1 00:00:02,720 --> 00:00:13,960 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:18,480 --> 00:00:21,400 Speaker 2: Hello and welcome to another episode of the Odd Lots podcast. 3 00:00:21,560 --> 00:00:22,920 Speaker 2: I'm Tracy Alloway. 4 00:00:22,680 --> 00:00:23,279 Speaker 3: And I'm Jill. 5 00:00:23,320 --> 00:00:24,680 Speaker 4: Why isn't thal Joe. 6 00:00:24,680 --> 00:00:28,840 Speaker 2: One of the weirdnesses of our current market moments is 7 00:00:28,880 --> 00:00:31,880 Speaker 2: that you have all these oil analysts who keep talking 8 00:00:31,880 --> 00:00:34,879 Speaker 2: about how the straight of hor Moves closure is like 9 00:00:35,400 --> 00:00:39,400 Speaker 2: the theoretical exercise that the entire market used to have 10 00:00:39,479 --> 00:00:42,720 Speaker 2: nightmares about. This was like the big risk in the 11 00:00:42,880 --> 00:00:46,400 Speaker 2: entire oil market. And yet and yet if you look 12 00:00:46,400 --> 00:00:48,800 Speaker 2: at the actual price of oil and where it's traded, 13 00:00:49,440 --> 00:00:52,840 Speaker 2: I mean, it's gone up, but it's not it doesn't 14 00:00:52,880 --> 00:00:54,920 Speaker 2: strike me as panic levels. 15 00:00:55,320 --> 00:00:57,600 Speaker 5: Yeah, I mean it's gone up a lot, and you know, 16 00:00:57,640 --> 00:00:59,600 Speaker 5: it started the year I'm just looking it at Brent. 17 00:01:00,240 --> 00:01:02,320 Speaker 5: It started the year around sixty. It had climbed to 18 00:01:02,360 --> 00:01:05,720 Speaker 5: around seventy before the war started. Now one fifteen, So 19 00:01:05,720 --> 00:01:08,240 Speaker 5: it's a huge move in some sense, but it's not 20 00:01:08,280 --> 00:01:11,200 Speaker 5: even a twenty twenty two problems, which were very high 21 00:01:11,520 --> 00:01:14,640 Speaker 5: and that all that's true, and yet there's this disconnect 22 00:01:14,720 --> 00:01:17,080 Speaker 5: I don't understand, like, why isn't it at two hundred 23 00:01:17,160 --> 00:01:20,759 Speaker 5: yet or whatever? Because Straightford moves is closed, etcetera. Why 24 00:01:20,800 --> 00:01:23,399 Speaker 5: isn't it even higher? But then the other thing is, okay, 25 00:01:23,440 --> 00:01:26,160 Speaker 5: like prices are up a lot, But then you look 26 00:01:26,200 --> 00:01:29,039 Speaker 5: at like what governments around the world are doing, and 27 00:01:29,080 --> 00:01:31,880 Speaker 5: it's like hair on fire panic, particularly in East Asia. 28 00:01:32,040 --> 00:01:35,720 Speaker 5: So you get stories about Korean government workers being told 29 00:01:35,760 --> 00:01:39,440 Speaker 5: to drive on every drive to work depending whether their 30 00:01:39,520 --> 00:01:45,280 Speaker 5: license plate number and even an odd like extreme rationing. Yeah, 31 00:01:45,440 --> 00:01:48,080 Speaker 5: and so I'm trying to like, it still feels like 32 00:01:48,120 --> 00:01:50,000 Speaker 5: there are some puzzle pieces here that I'm trying to 33 00:01:50,000 --> 00:01:50,520 Speaker 5: fit together. 34 00:01:50,760 --> 00:01:53,240 Speaker 2: Absolutely. The other thing I would say is it feels 35 00:01:53,280 --> 00:01:56,080 Speaker 2: also like there's this disconnect between what's going on in 36 00:01:56,080 --> 00:01:58,880 Speaker 2: the financial world and what's going on in the physical world. 37 00:01:59,000 --> 00:01:59,720 Speaker 4: I don't get. Yeah. 38 00:01:59,720 --> 00:02:02,120 Speaker 2: And there was this really interesting note This wasn't purely 39 00:02:02,200 --> 00:02:05,720 Speaker 2: related to oil, but you could kind of extrapolate from it, 40 00:02:05,920 --> 00:02:08,480 Speaker 2: But it was from Bloomberg Green Markets the other day, 41 00:02:08,600 --> 00:02:10,600 Speaker 2: and they were talking about Urea coming out of the 42 00:02:10,600 --> 00:02:13,000 Speaker 2: Middle East and the pricing that they've been seeing from it, 43 00:02:13,240 --> 00:02:15,360 Speaker 2: and one of the analysts says, the real issue on 44 00:02:15,480 --> 00:02:18,880 Speaker 2: pricing is that while sellers and buyers can quote almost 45 00:02:18,880 --> 00:02:22,360 Speaker 2: any price, nothing is actually getting out of the Gulf. 46 00:02:22,520 --> 00:02:26,520 Speaker 2: That reality makes most discussion academic rather than representative of 47 00:02:26,560 --> 00:02:29,320 Speaker 2: actual business. So I wonder how much of that is 48 00:02:29,320 --> 00:02:31,200 Speaker 2: happening in the oil market as well, where you have 49 00:02:31,280 --> 00:02:33,880 Speaker 2: all these quotes that are flashing across the screen, but 50 00:02:34,080 --> 00:02:37,280 Speaker 2: like for barrels that are essentially not going anywhere for 51 00:02:37,320 --> 00:02:37,680 Speaker 2: a while. 52 00:02:37,760 --> 00:02:40,040 Speaker 5: Yeah, and I still don't totally get it, because right, like, 53 00:02:40,120 --> 00:02:42,639 Speaker 5: these things do have to settle at some point, and 54 00:02:43,000 --> 00:02:44,440 Speaker 5: I don't know, I'm confused. And then there were those 55 00:02:44,480 --> 00:02:48,680 Speaker 5: headlines early on about how physical oil quoted in Oman 56 00:02:49,040 --> 00:02:52,440 Speaker 5: were fifty dollars a barrel above the front month. Many 57 00:02:52,480 --> 00:02:54,760 Speaker 5: things I don't understand. So we have to talk to 58 00:02:54,760 --> 00:02:56,440 Speaker 5: someone who can answer all these questions for us. 59 00:02:56,480 --> 00:02:58,560 Speaker 2: The great thing about an oil crisis, Joe, is that 60 00:02:58,600 --> 00:03:01,640 Speaker 2: we will learn about all the oil benchmarks throughout the 61 00:03:01,800 --> 00:03:04,800 Speaker 2: entire world. Okay, well, we really do have the perfect guest, 62 00:03:05,040 --> 00:03:07,160 Speaker 2: someone who's been on the show before, who a lot 63 00:03:07,160 --> 00:03:09,520 Speaker 2: of people have requested us to bring back to talk 64 00:03:09,560 --> 00:03:12,919 Speaker 2: about this particular moment in time. So without further ado, 65 00:03:13,080 --> 00:03:15,919 Speaker 2: we have, of course, Javier Blast. He is the energy 66 00:03:15,960 --> 00:03:19,000 Speaker 2: and commodities columnist over at Bloomberg, been writing about the 67 00:03:19,040 --> 00:03:21,600 Speaker 2: stuff for a very long time. Thank you so much 68 00:03:21,639 --> 00:03:23,160 Speaker 2: for coming back on our thoughts. 69 00:03:23,440 --> 00:03:26,799 Speaker 6: My pleasure seems that every time that you come back 70 00:03:26,919 --> 00:03:28,200 Speaker 6: is because of a crisis. 71 00:03:28,360 --> 00:03:29,440 Speaker 4: Yep, that's right. 72 00:03:29,680 --> 00:03:32,200 Speaker 2: Okay, well, let's just jump into it. How bad is 73 00:03:32,240 --> 00:03:32,640 Speaker 2: this one? 74 00:03:32,919 --> 00:03:36,080 Speaker 6: It's bad and it could get really bad. But in 75 00:03:36,160 --> 00:03:39,840 Speaker 6: any energy crisis, there are two elements that are very important. 76 00:03:39,920 --> 00:03:42,800 Speaker 6: One is the size of the disruption, and the size 77 00:03:42,840 --> 00:03:46,080 Speaker 6: is huge. And then is the length of that disruption, 78 00:03:46,280 --> 00:03:51,760 Speaker 6: how lonely goes, And so far the disruption is relatively 79 00:03:51,840 --> 00:03:52,440 Speaker 6: short lived. 80 00:03:52,560 --> 00:03:53,880 Speaker 4: We have been a month. 81 00:03:54,640 --> 00:03:57,360 Speaker 6: So that's one of the reasons why we are not 82 00:03:57,600 --> 00:04:01,640 Speaker 6: at crazy high oil prices. It's just because it's a 83 00:04:01,680 --> 00:04:04,480 Speaker 6: bit too early. Give it up a few more weeks 84 00:04:04,520 --> 00:04:07,840 Speaker 6: and certainly we will get there. But so far the 85 00:04:08,040 --> 00:04:13,240 Speaker 6: crisis is relatively short lived. How shortly, well, look at 86 00:04:13,280 --> 00:04:15,760 Speaker 6: twenty twenty two with Russia we are still at it 87 00:04:16,040 --> 00:04:19,679 Speaker 6: four years later. Or look at how lonely it took 88 00:04:19,920 --> 00:04:24,640 Speaker 6: for the resolution of the invasion of Kube in nineteen ninety. 89 00:04:24,760 --> 00:04:26,760 Speaker 4: That was about eight months. 90 00:04:27,000 --> 00:04:31,839 Speaker 6: So at times we forget how lone other crisis were, 91 00:04:31,920 --> 00:04:34,000 Speaker 6: and they were a lot longer than this one. 92 00:04:34,120 --> 00:04:39,240 Speaker 5: Okay, So now connect to what we're seeing with governments 93 00:04:39,279 --> 00:04:42,839 Speaker 5: around the world like already going into rationing mode almost 94 00:04:42,839 --> 00:04:46,159 Speaker 5: everywhere you look, particularly see a lot in Africa, already 95 00:04:46,480 --> 00:04:49,640 Speaker 5: a lot in East Asia. If the story is okay, 96 00:04:49,680 --> 00:04:54,440 Speaker 5: the prices haven't exploded the crazy high levels because this 97 00:04:54,600 --> 00:04:57,400 Speaker 5: is still short lived, maybe there's some buffer stocks. Why 98 00:04:57,440 --> 00:04:59,440 Speaker 5: this rationing reality. 