1 00:00:02,720 --> 00:00:14,000 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Ebower I opin. 2 00:00:15,840 --> 00:00:20,079 Speaker 2: This is Fussy Monkey. He's Bloomberg's bear chief in Karachi, Pakistan. 3 00:00:20,720 --> 00:00:23,159 Speaker 2: He's at a gas station right now, topping off his 4 00:00:23,280 --> 00:00:30,280 Speaker 2: car before the government raises fuel prices yet again. In 5 00:00:30,320 --> 00:00:34,160 Speaker 2: the US and the UK, fuel prices rise and fall 6 00:00:34,320 --> 00:00:38,400 Speaker 2: with the market, but in Pakistan the government adjusts them 7 00:00:38,479 --> 00:00:42,120 Speaker 2: on a fixed schedule, typically every two weeks. So when 8 00:00:42,159 --> 00:00:45,159 Speaker 2: Fussy heard that war had broken out in Iran and 9 00:00:45,200 --> 00:00:49,280 Speaker 2: the strait up our moose was effectively closed, he knew 10 00:00:49,400 --> 00:00:53,960 Speaker 2: prices would spike. So his first stop the gas station. 11 00:00:54,680 --> 00:00:57,120 Speaker 3: So basically topped up right till the end, so you know, 12 00:00:57,240 --> 00:01:02,160 Speaker 3: when you put a pump to fill your it automatically stops. 13 00:01:02,680 --> 00:01:05,720 Speaker 3: After it automatically stops, there is still some space to 14 00:01:05,760 --> 00:01:07,480 Speaker 3: fit in a few more liters as well. 15 00:01:07,880 --> 00:01:10,720 Speaker 2: It turned out to be the right call, because just 16 00:01:10,959 --> 00:01:15,280 Speaker 2: days later the government raised fuel prices by a record amount. 17 00:01:15,840 --> 00:01:18,759 Speaker 3: It was the biggest increase in Pakistan's history, by twenty 18 00:01:18,800 --> 00:01:22,360 Speaker 3: one percent, to be precise. And right before that we 19 00:01:22,520 --> 00:01:25,920 Speaker 3: saw that they were massive, massive long lines at fuel pumps. 20 00:01:26,800 --> 00:01:30,839 Speaker 2: Like much of South Asia, Pakistan's economy is especially vulnerable 21 00:01:30,920 --> 00:01:35,119 Speaker 2: to swings in global energy costs. The country imports most 22 00:01:35,160 --> 00:01:38,080 Speaker 2: of its fuel, with the vast majority of those imports 23 00:01:38,120 --> 00:01:41,920 Speaker 2: coming from Gulf countries. So when supply roots like the 24 00:01:41,920 --> 00:01:46,000 Speaker 2: Strait of Hormuz are disrupted, the shock hits hard at home. 25 00:01:49,600 --> 00:01:53,800 Speaker 3: Tonight, Pakistan increased food prices. It was, you know, chaos 26 00:01:53,920 --> 00:01:56,920 Speaker 3: at food pumps. We saw that they were massive, massive 27 00:01:57,000 --> 00:02:01,320 Speaker 3: long lines. There scuffles at food station. There were violence 28 00:02:01,480 --> 00:02:06,000 Speaker 3: in multiple places as well, and pumpsax lesine completely dried. 29 00:02:07,080 --> 00:02:10,320 Speaker 2: After oil prices surged past one hundred dollars a barrel, 30 00:02:10,560 --> 00:02:14,720 Speaker 2: Pakistan's government rolled out more than a dozen fuel saving measures. 31 00:02:15,360 --> 00:02:19,000 Speaker 2: Officials also said they would begin adjusting prices more often, 32 00:02:19,360 --> 00:02:22,160 Speaker 2: now weekly to keep pace with the volatility. 33 00:02:22,639 --> 00:02:25,800 Speaker 4: Part of the measures that we've taken in terms of 34 00:02:25,840 --> 00:02:29,680 Speaker 4: conservation and austerity include a four day work week, a 35 00:02:29,720 --> 00:02:33,519 Speaker 4: lot of work from home, a substantial reduction in government. 36 00:02:34,080 --> 00:02:38,120 Speaker 2: Last week, mousharf z Aidi, the spokesperson for Pakistan's Prime minister, 37 00:02:38,600 --> 00:02:42,640 Speaker 2: told Bloomberg that the government was bracing for prolonged energy shocks. 