, I mean, how many books are going
Speaker 3: to be written about this current conflict. I can't even imagine.
Speaker 1: Yeah, And it also gets to one other element that
Speaker 1: maybe doesn't get quite the attention that it deserves, which
Speaker 1: is that these groups Hamas hezbolah Aran as well, they're
Speaker 1: fighting a war on several fronts.
Speaker 3: Right.
Speaker 1: They're fighting it with weapons and arms and you know,
Speaker 1: forces on the ground. They're also fighting what they see
Speaker 1: as being a war of ideas on social media and
Speaker 1: in the press. These are political organizations. They conceive of
Speaker 1: themselves as having constituencies, right, people who will support them,
Speaker 1: and they have ideologies, right, They're selling ideas as much
Speaker 1: as they are trying to fight a war against Israel.
Speaker 1: Or the IDEF. So that's another thing to bear in mind,
Speaker 1: particularly when we look at things that Iran says. Right,
Speaker 1: Iran is putting out rhetoric, putting out tough talk, because
Speaker 1: in many ways they're trying to talk up their own
Speaker 1: sort of propaganda, their own ideology, their own perspective of
Speaker 1: the conflict. That doesn't necessarily mean they're going to do
Speaker 1: anything right, that they might not actually get involved, but
Speaker 1: it's important to bear in mind that these actors are
Speaker 1: engaging in this conflict on multiple levels. Some of them
Speaker 1: are on social media, some of them are just you know,
Speaker 1: involving ideas, trying to get more support for their particular positions.
Speaker 2: Greg other than your own book what should I download
Speaker 2: on my kendle this weekend? If I want to be
Speaker 2: a little bit smaller about all this.
Speaker 1: Oh boy, man, I mean there's I very often point
Speaker 1: people towards the work of Rashid Khalidi, who's a historian
Speaker 1: of the Middle East. They're old now, but the writings
Speaker 1: of Edward Sayid, who's a Palestinian intellectual of the twentieth century,
Speaker 1: are always great.
Speaker 3: Oh wait, Edward Sayid is like a little bit that's
Speaker 3: slightly controversial suggestion here controversial.
Speaker 1: Older, but I think still, you know, still still vital
Speaker 1: to understanding where the conflict is coming from. I mean,
Speaker 1: there's so many books written more recently and articles as well.
Speaker 1: I mean, for understanding Iran's role in this, I would
Speaker 1: point people towards the work of Afshan Ostovar. He had
Speaker 1: a great article in War in the Rocks, I think
Speaker 1: just yesterday about Hamas and Iran's relationship. I mean, the
Speaker 1: list is endless. Really, there's as you said, Tracy, you
Speaker 1: could read forever on this subject, and still I don't
Speaker 1: not fully understand how it goes.
Speaker 3: I tried. I tried for a few months, and I
Speaker 3: didn't get very far. Joe, you know what I just remembered.
Speaker 3: We should have back remember the episode we did on
Speaker 3: Iranian stocks, the fund manager who is investing in Iranian equities.
Speaker 3: That would be a super interesting perspective to have right now,
Speaker 3: All right, let's do it.
Speaker 2: Lots More is produced by Carmen Rodriguez and dash Ol Bennett,
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Speaker 2: Sage Bauman, who is our head of podcasts.
Speaker 3: Catch you next time for lots More.
Speaker 2: Thanks for listening,