99 00:04:59,600 --> 00:05:03,000 Speaker 6: Well, you're absolutely right that what is really cushion in 100 00:05:03,040 --> 00:05:06,480 Speaker 6: the market right now is a number of buffers that 101 00:05:06,520 --> 00:05:11,400 Speaker 6: we're going through. One is regular inventories that every country, 102 00:05:11,520 --> 00:05:16,360 Speaker 6: every refinery has to normal functioning. Then it is also 103 00:05:16,440 --> 00:05:21,599 Speaker 6: the strategic inventories that some countries own, particularly industrialized countries 104 00:05:21,640 --> 00:05:25,440 Speaker 6: like the United States, Europe, Japan, and also China. Those 105 00:05:25,480 --> 00:05:30,240 Speaker 6: have been mobilized in most places have been released. 106 00:05:30,760 --> 00:05:32,400 Speaker 4: And also we. 107 00:05:32,560 --> 00:05:35,720 Speaker 6: Enter the crisis with a market that was over supply. 108 00:05:36,160 --> 00:05:40,040 Speaker 6: There was even floating storage, that is when an oil 109 00:05:40,120 --> 00:05:42,800 Speaker 6: tanker has been loaded is on the high seas but 110 00:05:42,839 --> 00:05:45,479 Speaker 6: they cannot find a buyer and just basically sits on 111 00:05:45,560 --> 00:05:48,559 Speaker 6: the high seats looking for someone who will take the oil. 112 00:05:48,800 --> 00:05:50,880 Speaker 6: And we have quite a lot of that just going 113 00:05:50,920 --> 00:05:53,839 Speaker 6: into the crisis. So there was quite an element of 114 00:05:53,880 --> 00:05:58,279 Speaker 6: buffer through the system, and probably a larger buffer than 115 00:05:58,400 --> 00:06:02,520 Speaker 6: in normal circumstances because the market was over supply. That 116 00:06:02,720 --> 00:06:07,000 Speaker 6: is helping to cushion or to mitigate the crisis. Where 117 00:06:07,000 --> 00:06:10,200 Speaker 6: we are seeing some actions by government is where countries 118 00:06:10,200 --> 00:06:13,760 Speaker 6: are closer to the crisis, which is destrait or hormones. 119 00:06:14,040 --> 00:06:17,200 Speaker 6: So the closer that you are to that location, the 120 00:06:17,200 --> 00:06:20,159 Speaker 6: more action you need to take because you typically depend 121 00:06:20,200 --> 00:06:22,880 Speaker 6: more of that flow of oil coming from the Middle East, 122 00:06:23,080 --> 00:06:25,880 Speaker 6: and also because you are impacted earlier. If you are 123 00:06:25,920 --> 00:06:30,720 Speaker 6: moving oil from say Saudi Arabia into India, that's only 124 00:06:30,760 --> 00:06:33,400 Speaker 6: a few days at most a week of sailing time. 125 00:06:33,720 --> 00:06:36,760 Speaker 6: You are moving that to say the Philippines, that's about 126 00:06:36,800 --> 00:06:40,440 Speaker 6: fifteen days. It's longer you are moving that oil into Europe, 127 00:06:40,480 --> 00:06:42,960 Speaker 6: probably around three weeks. And it's even longer you are 128 00:06:42,960 --> 00:06:46,840 Speaker 6: moving that oil into say the United States, where Saudi 129 00:06:46,839 --> 00:06:49,839 Speaker 6: oil takes about forty days. So all of that means 130 00:06:49,880 --> 00:06:53,679 Speaker 6: that the crisis is felt in some places. 131 00:06:53,400 --> 00:06:55,880 Speaker 4: Quicker than in other places. 132 00:06:56,160 --> 00:07:00,359 Speaker 6: Also, it's how the global oil market works. And to 133 00:07:00,400 --> 00:07:03,719 Speaker 6: put it in quite simple terms, and I'm afraid that 134 00:07:03,760 --> 00:07:08,799 Speaker 6: I have to go with colonial vocabulary, but the oil 135 00:07:08,880 --> 00:07:12,240 Speaker 6: market is divided in two large chunks. 136 00:07:12,280 --> 00:07:14,480 Speaker 4: East of swet and west of sweth. 137 00:07:14,600 --> 00:07:16,920 Speaker 6: This is like, you know, the British Empire was still 138 00:07:16,960 --> 00:07:20,360 Speaker 6: around and everything was east or west of the Sweat Canal. 139 00:07:20,960 --> 00:07:24,280 Speaker 6: Countries that they are east of Swift, mostly Asia, rely 140 00:07:24,360 --> 00:07:27,760 Speaker 6: a lot on Middle East oil these days, and therefore 141 00:07:28,000 --> 00:07:32,200 Speaker 6: they are impacted earlier on the crisis. West of Swift Europe, 142 00:07:32,440 --> 00:07:36,680 Speaker 6: Western Europe and the whole American continent is a bit 143 00:07:36,800 --> 00:07:40,360 Speaker 6: detached from that market, and therefore the crisis will hit 144 00:07:40,400 --> 00:07:41,280 Speaker 6: them much later. 145 00:07:42,160 --> 00:07:45,440 Speaker 2: So I know a bunch of MH bros Are going 146 00:07:45,480 --> 00:07:47,680 Speaker 2: to get mad at me for even asking this, But like, 147 00:07:47,760 --> 00:07:50,800 Speaker 2: could you get a situation where you can't get oil 148 00:07:51,120 --> 00:07:53,200 Speaker 2: at any price in certain countries? 149 00:07:55,040 --> 00:07:59,480 Speaker 6: I mean, in an absolutely full blown crisis where we 150 00:07:59,560 --> 00:08:03,000 Speaker 6: have this the hormones closed for many months, we may 151 00:08:03,200 --> 00:08:05,960 Speaker 6: have a lang word in Iran. Yes, I think that 152 00:08:06,000 --> 00:08:08,560 Speaker 6: we can get into a situation that, no matter what 153 00:08:08,720 --> 00:08:11,480 Speaker 6: you are offering for a barrel of oil, no one 154 00:08:11,560 --> 00:08:13,920 Speaker 6: is willing to sell because that will be a wall 155 00:08:14,040 --> 00:08:18,080 Speaker 6: of esport bands where every country is trying to keep 156 00:08:18,400 --> 00:08:22,160 Speaker 6: the oil for themselves, et cetera. And I think that, yes, 157 00:08:22,280 --> 00:08:25,280 Speaker 6: I can't see an scenario in which, no matter how 158 00:08:25,360 --> 00:08:28,280 Speaker 6: much you are paying for a barrel of oil. You 159 00:08:28,360 --> 00:08:30,720 Speaker 6: may not find a buyer, or you may find enough 160 00:08:30,840 --> 00:08:33,520 Speaker 6: barrels for whatever you are offering, but that will be 161 00:08:33,559 --> 00:08:35,800 Speaker 6: in that really extreme extreme situation. 162 00:08:36,240 --> 00:08:39,600 Speaker 5: I have a very rudimentary oil one on one class. Actually, 163 00:08:39,600 --> 00:08:42,160 Speaker 5: I found a free book on my sidework called Oil 164 00:08:42,200 --> 00:08:42,960 Speaker 5: one O one. 165 00:08:42,880 --> 00:08:44,400 Speaker 3: Yesterday and I picked it up. I should have read 166 00:08:45,480 --> 00:08:45,840 Speaker 3: I don't know. 167 00:08:45,840 --> 00:08:48,559 Speaker 5: It's crazy, No, it's it's really it's a it's like 168 00:08:48,600 --> 00:08:50,720 Speaker 5: a fall on book. You know this book, Morgan Downey. 169 00:08:50,760 --> 00:08:52,720 Speaker 5: It's a very thick book Oil one on one. Someone 170 00:08:52,800 --> 00:08:54,880 Speaker 5: just put it on my sidewalk. Anyway, I have an 171 00:08:54,880 --> 00:08:55,720 Speaker 5: oil one on one. 172 00:08:55,800 --> 00:09:00,600 Speaker 2: Wait are you sure? Someone's not like they'll lure you 173 00:09:00,640 --> 00:09:01,360 Speaker 2: out of your house. 174 00:09:01,520 --> 00:09:03,040 Speaker 5: But I'm gonna ask you an oil one on one 175 00:09:03,120 --> 00:09:07,480 Speaker 5: question because it when we see, okay, Brent crude one 176 00:09:07,559 --> 00:09:10,160 Speaker 5: fifteen twenty five is at the time, how is the 177 00:09:10,240 --> 00:09:11,480 Speaker 5: Brent benchmark formed? 178 00:09:12,920 --> 00:09:14,000 Speaker 3: Oh course, okay? 179 00:09:14,040 --> 00:09:21,000 Speaker 6: Sorry now is a simple question and a complicated one. Effectively, 180 00:09:21,080 --> 00:09:23,640 Speaker 6: we are talking about a bunch of crude oil from 181 00:09:23,679 --> 00:09:27,040 Speaker 6: the North Sea ok So, mostly UK and Norway, but 182 00:09:27,360 --> 00:09:30,679 Speaker 6: also crude oil from Texas that comes across the Atlantic 183 00:09:31,200 --> 00:09:35,360 Speaker 6: and through effectively bias and sellers on the physical market, 184 00:09:35,440 --> 00:09:39,520 Speaker 6: we get a price that then cascade into the financial market. 185 00:09:39,559 --> 00:09:41,480 Speaker 4: But here is a very important. 186 00:09:41,160 --> 00:09:44,119 Speaker 5: I guess the reason I'm asking is because I associate 187 00:09:44,240 --> 00:09:47,520 Speaker 5: with Brent with the North Sea, and that's west of 188 00:09:47,559 --> 00:09:50,800 Speaker 5: the Seuez. And so when we're talking about east of 189 00:09:50,840 --> 00:09:53,920 Speaker 5: the Sewez oil, why is this the price and how 190 00:09:53,960 --> 00:09:58,280 Speaker 5: connected is that price to the oil moving that actually 191 00:09:58,280 --> 00:10:01,199 Speaker 5: affects these markets. I guess that's sort of why the 192 00:10:01,280 --> 00:10:02,160 Speaker 5: question is on my mind. 193 00:10:02,440 --> 00:10:04,080 Speaker 4: Now that that's a crucial question. 