38 00:02:42,960 --> 00:02:46,880 Speaker 4: We're also very conscious of the negative impact of this conflict, 39 00:02:47,160 --> 00:02:49,400 Speaker 4: not just on Pakistan, but on the whole region. 40 00:02:49,880 --> 00:02:52,320 Speaker 1: The Asia region as a whole is actually feeling it 41 00:02:52,520 --> 00:02:55,240 Speaker 1: very acutely, especially if you compare it with the rest 42 00:02:55,240 --> 00:02:55,760 Speaker 1: of the world. 43 00:02:56,200 --> 00:03:00,320 Speaker 2: Clara Ferrera Marquez is Bloomberg's Managing editor for Commodity and 44 00:03:00,520 --> 00:03:01,520 Speaker 2: Energy in Asia. 45 00:03:01,960 --> 00:03:04,400 Speaker 1: Then that's largely just to do with the way that 46 00:03:04,480 --> 00:03:08,080 Speaker 1: flows through the Middle East are directed. But it is 47 00:03:08,120 --> 00:03:11,680 Speaker 1: both a shortage problem and a price problem at the moment. 48 00:03:16,960 --> 00:03:20,480 Speaker 2: Welcome to the Big Take Asia from Bloomberg News. I'm Wanha. 49 00:03:20,960 --> 00:03:23,280 Speaker 2: Every week we take you inside some of the world's 50 00:03:23,280 --> 00:03:27,280 Speaker 2: biggest and most powerful economies in the markets, tycoons and 51 00:03:27,440 --> 00:03:31,640 Speaker 2: businesses that drive this ever shifting region. Today, in the 52 00:03:31,720 --> 00:03:35,800 Speaker 2: show how a global energy shock is rippling through Asia, 53 00:03:36,400 --> 00:03:39,600 Speaker 2: we begin in Pakistan, where the government has responded with 54 00:03:39,760 --> 00:03:43,920 Speaker 2: tough measures. Then we'll look at how other countries across 55 00:03:43,960 --> 00:03:47,280 Speaker 2: the region are managing the knock on effects of rising 56 00:03:47,480 --> 00:04:00,200 Speaker 2: energy prices. Pakistan sits at the crossroads of South Asia 57 00:04:00,320 --> 00:04:03,800 Speaker 2: in the Middle East. With few oil reserves of its own, 58 00:04:03,920 --> 00:04:08,000 Speaker 2: it depends heavily on the Gulf for energy. Tankers loaded 59 00:04:08,040 --> 00:04:11,840 Speaker 2: with crude oil, refined fuels, and liquefied natural gas stream 60 00:04:11,880 --> 00:04:15,120 Speaker 2: across the Arabian Sea. To keep the country running. 61 00:04:15,720 --> 00:04:22,680 Speaker 3: Pakistan imports most of its energy needs, so basically petrol, crude, diesel, LNG. 62 00:04:23,640 --> 00:04:26,880 Speaker 3: If I look at Pakistan's biggest trading partners, the countries 63 00:04:26,920 --> 00:04:32,280 Speaker 3: it imports from are Yuee, Saudi Arabia and Kutter, and 64 00:04:32,360 --> 00:04:33,880 Speaker 3: primarily its energy. 65 00:04:34,480 --> 00:04:38,080 Speaker 2: Pakistan is the world's fifth most populous country with more 66 00:04:38,120 --> 00:04:41,400 Speaker 2: than two hundred and fifty million people. That sheer size 67 00:04:41,600 --> 00:04:45,240 Speaker 2: drives an enormous demand for energy, and with most of 68 00:04:45,240 --> 00:04:49,120 Speaker 2: it imported, Pakistan's government is doing everything it can to 69 00:04:49,240 --> 00:04:50,479 Speaker 2: curb fuel consumption. 70 00:04:53,320 --> 00:04:56,880 Speaker 3: Pakistan's response has been quite radical and quite big and raustic. 71 00:04:57,320 --> 00:04:59,840 Speaker 3: So Pakistan came out with more than a dozen ma 72 00:05:00,520 --> 00:05:06,560 Speaker 3: to curb fuel consumption. They temporarily stop salaries for cabinet 73 00:05:06,640 --> 00:05:08,880 Speaker 3: numbers for two months. They've shut down schools for a 74 00:05:08,920 --> 00:05:11,480 Speaker 3: couple of weeks. They have moved to a four day 75 00:05:11,520 --> 00:05:14,360 Speaker 3: week for the next two months. The government has said 76 00:05:14,360 --> 00:05:17,520 Speaker 3: that they will reduce their expenditure by twenty percent, which 77 00:05:17,560 --> 00:05:20,479 Speaker 3: is quite significant. They're not going to use like half 78 00:05:20,520 --> 00:05:24,440 Speaker 3: of their transport vehicles and they're also going to reduce 79 00:05:24,680 --> 00:05:28,040 Speaker 3: consumption by half in those government departments. 