194 00:10:04,160 --> 00:10:08,760 Speaker 6: They are about two hundred and fifty different grades of 195 00:10:08,880 --> 00:10:12,160 Speaker 6: crude oil that we track on a given time, and 196 00:10:12,320 --> 00:10:16,959 Speaker 6: Brain is used effectively a short ham for the average 197 00:10:17,000 --> 00:10:21,280 Speaker 6: barrel in the world, and it's not really the average barrel, 198 00:10:21,360 --> 00:10:23,599 Speaker 6: and certainly not the average barrel that comes from the 199 00:10:23,640 --> 00:10:26,439 Speaker 6: Middle East. So you will have to look at benchmarks 200 00:10:26,520 --> 00:10:29,960 Speaker 6: like Oman Dubai that they are closer to the quality 201 00:10:30,559 --> 00:10:33,600 Speaker 6: of the Middle East oil, and those benchmarks are a 202 00:10:33,600 --> 00:10:38,360 Speaker 6: bit higher than what Brain is trading today. But if 203 00:10:38,400 --> 00:10:41,520 Speaker 6: I may suggest, forget about the price of a barrel 204 00:10:41,559 --> 00:10:45,320 Speaker 6: of oil, Okay, no one cares about the price of 205 00:10:45,360 --> 00:10:49,440 Speaker 6: oil unless you are someone producing oil in Texas or 206 00:10:49,440 --> 00:10:52,960 Speaker 6: Saudi Arabia or you are someone who owns a refinery. 207 00:10:53,320 --> 00:10:56,000 Speaker 6: Those are the people that care about the price of 208 00:10:56,080 --> 00:11:00,440 Speaker 6: a barrel of crude. The rest of us, you and I, 209 00:11:00,520 --> 00:11:03,280 Speaker 6: we care about the price of our refined product because 210 00:11:03,280 --> 00:11:06,800 Speaker 6: that's what we consume. We consume gasoline, we consume diesel, 211 00:11:07,160 --> 00:11:10,480 Speaker 6: or we consume other refined products that they are embedded 212 00:11:10,600 --> 00:11:13,000 Speaker 6: into a service that we are buying. Think about an 213 00:11:13,000 --> 00:11:16,720 Speaker 6: airfare ticket where inside that ticket there is a big 214 00:11:16,760 --> 00:11:20,000 Speaker 6: proportion of it that is jet fuel, or you are 215 00:11:20,040 --> 00:11:23,280 Speaker 6: buying I don't know, a cap made of plastic, well, 216 00:11:23,320 --> 00:11:27,840 Speaker 6: that is, you are buying effectively some kind of transformed NAFTA. 217 00:11:27,880 --> 00:11:31,120 Speaker 6: And obviously you know the transformation and the retail marking 218 00:11:31,400 --> 00:11:34,040 Speaker 6: and so on. But what matters really is the price 219 00:11:34,040 --> 00:11:37,920 Speaker 6: of refined products, and they're actually we are beginning to see, 220 00:11:38,080 --> 00:11:43,480 Speaker 6: particularly in the East, in the Southeast Asian markets, some 221 00:11:43,679 --> 00:11:46,360 Speaker 6: very extreme prices. So well, if you look at the 222 00:11:46,400 --> 00:11:51,080 Speaker 6: price of crude or brain or WTI or Roman, things 223 00:11:51,200 --> 00:11:54,800 Speaker 6: look relatively contained. You know, we are treading around one 224 00:11:54,880 --> 00:11:57,240 Speaker 6: hundred and one hundred and ten dollars a barrel, that 225 00:11:57,480 --> 00:12:00,839 Speaker 6: is well below the all time high. You look at 226 00:12:00,880 --> 00:12:05,640 Speaker 6: the course of diesel in Singapore, which is a benchmark 227 00:12:05,679 --> 00:12:07,920 Speaker 6: for the Southeast Asia market. 228 00:12:08,040 --> 00:12:09,240 Speaker 4: The price there is. 229 00:12:09,200 --> 00:12:12,360 Speaker 6: Approaching two hundred dollars a barrel, which is something that 230 00:12:12,360 --> 00:12:15,959 Speaker 6: we have never seen. So the refined product is where 231 00:12:16,040 --> 00:12:17,880 Speaker 6: really we are seeing the real tension. 232 00:12:18,160 --> 00:12:20,040 Speaker 2: This is exactly what I want to ask you. So 233 00:12:20,200 --> 00:12:23,440 Speaker 2: if you look at the benchmark prices for crude oil, 234 00:12:23,800 --> 00:12:27,640 Speaker 2: we've seen higher prices before, right and relatively recently in 235 00:12:27,679 --> 00:12:30,640 Speaker 2: twenty twenty two. But if you look at the refined products, 236 00:12:31,000 --> 00:12:36,240 Speaker 2: we're getting to places again that we haven't seen. What 237 00:12:36,440 --> 00:12:39,880 Speaker 2: explains that disconnect, Like back in twenty twenty two, why 238 00:12:39,920 --> 00:12:43,320 Speaker 2: didn't we see the higher cost of crude feed into 239 00:12:43,440 --> 00:12:47,000 Speaker 2: refined products the way that we seem to be seeing now. 240 00:12:47,320 --> 00:12:50,800 Speaker 6: For two reasons. One is because we have lost not 241 00:12:50,840 --> 00:12:53,360 Speaker 6: only a lot of crude oil production, but we have 242 00:12:53,480 --> 00:12:58,720 Speaker 6: lost a significant chunk of refined production. The Middle East 243 00:12:58,720 --> 00:13:02,240 Speaker 6: also has a lot of refinedes which are esport refineries. 244 00:13:02,480 --> 00:13:05,160 Speaker 4: They are just devoted to the xport market. 245 00:13:05,480 --> 00:13:09,600 Speaker 6: And the global trade of refined products is a lot 246 00:13:09,760 --> 00:13:13,120 Speaker 6: smaller than the global trade of crude oil, So even 247 00:13:13,160 --> 00:13:16,920 Speaker 6: a small reduction of supply could have a much larger impact. 248 00:13:17,240 --> 00:13:20,360 Speaker 6: You think about the market for the global market for 249 00:13:20,480 --> 00:13:24,760 Speaker 6: clude oil, which is one hundred million barrels. Around sixty 250 00:13:24,840 --> 00:13:28,280 Speaker 6: million are traded globally, but if you look at the 251 00:13:28,320 --> 00:13:32,080 Speaker 6: market for say, get fuel, that market is a lot smaller, 252 00:13:32,360 --> 00:13:35,800 Speaker 6: and we have lost a significant proportion of the refineries 253 00:13:35,840 --> 00:13:39,840 Speaker 6: who are serving that international market for jet fuel, and 254 00:13:39,880 --> 00:13:43,600 Speaker 6: therefore prices are reacting much more stronger than we saw 255 00:13:43,720 --> 00:13:47,839 Speaker 6: in previous crisis. There is also the way that the 256 00:13:47,840 --> 00:13:53,880 Speaker 6: whole of refining works. So refineries are slowing down intake 257 00:13:53,960 --> 00:13:56,560 Speaker 6: of clude oil because there is not enough crude oil 258 00:13:56,559 --> 00:13:59,960 Speaker 6: in the market, but we have not really seen get 259 00:14:00,080 --> 00:14:04,600 Speaker 6: the consumers reacting the same way. So what is happening 260 00:14:04,720 --> 00:14:07,520 Speaker 6: is the refining wall is acting as a buffer in 261 00:14:07,559 --> 00:14:11,880 Speaker 6: between crude oil that is not there and consumers that 262 00:14:11,920 --> 00:14:14,520 Speaker 6: they have not yet realized that the crude oil is 263 00:14:14,559 --> 00:14:17,800 Speaker 6: not there. So the refined market is trying to basically 264 00:14:18,640 --> 00:14:21,320 Speaker 6: get that two together, and the way that it can 265 00:14:21,320 --> 00:14:26,120 Speaker 6: only do it is by extreme pricing and indicating the consumers, hey, 266 00:14:26,720 --> 00:14:29,040 Speaker 6: I don't have enough crewe to make these refined products, 267 00:14:29,080 --> 00:14:32,320 Speaker 6: so please can you stop demanding the refined products? And 268 00:14:32,360 --> 00:14:35,400 Speaker 6: the police is basically two hundred dollars a barrel. 269 00:14:35,160 --> 00:14:38,640 Speaker 2: Diesel I should just say. We're recording this on March 270 00:14:38,680 --> 00:14:43,000 Speaker 2: thirty first, and a headline related to this, Trump tells 271 00:14:43,040 --> 00:14:47,520 Speaker 2: allies to buy us jet fuel or take it from horrormos. 272 00:14:47,960 --> 00:14:50,080 Speaker 5: I have no idea if we have spare jet fuel, 273 00:14:50,560 --> 00:14:53,880 Speaker 5: you know that, speaking of refined products doing East Asia, 274 00:14:54,160 --> 00:14:56,320 Speaker 5: one of the charts that's probably gone the most viral 275 00:14:56,480 --> 00:15:00,320 Speaker 5: is that Singapore jet fuel chart, and that, more than 276 00:15:00,320 --> 00:15:02,760 Speaker 5: any other chart, price shows that gap that Havevier is 277 00:15:02,800 --> 00:15:06,360 Speaker 5: talking about between the underlying quoted prices of barrels, which 278 00:15:06,400 --> 00:15:08,840 Speaker 5: is high, but that getual price is way above now 279 00:15:09,160 --> 00:15:10,480 Speaker 5: the twenty twenty two highs. 280 00:15:10,480 --> 00:15:11,360 Speaker 3: So that speaks to it. 281 00:15:11,520 --> 00:15:14,320 Speaker 5: Have you you're this down in Houston, are any Americans 282 00:15:14,440 --> 00:15:16,880 Speaker 5: from your perspective, are we going to pick up the slack? 283 00:15:16,960 --> 00:15:20,720 Speaker 5: Do you see American oil entrepreneurs doing more drilling and 284 00:15:20,800 --> 00:15:23,200 Speaker 5: exploration to take advantage of these high prices? 285 00:15:23,480 --> 00:15:25,840 Speaker 6: I mean, for sure, at one hundred dollars oil, everyone 286 00:15:25,920 --> 00:15:27,880 Speaker 6: is going to try to do more. It just basically 287 00:15:27,960 --> 00:15:30,120 Speaker 6: because he makes a lot of money. I mean, a 288 00:15:30,280 --> 00:15:33,720 Speaker 6: US shale producer in Texas was looking to sell his 289 00:15:33,840 --> 00:15:37,640 Speaker 6: oil about six weeks ago for sixty dollars a barroil 290 00:15:37,960 --> 00:15:39,880 Speaker 6: and it can sell the oil at one hundred today, 291 00:15:40,000 --> 00:15:43,280 Speaker 6: So everyone who can increase production a bit is going 292 00:15:43,320 --> 00:15:46,360 Speaker 6: to try. But do I see a massive amount of 293 00:15:46,360 --> 00:15:49,640 Speaker 6: extra drilling coming in the US over the next three months, 294 00:15:49,720 --> 00:15:51,920 Speaker 6: which is what really we needed. No, that's not going 295 00:15:51,960 --> 00:15:54,720 Speaker 6: to happen over the next three months. And also we 296 00:15:54,760 --> 00:15:57,760 Speaker 6: are losing so much oil that you know, it doesn't 297 00:15:57,880 --> 00:16:01,160 Speaker 6: matter what the US shale producers do. I mean, it 298 00:16:01,200 --> 00:16:04,280 Speaker 6: will help on the margins, but the gap is big. 299 00:16:04,360 --> 00:16:06,840 Speaker 6: And you know, I have been discussing with some of 300 00:16:06,840 --> 00:16:09,480 Speaker 6: the colleagues on the newsroom and with analyst and traders. 301 00:16:09,720 --> 00:16:12,280 Speaker 4: How big is the gap? Is eight million? Is a 302 00:16:12,400 --> 00:16:14,160 Speaker 4: nine million? Is ten? Is twelve? 303 00:16:14,600 --> 00:16:17,000 Speaker 6: I mean, at the end of the day, it almost 304 00:16:17,040 --> 00:16:21,160 Speaker 6: doesn't matter because we are talking about that about ten 305 00:16:21,200 --> 00:16:23,880 Speaker 6: percent of the global oil supply. I mean, whether it's 306 00:16:23,960 --> 00:16:28,640 Speaker 6: eight percent or eleven percent, it really doesn't really matter. 307 00:16:28,680 --> 00:16:32,320 Speaker 6: We are losing so much oil that either the conflict 308 00:16:32,360 --> 00:16:35,840 Speaker 6: and soon or prices need to move much much higher. 309 00:16:35,960 --> 00:16:39,440 Speaker 6: I mean, I am surprised that we are not much higher. 310 00:16:40,040 --> 00:16:44,440 Speaker 6: And in some ways it really speaks how good the 311 00:16:44,680 --> 00:16:48,040 Speaker 6: White House has been at joubone in the market, make 312 00:16:48,240 --> 00:16:52,840 Speaker 6: verbal intervention, make threats, make promises, a lot of them falls, 313 00:16:53,000 --> 00:16:55,600 Speaker 6: but it has worked in preventing a lot of the 314 00:16:55,640 --> 00:17:11,119 Speaker 6: panic buying that we have seen in previous crisis. 315 00:17:13,920 --> 00:17:17,119 Speaker 2: What's going on with you as natural gas because if 316 00:17:17,160 --> 00:17:20,560 Speaker 2: you look there, I mean we're talking about like muted 317 00:17:20,640 --> 00:17:23,200 Speaker 2: market moves in the oil market, even though those have risen. 318 00:17:23,400 --> 00:17:25,800 Speaker 2: If you look at that gas, not gas has actually 319 00:17:26,119 --> 00:17:26,720 Speaker 2: come down. 320 00:17:27,600 --> 00:17:30,359 Speaker 6: Yeah, not gas in the United States is trading almost 321 00:17:30,359 --> 00:17:34,159 Speaker 6: as a six month low, which, considering what is happening 322 00:17:34,160 --> 00:17:38,720 Speaker 6: on the global energy market, almost incredible. I mean, the 323 00:17:38,760 --> 00:17:41,679 Speaker 6: reason there is US shale, and the reason is that 324 00:17:41,720 --> 00:17:46,680 Speaker 6: you cannot esport gas easily. For exporting gas, you first 325 00:17:46,760 --> 00:17:51,359 Speaker 6: need to cool it down liquifi. That basically means having 326 00:17:51,400 --> 00:17:56,520 Speaker 6: an enormous fridge that cools gas from you know, room 327 00:17:56,560 --> 00:17:58,360 Speaker 6: temperature to minus one hundred. 328 00:17:58,160 --> 00:17:59,680 Speaker 4: And sixty celsius. 329 00:18:00,000 --> 00:18:01,879 Speaker 6: The illiquifies, and then you can put it on a 330 00:18:01,920 --> 00:18:04,879 Speaker 6: tanker and send it to the rest of the market. 331 00:18:05,080 --> 00:18:08,399 Speaker 6: Because we have limited equofaction capacity. When it does increase 332 00:18:08,440 --> 00:18:11,360 Speaker 6: in quite quickly, that creates a bottleneck. That means that 333 00:18:11,840 --> 00:18:16,640 Speaker 6: the US and Canadian gas effectively strapped inside North America, 334 00:18:16,720 --> 00:18:20,520 Speaker 6: and that's keeping prices completely detached from the global market, 335 00:18:20,960 --> 00:18:24,879 Speaker 6: and that is a huge difference from previous episodes of 336 00:18:25,080 --> 00:18:28,719 Speaker 6: high energy prices. Even in twenty twenty two, the price 337 00:18:28,880 --> 00:18:31,960 Speaker 6: of US natural GUS went from around three and a 338 00:18:32,000 --> 00:18:35,919 Speaker 6: half dollars four dollars to almost ten dollars per British 339 00:18:35,960 --> 00:18:39,760 Speaker 6: thermal unit. This time's staying at around three, actually below 340 00:18:39,800 --> 00:18:44,359 Speaker 6: three dollars at mbtu, And that is incredible because it 341 00:18:44,440 --> 00:18:50,800 Speaker 6: means that the heavy US industry electricity generators, chemical companies, 342 00:18:50,840 --> 00:18:56,120 Speaker 6: fertilizer companies, is like, there is no crisis. Well, everyone 343 00:18:56,160 --> 00:19:01,400 Speaker 6: else in the world is suffering. The US is completely insulated. 344 00:19:01,840 --> 00:19:06,040 Speaker 5: There is something odded perverse about some of the disparate 345 00:19:06,160 --> 00:19:08,760 Speaker 5: impacts here in terms of who is behind and who 346 00:19:08,760 --> 00:19:11,840 Speaker 5: has catalyzed this war, and which side of the Suez 347 00:19:11,880 --> 00:19:14,439 Speaker 5: you're on there, and who is feeling the brunt of it. 348 00:19:14,480 --> 00:19:16,800 Speaker 5: But that actually, you know, you mentioned fertilizer. We've talked 349 00:19:16,800 --> 00:19:18,760 Speaker 5: about fertilizer on the podcast. 350 00:19:19,200 --> 00:19:19,800 Speaker 3: These are the. 351 00:19:19,800 --> 00:19:24,760 Speaker 5: Type of things in a food insecurity that creates serious 352 00:19:24,760 --> 00:19:27,840 Speaker 5: political instability potentially around the world. 353 00:19:28,000 --> 00:19:29,080 Speaker 3: How worried are you you? 354 00:19:29,600 --> 00:19:31,920 Speaker 5: We all know you as the oil and the oil guy, 355 00:19:31,960 --> 00:19:34,280 Speaker 5: but you've written a lot about food over the years. 356 00:19:34,359 --> 00:19:36,520 Speaker 5: I remember you wrote a great piece about in twenty 357 00:19:36,560 --> 00:19:38,520 Speaker 5: twenty two about how rice is going to come to 358 00:19:38,560 --> 00:19:40,760 Speaker 5: the rescue and people couldn't get as much wheat, So 359 00:19:40,760 --> 00:19:43,200 Speaker 5: I know you know the food world too. How concerned 360 00:19:43,320 --> 00:19:47,480 Speaker 5: are you about food? And yeah, the sort of fallout 361 00:19:47,760 --> 00:19:48,480 Speaker 5: from that. 362 00:19:49,040 --> 00:19:51,080 Speaker 4: Today, I'm not very concerned. 363 00:19:51,560 --> 00:19:55,399 Speaker 6: This could all change if the war just goes on 364 00:19:55,560 --> 00:20:00,760 Speaker 6: for months, if President Trump decides that he wants to 365 00:20:01,000 --> 00:20:04,199 Speaker 6: invade Iran with ground troops, et cetera, et cetera. But 366 00:20:04,359 --> 00:20:08,240 Speaker 6: now I'm not very concerned for a number of reasons. 367 00:20:08,280 --> 00:20:11,520 Speaker 6: Twenty twenty two was a huge shock to the global 368 00:20:11,560 --> 00:20:15,239 Speaker 6: food market because it affected a bread basket region of 369 00:20:15,280 --> 00:20:18,040 Speaker 6: the world. If you look at Russia and Ukraine at 370 00:20:18,040 --> 00:20:21,239 Speaker 6: the time, combined, the accounted for around a quarter of 371 00:20:21,520 --> 00:20:25,720 Speaker 6: global exports of wheat and barley, around fifteen percent of 372 00:20:25,760 --> 00:20:30,040 Speaker 6: global exports of corn, and even much higher percentage for 373 00:20:30,160 --> 00:20:33,919 Speaker 6: some vegetable oil like rape seed and some flour. The 374 00:20:34,000 --> 00:20:37,119 Speaker 6: Russian invasion of Ukraine, the battleground was one of the 375 00:20:37,200 --> 00:20:41,840 Speaker 6: most some of the richest fertile farmland in the planet. 