80 00:05:28,400 --> 00:05:30,479 Speaker 2: What does that mean in terms of the day to 81 00:05:30,520 --> 00:05:34,599 Speaker 2: day life now for many pakistanis. 82 00:05:33,880 --> 00:05:37,400 Speaker 3: It is manageable in the sense that I think, you know, 83 00:05:37,440 --> 00:05:41,039 Speaker 3: we had the COVID crisis in which everyone learned how 84 00:05:41,080 --> 00:05:44,560 Speaker 3: to do things remotely. The government has asked all private 85 00:05:44,600 --> 00:05:48,560 Speaker 3: sector and public sector only fifty percent workforce should be 86 00:05:48,640 --> 00:05:51,520 Speaker 3: going to the offices now, and students have been asked 87 00:05:51,560 --> 00:05:53,719 Speaker 3: to have online classes in universities. 88 00:05:54,720 --> 00:05:58,159 Speaker 1: These are COVID era measures to save energy that we 89 00:05:58,200 --> 00:06:00,000 Speaker 1: haven't seen, you know, obviously since COVID. 90 00:06:00,640 --> 00:06:03,000 Speaker 2: That's Bloomberg's Clara Ferrera Marquez. 91 00:06:03,680 --> 00:06:06,119 Speaker 1: At that point we were a week or so into 92 00:06:06,160 --> 00:06:09,640 Speaker 1: the war. So it's very rapid and very extreme, and 93 00:06:09,720 --> 00:06:13,320 Speaker 1: it is not only about shortages. It is about saving money. 94 00:06:13,360 --> 00:06:16,960 Speaker 1: It is about subsidies that will be more expensive. It 95 00:06:17,040 --> 00:06:19,240 Speaker 1: is about the strain to these budgets. 96 00:06:19,800 --> 00:06:23,240 Speaker 2: The austerity measures may feel harsh, but this isn't the 97 00:06:23,240 --> 00:06:27,039 Speaker 2: first time Pakistan has implemented them. Four years ago, the 98 00:06:27,120 --> 00:06:31,200 Speaker 2: country went through a crippling energy crisis, fueled in part 99 00:06:31,400 --> 00:06:33,480 Speaker 2: by Russia's invasion of Ukraine. 100 00:06:34,160 --> 00:06:38,640 Speaker 3: Pakistan suffered daily blackouts and energy saving measures were again 101 00:06:38,720 --> 00:06:42,800 Speaker 3: introduced to curve the blackouts, but the situation was quite 102 00:06:42,880 --> 00:06:46,640 Speaker 3: different then. Pakistan was going through an economic crisis. At 103 00:06:46,640 --> 00:06:51,040 Speaker 3: that time. We didn't have enough dollars to pay for fuel. 104 00:06:51,640 --> 00:06:54,480 Speaker 3: Now four years later, we're in a much better place. 105 00:06:54,760 --> 00:06:58,880 Speaker 3: Pakistan's reserves dollar reserves have gone up. Now we're around 106 00:06:59,040 --> 00:07:02,360 Speaker 3: twenty one billion dollars total results. It's at a four 107 00:07:02,440 --> 00:07:03,360 Speaker 3: year high right now. 108 00:07:03,800 --> 00:07:07,000 Speaker 2: Pakistan may have more dollars in the bank today, but 109 00:07:07,240 --> 00:07:11,840 Speaker 2: rising oil prices pose a real risk. Investors worry that 110 00:07:11,880 --> 00:07:14,960 Speaker 2: the stability Pakistan has built over the past few years 111 00:07:15,040 --> 00:07:18,240 Speaker 2: could quickly unravel if the trend continues. 112 00:07:19,480 --> 00:07:21,640 Speaker 1: The country is in a slightly better position this time, 113 00:07:21,640 --> 00:07:24,960 Speaker 1: but that doesn't mean that industries won't feel the pain, 114 00:07:25,080 --> 00:07:28,480 Speaker 1: that the country's budget won't feel the pain, and certainly 115 00:07:28,480 --> 00:07:31,040 Speaker 1: the measures that they have taken suggest that they are 116 00:07:31,080 --> 00:07:35,720 Speaker 1: positioning themselves for a lengthy period of heightened prices. You know, 117 00:07:35,960 --> 00:07:40,280 Speaker 1: things do come unstuck. Pakistan during the European gas crisis 118 00:07:40,280 --> 00:07:42,320 Speaker 1: of to a Russia's invasion of Ukraine is a very 119 00:07:42,360 --> 00:07:46,120 Speaker 1: good example of that. Trading houses cut off Pakistan in 120 00:07:46,240 --> 00:07:49,240 Speaker 1: order to serve Europe, where prices were far higher. I 121 00:07:49,240 --> 00:07:52,920 Speaker 1: think it's almost inevitable that the countries with less purchasing 122 00:07:53,000 --> 00:07:55,360 Speaker 1: power will find themselves a little bit further back in 123 00:07:55,400 --> 00:07:58,680 Speaker 1: the queue. But remember political allegiances also matter here, and 124 00:07:58,760 --> 00:08:00,480 Speaker 1: those are complex. Across the beachion. 125 00:08:01,640 --> 00:08:06,640 Speaker 2: Beneath the immediate strain of rising oil prices, Pakistan faces 126 00:08:06,680 --> 00:08:11,200 Speaker 2: a familiar cycle periods of growth followed by sudden crashes, 127 00:08:11,640 --> 00:08:16,600 Speaker 2: persistent instability, and repeated bailouts. Since the nineteen fifties, the 128 00:08:16,680 --> 00:08:19,880 Speaker 2: country has been the recipient of more than twenty bailouts 129 00:08:19,880 --> 00:08:23,280 Speaker 2: from the International Monetary Fund, making it one of the 130 00:08:23,320 --> 00:08:25,280 Speaker 2: fund's most frequent borrowers. 131 00:08:26,640 --> 00:08:30,640 Speaker 3: Pakistan has this economic cycle for what we call a 132 00:08:30,680 --> 00:08:33,880 Speaker 3: boom and bus cycle. As I mentioned dollar reserve, that's 133 00:08:33,960 --> 00:08:36,360 Speaker 3: quite a key indicated in Pakistan's history. What happens is 134 00:08:36,400 --> 00:08:38,080 Speaker 3: that we run out of dollars and then you know, 135 00:08:38,160 --> 00:08:40,800 Speaker 3: day's an economics slowdown. We run back to the IMF 136 00:08:41,200 --> 00:08:42,040 Speaker 3: for a bailout. 137 00:08:42,679 --> 00:08:46,080 Speaker 2: On top of that, Pakistan is heavily indebted to a 138 00:08:46,160 --> 00:08:50,840 Speaker 2: wide range of creditors, including China. Its interest payments alone 139 00:08:50,960 --> 00:08:54,520 Speaker 2: amount of forty three percent of the country's export revenues, 140 00:08:54,920 --> 00:08:58,720 Speaker 2: one of the highest ratios in the world. Rising energy 141 00:08:58,760 --> 00:09:02,040 Speaker 2: costs mean there will be us capacity to service that debt, 142 00:09:02,440 --> 00:09:05,480 Speaker 2: potentially pushing the country closer to default. 143 00:09:06,120 --> 00:09:10,280 Speaker 3: This is compounded by other issues that you're facing right now. 144 00:09:10,520 --> 00:09:13,200 Speaker 3: There are a lot of fundamental issues in Pakistan of 145 00:09:13,360 --> 00:09:18,640 Speaker 3: corruption that has never been controlled, this political instability in Pakistan. 146 00:09:18,760 --> 00:09:20,880 Speaker 3: All the time one is trying to overthrow the other. 147 00:09:21,400 --> 00:09:24,560 Speaker 3: There's a lot of regime change that happens. All of 148 00:09:24,600 --> 00:09:27,760 Speaker 3: this constrains the economy and the country and the growth 149 00:09:27,760 --> 00:09:28,400 Speaker 3: of the country. 150 00:09:29,400 --> 00:09:32,520 Speaker 2: And it's not just the war in Iran. Adding pressure, 151 00:09:33,080 --> 00:09:38,000 Speaker 2: Pakistan has opened another front much closer to home. Last month, 152 00:09:38,080 --> 00:09:40,760 Speaker 2: the government declared what it called an open war with 153 00:09:40,880 --> 00:09:46,360 Speaker 2: its neighbor Afghanistan, launching air strikes across the border. What 154 00:09:46,520 --> 00:09:48,640 Speaker 2: is behind this latest escalation. 