376 00:20:42,280 --> 00:20:46,240 Speaker 6: The battleground of the crisis in the Middle East is 377 00:20:46,440 --> 00:20:48,840 Speaker 6: desert and a piece of seed that we call the 378 00:20:48,840 --> 00:20:51,920 Speaker 6: Strait of Hormuz. It doesn't have the same impact in 379 00:20:52,000 --> 00:20:55,359 Speaker 6: terms of global supply. It does have an impact on 380 00:20:55,440 --> 00:20:58,880 Speaker 6: fertilizer prices. So it did also the twenty twenty two 381 00:20:58,880 --> 00:21:02,600 Speaker 6: war between Asia and Ukraine, which is still ongoing. But 382 00:21:02,920 --> 00:21:08,080 Speaker 6: fertilizer prices require time to have an impact on food production. 383 00:21:08,840 --> 00:21:12,959 Speaker 6: And also, while yes, the numbers are very scary, and 384 00:21:13,119 --> 00:21:16,280 Speaker 6: you look at the global fertilizer market, just focusing on Yurea, 385 00:21:16,840 --> 00:21:19,400 Speaker 6: you look at that market and say, oh boy, it's 386 00:21:19,440 --> 00:21:22,440 Speaker 6: going up a lot. We are approaching the twenty twenty 387 00:21:22,480 --> 00:21:27,199 Speaker 6: two record high. But that is a problem in many markets. 388 00:21:27,000 --> 00:21:29,080 Speaker 6: It is a problem that is not a food problem. 389 00:21:29,320 --> 00:21:31,960 Speaker 6: It will be a fyscal problem. And the reason is 390 00:21:32,000 --> 00:21:36,280 Speaker 6: that Yurea fertilizer in particular, is massively subsidized in the 391 00:21:36,320 --> 00:21:40,160 Speaker 6: developing world, particularly in places like India and Pakistan. So 392 00:21:40,920 --> 00:21:43,040 Speaker 6: the problem there is going to be for the Indian 393 00:21:43,080 --> 00:21:47,000 Speaker 6: government Cana the Ford and spend billions of dollars estra 394 00:21:47,320 --> 00:21:51,439 Speaker 6: subsidizing fertilizer less. So is it going to be a 395 00:21:51,440 --> 00:21:54,720 Speaker 6: food crisis in India because the fertilizer, i think, is 396 00:21:54,760 --> 00:21:57,119 Speaker 6: going to be there it's just that you are the 397 00:21:57,200 --> 00:21:58,800 Speaker 6: finance minister in India. 398 00:21:58,880 --> 00:22:01,560 Speaker 4: You have a big problem. And there that's how I'm 399 00:22:01,600 --> 00:22:02,440 Speaker 4: seeing the problem. 400 00:22:02,760 --> 00:22:07,639 Speaker 6: And also the global food market is in a better 401 00:22:07,720 --> 00:22:09,720 Speaker 6: position that almost any. 402 00:22:09,520 --> 00:22:12,440 Speaker 4: Time in the last two or three DCS. 403 00:22:12,720 --> 00:22:16,879 Speaker 6: Inventories of weed are very high, inventories of rice in 404 00:22:16,920 --> 00:22:20,879 Speaker 6: particular an all time high. And while you mentioned rice, 405 00:22:21,000 --> 00:22:24,600 Speaker 6: while we are worried about fertilizer prices, et cetera, et cetera, 406 00:22:24,720 --> 00:22:27,800 Speaker 6: if you look at the most important benchmark for rice 407 00:22:27,880 --> 00:22:31,680 Speaker 6: prices in Asia is about to hit at nineteen year low. 408 00:22:32,200 --> 00:22:32,440 Speaker 3: Good. 409 00:22:32,880 --> 00:22:35,800 Speaker 2: Well, if you're a farmer, no, not if. 410 00:22:35,680 --> 00:22:38,160 Speaker 3: You're the vast majority of people who need eat. Most 411 00:22:38,160 --> 00:22:39,120 Speaker 3: people aren't farmers. 412 00:22:39,160 --> 00:22:42,520 Speaker 6: Sure, but look, as I said, this all depends on 413 00:22:42,600 --> 00:22:46,159 Speaker 6: how lonely it stays. Because you know, you have fertilizer 414 00:22:46,200 --> 00:22:51,080 Speaker 6: prices for several months high, diesel prices very high. Then 415 00:22:51,160 --> 00:22:56,000 Speaker 6: you start eroding the flexibility on the system and you 416 00:22:56,040 --> 00:22:59,520 Speaker 6: don't want to go. The weather can be very funny 417 00:22:59,560 --> 00:23:02,439 Speaker 6: and you we get bad weather when we just really 418 00:23:02,480 --> 00:23:06,000 Speaker 6: need good weather. So my main concern right now will 419 00:23:06,040 --> 00:23:08,639 Speaker 6: be what I'm going to be looking at. This lasts 420 00:23:08,640 --> 00:23:11,840 Speaker 6: a couple of more months. Then my main focus is 421 00:23:11,880 --> 00:23:14,359 Speaker 6: going to be how good is the monsoon. Are we 422 00:23:14,480 --> 00:23:17,199 Speaker 6: going to have a good monsoon season in India or 423 00:23:17,240 --> 00:23:18,679 Speaker 6: is it going to be a bad one, because if 424 00:23:18,680 --> 00:23:20,560 Speaker 6: we have a bad one, then we have a problem. 425 00:23:21,000 --> 00:23:21,400 Speaker 5: Yeah. 426 00:23:21,520 --> 00:23:25,720 Speaker 2: I've been reading about the fertilizer urea tenders that the 427 00:23:25,720 --> 00:23:29,439 Speaker 2: Indian government does periodically. It's just really interesting, like, you know, 428 00:23:29,480 --> 00:23:34,000 Speaker 2: this big exercise to purchase subsidized urea and so far 429 00:23:34,119 --> 00:23:36,440 Speaker 2: from what I understand, they've been putting it off because 430 00:23:36,440 --> 00:23:38,639 Speaker 2: of the uncertainty and prices. So who knows what's going 431 00:23:38,680 --> 00:23:42,199 Speaker 2: to happen. But okay, Ukraine and Russia have come up 432 00:23:42,200 --> 00:23:46,000 Speaker 2: a couple of times in this conversation. What's going on 433 00:23:46,640 --> 00:23:51,760 Speaker 2: with Russian oil? Right now? Listeners can't see, but Javier 434 00:23:51,960 --> 00:23:54,320 Speaker 2: is smiling, tell us have you. 435 00:23:54,800 --> 00:23:57,879 Speaker 6: Well it's almost like, oh boy, if we didn't have 436 00:23:58,000 --> 00:23:59,920 Speaker 6: enough with the Middle East, here is Ukraine and you 437 00:24:00,080 --> 00:24:03,280 Speaker 6: can not blame. Ukraine is fighting for survival. So they 438 00:24:03,280 --> 00:24:06,320 Speaker 6: are hitting Russia as hard as they can wherever they can, 439 00:24:06,800 --> 00:24:10,080 Speaker 6: and that means hitting the oil terminals. In the past, 440 00:24:10,080 --> 00:24:11,960 Speaker 6: they were hitting the terminals in the south of the 441 00:24:12,000 --> 00:24:14,560 Speaker 6: country that's the Black Sea. But they have found a 442 00:24:14,600 --> 00:24:18,720 Speaker 6: corridor to send drones, long distant drones into the north, 443 00:24:18,800 --> 00:24:21,880 Speaker 6: into the Baltic and I think that the Russians were 444 00:24:22,000 --> 00:24:25,720 Speaker 6: caught completely off guard. They didn't think that that Ukraine 445 00:24:25,760 --> 00:24:27,880 Speaker 6: will be able to hit the terminals in the far 446 00:24:28,000 --> 00:24:31,160 Speaker 6: north of Russian territory, so they were not very well 447 00:24:31,200 --> 00:24:35,639 Speaker 6: protected or Ukrainians were extremely good at it. But the 448 00:24:35,720 --> 00:24:39,879 Speaker 6: terminas have been damaged significantly. We don't know for sure 449 00:24:40,280 --> 00:24:43,000 Speaker 6: the stand of the damage, but looking at the satellite pictures, 450 00:24:43,080 --> 00:24:46,000 Speaker 6: it looks bad enough. So we may be also losing 451 00:24:46,400 --> 00:24:50,520 Speaker 6: potentially one million barros a day of Russian oil. And 452 00:24:50,960 --> 00:24:55,119 Speaker 6: it's not really the time. Again, you cannot blame Ukraine, 453 00:24:55,400 --> 00:24:57,439 Speaker 6: but it's not really the time when you want to 454 00:24:57,440 --> 00:24:58,359 Speaker 6: be losing more oil. 455 00:24:58,920 --> 00:25:00,000 Speaker 3: Yeah, it's pretty well right. 456 00:25:00,119 --> 00:25:02,960 Speaker 5: So in some sense there have been the stories about okay, 457 00:25:03,000 --> 00:25:07,560 Speaker 5: Russia benefiting because of relaxed sanctions and surging prices. But 458 00:25:07,600 --> 00:25:10,760 Speaker 5: on the other hand, just from the global perspective, here 459 00:25:10,840 --> 00:25:14,359 Speaker 5: is more supply that's being taken off the market. So 460 00:25:14,400 --> 00:25:18,080 Speaker 5: I mentioned, or it's been Tracy mentioned recording this March thirty. 461 00:25:18,119 --> 00:25:20,000 Speaker 5: First in the morning. Last night we got the Wall 462 00:25:20,040 --> 00:25:23,760 Speaker 5: Street Journal headline that maybe Trump will be comfortable ending 463 00:25:23,840 --> 00:25:26,840 Speaker 5: this war even if the straight of horror moves is 464 00:25:26,880 --> 00:25:30,560 Speaker 5: not back to normal, and Iran passed a law that 465 00:25:30,800 --> 00:25:33,399 Speaker 5: codified that said the straight of horror moves won't go 466 00:25:33,440 --> 00:25:35,320 Speaker 5: back to normal, and it's going to collect a toll, 467 00:25:35,440 --> 00:25:38,840 Speaker 5: it says, and so forth, Let's say, okay, the war ends. 468 00:25:39,000 --> 00:25:42,000 Speaker 5: Let's say Trump decides to unilaterally and the war without 469 00:25:42,200 --> 00:25:46,480 Speaker 5: resolution here, and like, how big of a fundamental change 470 00:25:46,640 --> 00:25:49,240 Speaker 5: is this to the Middle East? If it's sort of 471 00:25:49,320 --> 00:25:53,160 Speaker 5: accepted that Iran has a straight of horror moves toll booth, 472 00:25:53,560 --> 00:25:56,919 Speaker 5: could this be a tolerable situation for the region. 