155 00:09:49,320 --> 00:09:51,840 Speaker 3: When the US and NATO pulled out of Afghanistan a 156 00:09:51,840 --> 00:09:54,840 Speaker 3: few years ago, the Afghan Taliban government came to power, 157 00:09:55,240 --> 00:09:58,880 Speaker 3: and since then we've seen that militancy or terrorist attacks 158 00:09:58,880 --> 00:10:03,360 Speaker 3: in Pakistan have increased over time. The Afghan Taliban government 159 00:10:03,480 --> 00:10:07,320 Speaker 3: is giving safe heaven to terrorists who are planning, plotting, 160 00:10:07,520 --> 00:10:11,439 Speaker 3: and also sometimes entering as suicide bombers and attacking Pakistan. 161 00:10:11,840 --> 00:10:15,880 Speaker 3: So Pakistan's defense minister has called an open war against 162 00:10:15,920 --> 00:10:20,320 Speaker 3: Afghanistan now and Pakistan has been quite aggressive in the 163 00:10:20,360 --> 00:10:21,280 Speaker 3: past two weeks. 164 00:10:21,559 --> 00:10:25,280 Speaker 2: What is the public sentiment regarding this conflict, especially as 165 00:10:25,280 --> 00:10:27,760 Speaker 2: a country faces this severe energy crisis. 166 00:10:28,280 --> 00:10:32,960 Speaker 3: So Pakistan is a country that usually is not in 167 00:10:33,040 --> 00:10:36,680 Speaker 3: consensus on a lot of things or most things, but 168 00:10:36,840 --> 00:10:40,160 Speaker 3: this is one area that people are in consensus on 169 00:10:40,160 --> 00:10:42,320 Speaker 3: this most people. I'll tell you which part is not, 170 00:10:42,440 --> 00:10:45,040 Speaker 3: but most people are in consensus that you know that 171 00:10:45,160 --> 00:10:47,600 Speaker 3: this is the way forward because you know, Pakistan has 172 00:10:47,640 --> 00:10:51,760 Speaker 3: been trying for two to three years to get the 173 00:10:51,800 --> 00:10:54,160 Speaker 3: Afghan Taliban to deal with this issue, but they haven't 174 00:10:54,200 --> 00:10:57,240 Speaker 3: been So Pakistan has now taken it into its own hands. 175 00:10:57,920 --> 00:11:00,440 Speaker 2: And right now I mean getting back to to the 176 00:11:00,559 --> 00:11:05,440 Speaker 2: energy situation. What's the current outlook for Pakistan's energy crisis 177 00:11:05,600 --> 00:11:08,200 Speaker 2: and is their consensus on how that might be resolved. 178 00:11:08,840 --> 00:11:12,359 Speaker 3: It all depends on how long the war lasts. Pakistan 179 00:11:12,440 --> 00:11:16,280 Speaker 3: has used its current relations to get fueled this week. 180 00:11:16,760 --> 00:11:20,720 Speaker 3: But if it's a short shock that lasts a week 181 00:11:20,840 --> 00:11:25,160 Speaker 3: or so, then Pakistan is good. Pakistan will be able 182 00:11:25,200 --> 00:11:29,679 Speaker 3: to ride it out. But if this conflict is prolonged, 183 00:11:30,280 --> 00:11:33,280 Speaker 3: it goes on for several months, then we are looking 184 00:11:33,360 --> 00:11:37,520 Speaker 3: at a most severe scenario and widespread energy shortages across 185 00:11:37,520 --> 00:11:41,800 Speaker 3: the country. By shortages, I mean electricity blackouts for four 186 00:11:41,840 --> 00:11:45,160 Speaker 3: to six hours. They will be fuel rationing as well. 187 00:11:45,679 --> 00:11:49,200 Speaker 3: Anything can happen. They could be deadly protests, they could 188 00:11:49,200 --> 00:11:53,080 Speaker 3: be pressure on the government to resign. They could be 189 00:11:53,160 --> 00:11:56,600 Speaker 3: a lot of unrest in the country. And hopefully we 190 00:11:56,679 --> 00:11:57,320 Speaker 3: don't get there. 191 00:11:59,320 --> 00:12:02,960 Speaker 2: Pakistan isn't the only country in Asia affected by this 192 00:12:03,160 --> 00:12:06,319 Speaker 2: energy crisis. After the break, we'll look at how the 193 00:12:06,400 --> 00:12:09,480 Speaker 2: ripple effects of oil and gas price hikes are being 194 00:12:09,480 --> 00:12:11,040 Speaker 2: felt across the region. 195 00:12:27,040 --> 00:12:29,560 Speaker 3: Last fur so, President Trump here is demanding that other 196 00:12:29,640 --> 00:12:32,439 Speaker 3: countries contribute to the defense of the Strait of Hormouse, 197 00:12:32,480 --> 00:12:34,920 Speaker 3: which remains effectively shut to oil tankers. 198 00:12:35,480 --> 00:12:40,240 Speaker 2: Earlier this week, President Donald Trump pressured countries including China, 199 00:12:40,360 --> 00:12:45,080 Speaker 2: to help unblock the Strait of Hormuse. Trump even threatened 200 00:12:45,080 --> 00:12:49,040 Speaker 2: to delay his summit with President Shijinping if Beijing doesn't 201 00:12:49,080 --> 00:12:53,200 Speaker 2: step in, but Bloomberg Commodities and Energy editor Clara Ferrara 202 00:12:53,320 --> 00:12:57,520 Speaker 2: Marquez says it's unlikely China will bow to that pressure. 203 00:12:58,320 --> 00:13:01,800 Speaker 1: Remember, China has a non intevent policy. It tends to 204 00:13:01,840 --> 00:13:06,600 Speaker 1: stay well out of these situations. It has escorted vessels before, 205 00:13:06,679 --> 00:13:09,440 Speaker 1: but not in these contexts. I can see very little 206 00:13:09,520 --> 00:13:12,640 Speaker 1: upside for China here. As for a delay in the meeting, 207 00:13:12,800 --> 00:13:15,440 Speaker 1: I'm not sure that China is particularly concerned about that. 208 00:13:15,600 --> 00:13:20,719 Speaker 1: So I understand that this sounds quite effective, but in 209 00:13:20,760 --> 00:13:23,040 Speaker 1: reality it probably says more about the pressures on the 210 00:13:23,040 --> 00:13:27,520 Speaker 1: Trump administration than it does about the Chinese. 211 00:13:26,400 --> 00:13:30,480 Speaker 2: Trump also threatened to expand strikes on Iran's carg Island, 212 00:13:30,720 --> 00:13:34,840 Speaker 2: targeting its oil infrastructure. We can do that on five 213 00:13:34,880 --> 00:13:35,960 Speaker 2: minutes to notice. 214 00:13:35,720 --> 00:13:36,360 Speaker 3: It'll be over. 215 00:13:37,280 --> 00:13:41,760 Speaker 2: Across Asia Pacific, rising oil and gas prices are already 216 00:13:41,920 --> 00:13:47,120 Speaker 2: reshaping economies, straining budgets and forcing governments to rethink how 217 00:13:47,120 --> 00:13:51,600 Speaker 2: they protect industries and households. Clara says it's the poorer 218 00:13:51,600 --> 00:13:55,440 Speaker 2: countries with less resilient economies that are being hit hardest 219 00:13:55,760 --> 00:13:56,520 Speaker 2: and fastest. 220 00:13:57,200 --> 00:14:00,800 Speaker 1: The wealthier countries can generally at least their way out 221 00:14:00,880 --> 00:14:03,600 Speaker 1: of it in the short term. They can get energy 222 00:14:03,720 --> 00:14:06,240 Speaker 1: from Australia, they can get it from the US, but 223 00:14:06,320 --> 00:14:08,840 Speaker 1: it is going to cost moords, it has to come 224 00:14:08,880 --> 00:14:11,640 Speaker 1: further and it probably won't be available immediately, and then 225 00:14:11,679 --> 00:14:14,520 Speaker 1: you're competing with plenty of others who are also trying 226 00:14:14,559 --> 00:14:18,199 Speaker 1: to replace supply, which again puts the more price sensitive 227 00:14:18,280 --> 00:14:21,160 Speaker 1: countries at a disadvantage. 228 00:14:20,520 --> 00:14:24,160 Speaker 2: And what's the situation with energy surpluses or reserves. 