473 00:25:56,680 --> 00:25:58,639 Speaker 3: Like what is the significance of that? 474 00:25:59,359 --> 00:26:01,719 Speaker 6: I would be so price if the region was to 475 00:26:01,720 --> 00:26:05,280 Speaker 6: be happy with Iran having a toll boot on the straight. 476 00:26:05,359 --> 00:26:07,920 Speaker 6: I don't think that any countries would be happy that 477 00:26:08,000 --> 00:26:12,480 Speaker 6: an international astraite just becomes, you know, a toll boot 478 00:26:12,560 --> 00:26:16,800 Speaker 6: for passing ships. I mean, like what it stops Morocco 479 00:26:17,160 --> 00:26:21,119 Speaker 6: or Gibraltar or Spain to impose a similar situation in 480 00:26:21,160 --> 00:26:24,560 Speaker 6: the Mediterranean or Denmark, in in the Danish streets, in 481 00:26:24,720 --> 00:26:28,399 Speaker 6: in the Baltic I mean you or Singapore on the 482 00:26:28,440 --> 00:26:32,280 Speaker 6: Singapore and Australia, you create a very very bad precedent 483 00:26:32,400 --> 00:26:36,520 Speaker 6: for international piece and I'm free shipping. I would be 484 00:26:36,560 --> 00:26:39,000 Speaker 6: surprised if countries in the in the Middle East were 485 00:26:39,040 --> 00:26:39,720 Speaker 6: happy to it. 486 00:26:40,320 --> 00:26:41,960 Speaker 4: Would they needed to accept it? 487 00:26:42,600 --> 00:26:44,800 Speaker 6: I mean a current prices of one hundred dollars, say 488 00:26:44,880 --> 00:26:46,800 Speaker 6: that you you know, you are an export country and 489 00:26:46,840 --> 00:26:48,880 Speaker 6: you have to pay half a dollar per barrel as 490 00:26:48,880 --> 00:26:51,880 Speaker 6: a fee. I think that that's something that everyone will say, Well, 491 00:26:51,880 --> 00:26:53,520 Speaker 6: you know, I mean, we're still selling the oil at 492 00:26:53,520 --> 00:26:55,960 Speaker 6: one hundred dollars, so instead of one hundred, we are 493 00:26:55,960 --> 00:26:58,160 Speaker 6: selling that ninety nine and a half. That's pretty good 494 00:26:58,160 --> 00:27:00,359 Speaker 6: to me. So I suppose that some of the oil 495 00:27:00,359 --> 00:27:04,639 Speaker 6: will flow. But you led Iran basically to dictate terms 496 00:27:04,680 --> 00:27:08,080 Speaker 6: and dictate terms forever, and that will mean also that 497 00:27:08,080 --> 00:27:11,800 Speaker 6: that Iran has a very tight grip on policy and 498 00:27:11,840 --> 00:27:15,320 Speaker 6: economic decisions that his neighbors have been doing independently before. 499 00:27:15,680 --> 00:27:17,960 Speaker 6: So I cannot see that on the long term. I 500 00:27:18,000 --> 00:27:21,760 Speaker 6: don't see also countries like China being particularly happy with 501 00:27:21,800 --> 00:27:25,680 Speaker 6: that arrangement. But if anything, over the last five years 502 00:27:25,760 --> 00:27:28,560 Speaker 6: or so, we have seen things on international diplomacy and 503 00:27:28,640 --> 00:27:32,119 Speaker 6: international security that I said before, Now that's not going 504 00:27:32,160 --> 00:27:33,800 Speaker 6: to happen, and then I have to eat my heart. 505 00:27:34,520 --> 00:27:37,720 Speaker 2: Sorry, I just got a visual of having eating his hat. 506 00:27:38,119 --> 00:27:41,320 Speaker 4: Okay with with I sprinkles and olive oil on top of. 507 00:27:43,200 --> 00:27:47,000 Speaker 2: Tomatoes. Yeah, okay. One thing that people have talked about 508 00:27:47,000 --> 00:27:49,800 Speaker 2: for I'm pretty sure the duration of all of our 509 00:27:50,119 --> 00:27:55,840 Speaker 2: careers are attempts to move away from pricing oil in dollars. 510 00:27:56,280 --> 00:27:57,000 Speaker 4: And if you think. 511 00:27:56,840 --> 00:28:00,920 Speaker 2: About the current situation, there's something very poor verse about 512 00:28:01,320 --> 00:28:05,280 Speaker 2: seeing the dollar go up because there's a scramble for 513 00:28:05,400 --> 00:28:09,439 Speaker 2: barrels of oil because of an action taken by the 514 00:28:09,600 --> 00:28:13,320 Speaker 2: United States. From your contacts in the oil market, is 515 00:28:13,359 --> 00:28:17,679 Speaker 2: anyone talking about like actual currency pricing for barrels at 516 00:28:17,680 --> 00:28:19,640 Speaker 2: the moment? Is this something that is going to get 517 00:28:19,800 --> 00:28:20,600 Speaker 2: renewed traction? 518 00:28:21,400 --> 00:28:23,400 Speaker 4: No, I don't hear anyone. 519 00:28:23,680 --> 00:28:28,040 Speaker 6: I mean, certainly Iran may be happy to take other currencies, 520 00:28:28,760 --> 00:28:32,960 Speaker 6: has been relatively happy to take Chinese juan and also 521 00:28:33,160 --> 00:28:38,400 Speaker 6: the other currencies, which has problems on compatibility. Everyone else 522 00:28:38,440 --> 00:28:42,200 Speaker 6: will still want the dollar. And the way that it 523 00:28:42,280 --> 00:28:45,520 Speaker 6: was put to me to a leading producing country in 524 00:28:45,560 --> 00:28:47,640 Speaker 6: the Middle East, and I was talking to the head 525 00:28:47,640 --> 00:28:50,360 Speaker 6: of the central bank. I'm gonna not name the country, 526 00:28:50,720 --> 00:28:54,320 Speaker 6: but they said to me, so if I switched from 527 00:28:54,360 --> 00:28:56,880 Speaker 6: the dollar to say the Juan. I moved from a 528 00:28:57,000 --> 00:29:00,320 Speaker 6: relatively high interest rate to a low interest rate. I 529 00:29:00,360 --> 00:29:04,400 Speaker 6: moved from full compatibility to a lot of problems to convert. 530 00:29:04,800 --> 00:29:08,280 Speaker 6: And I moved from maximum liquidity to no liquidity whatsoever. 531 00:29:08,640 --> 00:29:10,960 Speaker 6: And then the central bank governors like, why I would 532 00:29:11,040 --> 00:29:13,560 Speaker 6: like to do that? Why I would like to really 533 00:29:13,560 --> 00:29:16,120 Speaker 6: take a step back on my currency. And I think 534 00:29:16,200 --> 00:29:19,400 Speaker 6: that the Juan is not there yet. For oil producers 535 00:29:19,840 --> 00:29:23,160 Speaker 6: and everyone that is using other currencies that the dollar 536 00:29:23,240 --> 00:29:26,440 Speaker 6: to price the oil or to invoice the oil, they 537 00:29:26,480 --> 00:29:28,800 Speaker 6: are doing it because they are under American sanctions. They 538 00:29:28,800 --> 00:29:30,640 Speaker 6: are not doing it because they want to do it. 539 00:29:30,920 --> 00:29:33,040 Speaker 6: They are doing it because they have no other options 540 00:29:33,240 --> 00:29:35,560 Speaker 6: that to do it, just because they are on the 541 00:29:35,760 --> 00:29:37,920 Speaker 6: naughty corner of the US dressury. 542 00:29:38,120 --> 00:29:40,920 Speaker 5: So I feel like the twenty twenty two twenty twenty 543 00:29:40,920 --> 00:29:46,480 Speaker 5: three inflation crisis, commodities crisis really delivered a near death 544 00:29:46,560 --> 00:29:51,520 Speaker 5: blow to a lot of the decarbonization dreams of the 545 00:29:51,560 --> 00:29:53,880 Speaker 5: twenty tens and so forth. And we saw, you know, 546 00:29:53,920 --> 00:29:56,480 Speaker 5: we know, a bunch of companies and country sort of 547 00:29:56,560 --> 00:30:00,920 Speaker 5: quietly ditched their goals of zero and all that. It 548 00:30:01,000 --> 00:30:03,320 Speaker 5: seems like this is going to have a further effect 549 00:30:03,360 --> 00:30:08,680 Speaker 5: on this, but especially because Asian economies, I imagine it sounds 550 00:30:08,680 --> 00:30:11,040 Speaker 5: like coal is going to be ramped back up, et cetera. 551 00:30:11,320 --> 00:30:13,560 Speaker 5: But there's an interesting dynamic, and I forget who talked 552 00:30:13,560 --> 00:30:16,560 Speaker 5: about it. You know, we did this episode about how 553 00:30:16,640 --> 00:30:20,680 Speaker 5: this could even further accelerate the Chinese ev exports, et cetera. 