229 00:14:24,680 --> 00:14:27,680 Speaker 1: So the reserves picture is a bit complicated. China obviously 230 00:14:27,720 --> 00:14:31,320 Speaker 1: has extensive reserves under its Strategic Petroleum Reserve and also 231 00:14:31,320 --> 00:14:33,640 Speaker 1: commercial reserves. It's something they've been building up for a 232 00:14:33,720 --> 00:14:36,320 Speaker 1: very long time. It's part of China's wide package of 233 00:14:36,840 --> 00:14:40,720 Speaker 1: energy security. Places like Singapore would have them, but it's 234 00:14:40,760 --> 00:14:43,600 Speaker 1: not widespread, and most of these countries are fuel importers. 235 00:14:43,640 --> 00:14:46,480 Speaker 1: Even somewhere like Indonesia, which does produce its own crude, 236 00:14:46,840 --> 00:14:48,800 Speaker 1: is still a net importer of crude and is still 237 00:14:48,800 --> 00:14:50,320 Speaker 1: a net importer of fuels. 238 00:14:50,880 --> 00:14:53,600 Speaker 2: It's not just oil and gas that are at stake. 239 00:14:54,000 --> 00:14:56,880 Speaker 2: The closure of the Strait of Hormuz is disrupting a 240 00:14:57,040 --> 00:14:58,680 Speaker 2: wide range of commodities. 241 00:14:59,360 --> 00:15:01,760 Speaker 1: We do tend to focus on it as an energy 242 00:15:01,760 --> 00:15:05,480 Speaker 1: producing region. So for example, gas is a feedstock for fertilizer, 243 00:15:05,520 --> 00:15:08,280 Speaker 1: but there are flows of fertilizer itself coming from the region. 244 00:15:08,800 --> 00:15:12,680 Speaker 1: It's aluminium, it's steel for the industry. There's a huge 245 00:15:12,720 --> 00:15:14,880 Speaker 1: amount that is actually produced here. 246 00:15:15,480 --> 00:15:20,080 Speaker 2: Tech LPG that's liquefied petroleum gas. As an example, it's 247 00:15:20,200 --> 00:15:22,760 Speaker 2: used for cooking and mini homes, as well as in 248 00:15:22,840 --> 00:15:27,560 Speaker 2: key industries. India is the world's second largest importer of LPG, 249 00:15:27,920 --> 00:15:31,480 Speaker 2: and right now it's facing an acute shortage. 250 00:15:31,320 --> 00:15:34,640 Speaker 1: With those sources no longer arriving. You saw the Indian 251 00:15:34,680 --> 00:15:40,200 Speaker 1: government channeling resources towards households rather than industry. 252 00:15:41,200 --> 00:15:45,000 Speaker 2: Over the weekend, Prime Minister Narendra Modi announced that India 253 00:15:45,120 --> 00:15:49,360 Speaker 2: had secured safe passage for two LPG tankers through the 254 00:15:49,360 --> 00:15:53,400 Speaker 2: Strait of Hormuz. Since the war began, only a handful 255 00:15:53,440 --> 00:15:57,120 Speaker 2: of nations, including China and Russia, have managed to get 256 00:15:57,200 --> 00:16:02,080 Speaker 2: vessels through safely. Clara, We've seen Russian oil prices climb 257 00:16:02,240 --> 00:16:05,400 Speaker 2: sharply in recent weeks. What were one to discounts have 258 00:16:05,480 --> 00:16:08,880 Speaker 2: in some cases turned into premiums. At the same time, 259 00:16:09,000 --> 00:16:13,520 Speaker 2: the Trump administration has temporarily e sanctions on certain Russian shipments. 260 00:16:14,080 --> 00:16:17,760 Speaker 2: How is that reshaping the oil market and affecting countries 261 00:16:17,800 --> 00:16:20,240 Speaker 2: like India that do buy oil from Russia. 262 00:16:20,360 --> 00:16:23,760 Speaker 1: India isn't traditionally a large consumer of Russian oil. After 263 00:16:23,800 --> 00:16:27,840 Speaker 1: the war in Ukraine, discounts became extremely attractive, and India 264 00:16:27,920 --> 00:16:32,040 Speaker 1: became the largest buyer of seaborn Russian oil. The Trump 265 00:16:32,040 --> 00:16:35,560 Speaker 1: administration has sought to change that, largely to Pressia President Putin, 266 00:16:35,840 --> 00:16:38,800 Speaker 1: and that is now changing again. The US has now 267 00:16:38,800 --> 00:16:43,080 Speaker 1: provided two waivers that would allow countries including India. The 268 00:16:43,120 --> 00:16:45,240 Speaker 1: first was just for India. The second was wider to 269 00:16:45,360 --> 00:16:48,320 Speaker 1: buy Russian oil already on the water, so that then 270 00:16:48,440 --> 00:16:51,560 Speaker 1: opens the potential for India to take more. The issue 271 00:16:51,600 --> 00:16:53,680 Speaker 1: is exactly the one that you've identified, which is it's 272 00:16:53,720 --> 00:16:57,560 Speaker 1: actually pretty expensive now, so that initial advantage is no 273 00:16:57,680 --> 00:17:01,480 Speaker 1: longer as attractive. However, this oil is on the water, 274 00:17:01,560 --> 00:17:05,399 Speaker 1: so it is available, so the prices are rising. Indian 275 00:17:05,480 --> 00:17:08,240 Speaker 1: refiners will have to pay more because what was a 276 00:17:08,280 --> 00:17:10,680 Speaker 1: discount is in some cases now turning to a premium. 277 00:17:10,720 --> 00:17:13,840 Speaker 1: And the Chinese refiners, particularly the private sector, that have 278 00:17:13,920 --> 00:17:17,520 Speaker 1: been really reliant on these discounted flows, they're all paying 279 00:17:17,560 --> 00:17:18,160 Speaker 1: more for them. 280 00:17:19,880 --> 00:17:24,280 Speaker 2: Rising energy prices have an immediate effect on people's economic security, 281 00:17:24,760 --> 00:17:28,199 Speaker 2: and we've seen here in Asia that economic insecurity can 282 00:17:28,320 --> 00:17:31,720 Speaker 2: lead to political unrest. Where do you think are the 283 00:17:31,720 --> 00:17:34,160 Speaker 2: stress points here in Asia Pacific? 284 00:17:34,600 --> 00:17:36,639 Speaker 1: That's difficult to say, because I think you have some 285 00:17:36,720 --> 00:17:39,040 Speaker 1: places where it would be very immediate. So you try 286 00:17:39,080 --> 00:17:41,920 Speaker 1: and put up fuel prices in you know, in emerging 287 00:17:42,040 --> 00:17:44,639 Speaker 1: economy in Southeast Asia, and you will almost certainly feel 288 00:17:44,640 --> 00:17:46,879 Speaker 1: people on the streets very quickly because it's a very 289 00:17:46,960 --> 00:17:50,879 Speaker 1: large proportion of your spending every month right to go 290 00:17:50,960 --> 00:17:53,720 Speaker 1: into food, which is directly impacted by fuel costs and 291 00:17:53,720 --> 00:17:56,679 Speaker 1: then fuel costs themselves. But it plays out in the 292 00:17:56,720 --> 00:17:58,960 Speaker 1: longer term here, and that is not really just a 293 00:17:58,960 --> 00:18:01,280 Speaker 1: problem for Frasier. I mean, US has midterms at the 294 00:18:01,359 --> 00:18:02,840 Speaker 1: end of this year, right, It's going to be a 295 00:18:02,880 --> 00:18:05,640 Speaker 1: massive issue there too. It's an issue in Brazil, which 296 00:18:05,680 --> 00:18:09,280 Speaker 1: has elections in October. So the political repercussions here will 297 00:18:09,280 --> 00:18:11,760 Speaker 1: play out over a long period of time, especially if 298 00:18:11,800 --> 00:18:12,520 Speaker 1: this is true or now. 299 00:18:21,320 --> 00:18:23,760 Speaker 2: This is The Big Take Asia from Bloomberg News. 300 00:18:24,040 --> 00:18:24,919 Speaker 4: I'm wanha. 301 00:18:25,440 --> 00:18:28,280 Speaker 2: To get more from The Big Take and unlimited access 302 00:18:28,320 --> 00:18:31,560 Speaker 2: to all of Bloomberg dot Com, subscribe today at Bloomberg 303 00:18:31,560 --> 00:18:34,880 Speaker 2: dot com slash podcast offer. If you like the episode, 304 00:18:35,000 --> 00:18:37,560 Speaker 2: make sure to subscribe and review The Big Take Asia 305 00:18:37,680 --> 00:18:40,920 Speaker 2: wherever you listen to podcasts. It really helps people find 306 00:18:40,960 --> 00:18:43,280 Speaker 2: the show. Thanks for listening, See you next time.