554 00:30:20,720 --> 00:30:24,200 Speaker 5: And efforts to reduce oil consumption. Could we see this 555 00:30:24,320 --> 00:30:29,760 Speaker 5: situation in which we essentially have electrification without decarbonization, that 556 00:30:29,960 --> 00:30:33,680 Speaker 5: basically we see this boom for electrification. Maybe you're the 557 00:30:33,720 --> 00:30:36,000 Speaker 5: one who used this term. Someone was talking about it 558 00:30:36,120 --> 00:30:38,760 Speaker 5: might have just been new but more electric cars and 559 00:30:38,800 --> 00:30:40,040 Speaker 5: more coal at the same time. 560 00:30:40,560 --> 00:30:41,280 Speaker 4: I think that we can. 561 00:30:41,520 --> 00:30:43,440 Speaker 6: I think that that's a very good way to put it, 562 00:30:43,520 --> 00:30:46,160 Speaker 6: because I think that we can't have a simultaneous poosh 563 00:30:46,480 --> 00:30:49,840 Speaker 6: to try to get to reduce your dependence on oil 564 00:30:49,880 --> 00:30:53,240 Speaker 6: and to reduce your dependence on middle least oil. In particular, 565 00:30:53,720 --> 00:30:57,200 Speaker 6: it's going to be see unsafe, particularly if we run 566 00:30:57,800 --> 00:31:01,440 Speaker 6: somehow still has some control, whether it's a tool both 567 00:31:01,640 --> 00:31:04,240 Speaker 6: or some kind of de facto control over the over 568 00:31:04,280 --> 00:31:06,880 Speaker 6: the street or hormones who would like to be dependent 569 00:31:06,960 --> 00:31:09,800 Speaker 6: of of you know, Middle East and oil in that situation, 570 00:31:10,120 --> 00:31:12,040 Speaker 6: because you think that there's going to be a crisis 571 00:31:12,080 --> 00:31:15,040 Speaker 6: six months down the road, and the solution for that 572 00:31:15,200 --> 00:31:17,600 Speaker 6: is going to be, you know, more generation with coal. 573 00:31:17,760 --> 00:31:21,320 Speaker 6: And we are seeing that just you know, across the 574 00:31:21,360 --> 00:31:24,280 Speaker 6: whole of Asia, whether it's poor countries like Pakistan or 575 00:31:24,320 --> 00:31:28,280 Speaker 6: India or the most developed countries in the region like Japan, 576 00:31:28,440 --> 00:31:30,840 Speaker 6: all of them are going for more coal right now. 577 00:31:30,880 --> 00:31:32,600 Speaker 4: But I think that we're going to see also. 578 00:31:32,640 --> 00:31:34,840 Speaker 6: Over the medium and a longer time, we're going to 579 00:31:34,920 --> 00:31:38,000 Speaker 6: see a movement for more solar alongside batteries. So I 580 00:31:38,000 --> 00:31:42,800 Speaker 6: can see the role of energy liquefied natural gas squeeze 581 00:31:42,840 --> 00:31:45,920 Speaker 6: out of the electricity system with a push for more 582 00:31:46,000 --> 00:31:48,960 Speaker 6: coal as the immediate future, and more you know down 583 00:31:49,040 --> 00:31:52,479 Speaker 6: the road with more solar and more batteries. Effectively, you know, 584 00:31:52,560 --> 00:31:55,880 Speaker 6: at least for a few years, means perhaps more electrification, 585 00:31:56,040 --> 00:31:59,400 Speaker 6: but with more carbon intensive production of that electricity, which 586 00:31:59,440 --> 00:32:01,760 Speaker 6: is not exactly what the doctor recommended. 587 00:32:03,320 --> 00:32:05,880 Speaker 2: Now, Havy. One of the reasons we wanted to talk 588 00:32:05,920 --> 00:32:08,280 Speaker 2: to you other than a bunch of our listeners have 589 00:32:08,320 --> 00:32:10,480 Speaker 2: been clamoring for us to have you on. But you 590 00:32:10,560 --> 00:32:14,560 Speaker 2: of course, wrote an excellent book called The World for Sale, Money, Power, 591 00:32:14,560 --> 00:32:17,360 Speaker 2: and the Traders who Barter the Earth's resources. You're very 592 00:32:17,400 --> 00:32:20,480 Speaker 2: plugged in to the commodity You've seen what's been the 593 00:32:20,520 --> 00:32:25,719 Speaker 2: most surprising reaction or thing that you've heard from that 594 00:32:25,920 --> 00:32:29,880 Speaker 2: space over the past month or so. 595 00:32:29,960 --> 00:32:31,959 Speaker 6: I mean, I think that there are a couple of 596 00:32:31,960 --> 00:32:36,440 Speaker 6: things that they are very interesting. One is how little 597 00:32:36,880 --> 00:32:40,440 Speaker 6: relative the price of natural guys in Europe, which was 598 00:32:40,520 --> 00:32:42,680 Speaker 6: the epicenter of the twenty twenty two. 599 00:32:42,560 --> 00:32:43,960 Speaker 4: Crisis, has moved. 600 00:32:44,040 --> 00:32:47,640 Speaker 6: Yes, sure, the price of natural gas we refer to 601 00:32:47,680 --> 00:32:51,280 Speaker 6: the benchmar as TTF as a Dutch benchmark for Europe, 602 00:32:51,920 --> 00:32:54,840 Speaker 6: has gone up a lot, about seventy percent since the 603 00:32:54,880 --> 00:32:58,240 Speaker 6: crisis started, but it's around the same level as it 604 00:32:58,520 --> 00:33:02,880 Speaker 6: was fourteen months ago. And actually today, or the last 605 00:33:02,880 --> 00:33:05,640 Speaker 6: time I checked the price this morning was lower than 606 00:33:05,680 --> 00:33:06,600 Speaker 6: four weeks ago. 607 00:33:06,960 --> 00:33:08,280 Speaker 4: So it went up a lot. 608 00:33:08,280 --> 00:33:10,200 Speaker 6: At the beginning of the war and since then has 609 00:33:10,280 --> 00:33:14,400 Speaker 6: kind of flattened or came down. That is an indication 610 00:33:14,560 --> 00:33:18,040 Speaker 6: of how much allergy supplies coming into the market. A 611 00:33:18,080 --> 00:33:21,000 Speaker 6: lot of it is coming from North America, the US 612 00:33:21,040 --> 00:33:24,080 Speaker 6: and Canada. That really is something that a lot of 613 00:33:24,160 --> 00:33:28,120 Speaker 6: traders physical traders knew was coming, but I think it 614 00:33:28,160 --> 00:33:31,719 Speaker 6: still has surprise on hedge funds. And alongside is the 615 00:33:31,720 --> 00:33:35,840 Speaker 6: price of electricity, because at times we focus on oil 616 00:33:35,960 --> 00:33:39,360 Speaker 6: and we see energy crisis through the lens still of 617 00:33:39,480 --> 00:33:42,880 Speaker 6: nineteen seventy, nineteen seventy three, nineteen seventy nine, the first 618 00:33:42,880 --> 00:33:46,640 Speaker 6: and second oil crisis. But the global economy has changed 619 00:33:46,640 --> 00:33:49,280 Speaker 6: a lot since then. And yes, of course gasoline and 620 00:33:49,280 --> 00:33:52,800 Speaker 6: diesel are very important, but electricity is really what powers 621 00:33:52,840 --> 00:33:57,680 Speaker 6: today the global economy. You go to your bakery downstairs 622 00:33:57,760 --> 00:34:01,680 Speaker 6: or your coffee shop, that's all electricity. And the price 623 00:34:01,720 --> 00:34:05,480 Speaker 6: of electricity increase a lot. In twenty twenty two, particularly 624 00:34:05,520 --> 00:34:09,600 Speaker 6: here in Europe, we saw prices. We look at German 625 00:34:09,719 --> 00:34:12,040 Speaker 6: prices as a benchmark for the whole of Europe, and 626 00:34:12,040 --> 00:34:14,960 Speaker 6: I typically look at the one year forward because they 627 00:34:15,040 --> 00:34:17,120 Speaker 6: kind of smooth out a lot of the you know, 628 00:34:17,239 --> 00:34:17,759 Speaker 6: months and. 629 00:34:17,840 --> 00:34:19,040 Speaker 4: Day to day volatility. 630 00:34:19,440 --> 00:34:23,799 Speaker 6: The one year forward for electricity prices in Germany went 631 00:34:23,920 --> 00:34:27,320 Speaker 6: up to nearly one thousand euros per meke up an hour. 632 00:34:27,840 --> 00:34:29,120 Speaker 4: It's now around ninety. 633 00:34:29,680 --> 00:34:32,040 Speaker 6: So when people talk about are we seeing an energy 634 00:34:32,080 --> 00:34:34,960 Speaker 6: crisis like twenty twenty two, I said, look, you look 635 00:34:34,960 --> 00:34:38,360 Speaker 6: at refined products or even clude oil. Yes, it's bad. 636 00:34:38,800 --> 00:34:43,400 Speaker 6: You look at gas in Europe, it's getting uncomfortable, but 637 00:34:43,480 --> 00:34:44,160 Speaker 6: it's not bad. 638 00:34:44,600 --> 00:34:45,240 Speaker 4: In the US. 639 00:34:45,239 --> 00:34:47,440 Speaker 6: They have not even noticed that there is a crisis. 640 00:34:47,840 --> 00:34:51,560 Speaker 6: You look at the electricity market, it's like someone said 641 00:34:51,560 --> 00:34:54,399 Speaker 6: the word crisis because we are a normal prices here. 642 00:34:54,440 --> 00:34:56,960 Speaker 6: I mean like I have not seen anything moving, and 643 00:34:57,000 --> 00:35:00,960 Speaker 6: I think that that has been quite at the center conversations. 644 00:35:01,080 --> 00:35:03,799 Speaker 6: And it's also one of the reasons when I told 645 00:35:03,800 --> 00:35:08,040 Speaker 6: to central banks which they are a bit more at 646 00:35:08,160 --> 00:35:10,719 Speaker 6: ease that they were in twenty twenty two, because in 647 00:35:10,760 --> 00:35:16,320 Speaker 6: twenty twenty two, the four major energy commodities electricity, natural gas, 648 00:35:16,400 --> 00:35:20,200 Speaker 6: call an oil, all of them went out simultaneously and 649 00:35:20,239 --> 00:35:23,080 Speaker 6: they went to a stream crisis. So far from these 650 00:35:23,120 --> 00:35:26,360 Speaker 6: crisis we have seen a movement in oil and a 651 00:35:26,400 --> 00:35:29,960 Speaker 6: bit of natural gas in Europe and Asia, not everywhere 652 00:35:29,960 --> 00:35:34,480 Speaker 6: else has barely moved. Electricity is just basically relaxing and 653 00:35:35,040 --> 00:35:37,319 Speaker 6: having a very Spanish Yesta. 654 00:35:37,800 --> 00:35:40,200 Speaker 2: All right, HARBYA, thank you so much for coming back 655 00:35:40,200 --> 00:35:41,719 Speaker 2: on our thoughts. Really appreciate it. 656 00:35:41,960 --> 00:35:42,759 Speaker 4: My pleasure. 657 00:35:55,080 --> 00:35:57,400 Speaker 2: Joe, great to talk to have you as always. A 658 00:35:57,480 --> 00:35:59,600 Speaker 2: couple of things stood out to me from that conversation, 659 00:36:00,120 --> 00:36:04,080 Speaker 2: So it seems like everything is very relative in commodities 660 00:36:04,160 --> 00:36:06,680 Speaker 2: at the moment, Like the relative price moves really seem 661 00:36:06,760 --> 00:36:09,120 Speaker 2: to matter and like be quite different to each other. 662 00:36:09,280 --> 00:36:12,960 Speaker 2: So the idea that maybe we shouldn't be focusing on 663 00:36:13,000 --> 00:36:15,760 Speaker 2: the crude price so much. It's more the refined products 664 00:36:15,800 --> 00:36:18,799 Speaker 2: where we're releasing the impact, which is what matters for 665 00:36:19,080 --> 00:36:22,760 Speaker 2: you know, everyday consumption and economic growth. And then secondly 666 00:36:22,840 --> 00:36:26,640 Speaker 2: the idea that we still don't have that much movement 667 00:36:26,880 --> 00:36:29,600 Speaker 2: in natural gas, yeah, which is kind of weird, but 668 00:36:29,719 --> 00:36:33,640 Speaker 2: also relevant if you're worried about inflation, because that would 669 00:36:33,680 --> 00:36:38,080 Speaker 2: be I think like the primary channel electricity prices through 670 00:36:38,120 --> 00:36:41,080 Speaker 2: which you would see higher prices through the economy. 671 00:36:41,160 --> 00:36:44,120 Speaker 5: Yeah, I mean, look also, I mean gasoline prices are 672 00:36:44,160 --> 00:36:47,720 Speaker 5: going to go to five dollars very plausibly. Diesel prices 673 00:36:47,719 --> 00:36:49,560 Speaker 5: in the US are up, So it's gonna there's gonna 674 00:36:49,600 --> 00:36:51,680 Speaker 5: be a strain. But I do think that is, as 675 00:36:51,719 --> 00:36:56,160 Speaker 5: you say, the really key thing it is like that 676 00:36:56,160 --> 00:36:58,880 Speaker 5: that you know, what really helped me understand this was 677 00:36:58,960 --> 00:37:03,080 Speaker 5: just this idea of distance between the straight and where 678 00:37:03,120 --> 00:37:05,640 Speaker 5: you're an end consumer, right, and you have to figure 679 00:37:05,719 --> 00:37:08,640 Speaker 5: too that like, if the distance is fairly narrow and 680 00:37:08,760 --> 00:37:11,560 Speaker 5: short and you're getting your oil from your next door neighbor, 681 00:37:11,760 --> 00:37:14,200 Speaker 5: you're gonna have less, you know, less reason to hold 682 00:37:14,239 --> 00:37:16,839 Speaker 5: a lot of stocks and so forth. And so when 683 00:37:16,880 --> 00:37:21,160 Speaker 5: you see these headlines in East Asia, like they're already 684 00:37:21,160 --> 00:37:24,560 Speaker 5: in rationing mode, Like I sort of get it. Whereas 685 00:37:24,600 --> 00:37:27,160 Speaker 5: in other parts, you know, there's not a ton of 686 00:37:27,640 --> 00:37:31,120 Speaker 5: imports west of Suez from Saudi Arabia Saudi Arabia, but 687 00:37:31,160 --> 00:37:34,000 Speaker 5: there is some. So in some of these areas or 688 00:37:34,080 --> 00:37:36,839 Speaker 5: some of these longer distances, like the Philippines, et cetera, 689 00:37:37,640 --> 00:37:39,920 Speaker 5: this sort of drop dead date or whatever. Maybe that's 690 00:37:39,960 --> 00:37:42,720 Speaker 5: a little too extreme, but the sort of the true 691 00:37:42,920 --> 00:37:44,880 Speaker 5: moment the crisis hits hasn't hit yet. 692 00:37:45,080 --> 00:37:48,520 Speaker 2: Everything's relative, Joe, especially geography. Well, the other thing I 693 00:37:48,600 --> 00:37:52,680 Speaker 2: was thinking, though, is, you know, these buffer stocks have 694 00:37:52,800 --> 00:37:57,880 Speaker 2: helped the market whether this crisis so far. But I 695 00:37:58,000 --> 00:38:01,359 Speaker 2: just like, I have to imagine that if things were 696 00:38:01,400 --> 00:38:03,440 Speaker 2: to get resolved in the next I don't know a 697 00:38:03,480 --> 00:38:06,360 Speaker 2: week or two or even month, that everyone around the 698 00:38:06,360 --> 00:38:09,200 Speaker 2: world is going to be scrambling to rebuild some of 699 00:38:09,239 --> 00:38:12,000 Speaker 2: their stoles oil. So I just don't see like that 700 00:38:12,120 --> 00:38:17,200 Speaker 2: immediate pressure on price necessarily dissipating that fast. But there 701 00:38:17,320 --> 00:38:18,680 Speaker 2: still seem to be a lot of people in the 702 00:38:18,680 --> 00:38:19,879 Speaker 2: oil market who think it is. 703 00:38:20,320 --> 00:38:22,360 Speaker 5: It's a pretty weird time. And you know, one of 704 00:38:22,360 --> 00:38:24,520 Speaker 5: the things I think, like in the very early days 705 00:38:24,520 --> 00:38:28,160 Speaker 5: of the war, well, one thing that perhaps kept oil 706 00:38:28,160 --> 00:38:30,320 Speaker 5: prices someone contained was like, oh, Trump is going to 707 00:38:30,360 --> 00:38:33,239 Speaker 5: talk over right, There's not much appetite for any pain. 708 00:38:33,560 --> 00:38:35,480 Speaker 5: And then I think the next step, which we're in 709 00:38:35,560 --> 00:38:39,120 Speaker 5: right now, is and this next leg up that we've seen, 710 00:38:39,280 --> 00:38:42,719 Speaker 5: we have seen bent futures trade closed yesterday at the 711 00:38:42,760 --> 00:38:45,799 Speaker 5: highest prices yet in this crisis, the next leg is 712 00:38:45,800 --> 00:38:49,799 Speaker 5: probably well Trump couldn't check it out if you wanted to, 713 00:38:49,840 --> 00:38:53,240 Speaker 5: because Iran get to say. And then the next stage 714 00:38:53,480 --> 00:38:58,800 Speaker 5: maybe well maybe Trump latterly decides to end the war. 715 00:38:59,440 --> 00:39:03,040 Speaker 5: Iran's still controls the straight Uorford moods to some extent. 716 00:39:03,640 --> 00:39:06,239 Speaker 5: How does the world live with a toll booth, etc. 717 00:39:06,600 --> 00:39:09,440 Speaker 5: Which is not great for anyone not thrilled, But also 718 00:39:09,480 --> 00:39:13,399 Speaker 5: perhaps I don't know, maybe like the market could live 719 00:39:13,440 --> 00:39:15,839 Speaker 5: with that for a while. So we seem to be 720 00:39:15,880 --> 00:39:18,120 Speaker 5: maybe moving I don't know. It'll be interesting to see 721 00:39:18,120 --> 00:39:21,239 Speaker 5: if this latest headline, how long that stays with us? 722 00:39:21,280 --> 00:39:23,759 Speaker 5: And if that becomes the new meta that or the 723 00:39:23,800 --> 00:39:27,040 Speaker 5: new narrative that will just be Yes, this is not great. 724 00:39:27,120 --> 00:39:30,200 Speaker 3: But this is not great is better than no movement 725 00:39:30,280 --> 00:39:30,600 Speaker 3: at all. 726 00:39:30,920 --> 00:39:32,560 Speaker 2: It's very seven stages of great. 727 00:39:32,640 --> 00:39:34,360 Speaker 3: Yeah, it does feel it does. 728 00:39:34,200 --> 00:39:38,600 Speaker 2: Feel like we moved from denial to like depression and 729 00:39:38,640 --> 00:39:43,080 Speaker 2: then reconstruction, acceptance finally exceptions. Yeah, all right, shall we 730 00:39:43,120 --> 00:39:43,440 Speaker 2: leave it there? 731 00:39:43,560 --> 00:39:44,200 Speaker 3: Let's leave it there. 732 00:39:44,440 --> 00:39:47,120 Speaker 2: This has been another episode of the Authoughts podcast. I'm 733 00:39:47,160 --> 00:39:49,760 Speaker 2: Tracy Alloway. You can follow me at Tracy Alloway. 734 00:39:49,880 --> 00:39:52,600 Speaker 3: And I'm Joe Wisenthal. You can follow me at the Stalwart. 735 00:39:52,880 --> 00:39:55,759 Speaker 5: Follow our guest Javier Bloss at Javier Bloss, and of course, 736 00:39:55,840 --> 00:39:58,600 Speaker 5: check out all of his Bloomberg opinion columns. Follow our 737 00:39:58,680 --> 00:40:02,120 Speaker 5: producers Carmen Rodriguez at Carmen Arman, dash Oil, Bennett at 738 00:40:02,160 --> 00:40:05,160 Speaker 5: Dashbot at, Kalebrooks and Kale Brooks. And from our Odd 739 00:40:05,160 --> 00:40:07,719 Speaker 5: Lots content go to Bloomberg dot com. Slash odd Lots 740 00:40:07,719 --> 00:40:10,120 Speaker 5: were a daily newsletter and all of our episodes and 741 00:40:10,120 --> 00:40:12,000 Speaker 5: you could shout about all these topics twenty four to 742 00:40:12,040 --> 00:40:15,959 Speaker 5: seven in our discord Discord dot gg slash online and if. 743 00:40:15,880 --> 00:40:17,880 Speaker 2: You enjoy Odd Lots, if you like it when we 744 00:40:17,920 --> 00:40:20,600 Speaker 2: talk to Javier about global oil markets, then please leave 745 00:40:20,680 --> 00:40:24,040 Speaker 2: us a positive review on your favorite podcast platform. And remember, 746 00:40:24,080 --> 00:40:26,480 Speaker 2: if you are a Bloomberg subscriber, you can listen to 747 00:40:26,600 --> 00:40:29,480 Speaker 2: all of our episodes absolutely add free. All you need 748 00:40:29,520 --> 00:40:32,200 Speaker 2: to do is find the Bloomberg channel on Apple Podcasts 749 00:40:32,239 --> 00:40:34,880 Speaker 2: and follow the instructions there. Thanks for listening. 750 00:41:00,760 --> 00:41:00,960 Speaker 1: Eight