00:00Well, as hostilities between Israel and Iran continue into a seventh day, oil prices have risen up more than 1% on world markets.
00:09Jonathan Lamb is an oil and gas analyst at the finance and investment group Wooden Company.
00:14Jonathan, welcome. Good to see you.
00:16So, oil prices creeping up. How high do you think they might climb?
00:25The answer to that is rather binary.
00:27What the markets are worried about is if exports of crude from the Arabian Gulf were to stop because the Straits of Hormuz were closed,
00:39then the impact on oil prices could be extremely high indeed.
00:44Remember that Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates all export through the Straits of Hormuz.
00:53And where oil prices could go without that supply is anybody's guess.
00:59$150, $200 a barrel could be possible.
01:03If that does not happen, then we're probably simply looking at a little bit of panic and oil prices will go back down to the levels that they were two or three weeks ago.
01:18So, there's a very wide range there, but there's really, I think, only two outcomes.
01:25Give us a bit of context here, because we have been here before over the decades.
01:31I mean, in context, what kind of oil shock might we be looking at compared to what we've been through in the past?
01:37I mean, some of the biggest oil shocks we've seen in the past have come from the loss of large oil exporting countries.
01:49For example, the Iraq-Kuwait war that led to a great big spike in oil prices.
01:56But the spikes tend to be temporary, because the world finds a way to get around the loss of the barrels over time.
02:10The problem is, in the meantime, because you have very high oil prices, the impact on global economy tends to be quite significant.
02:20And so, even if it's short term, it could be quite costly for all of us.
02:24We keep on talking about the rise of renewables around the world.
02:29I mean, does this now mean, in 2025, that we are perhaps less dependent on oil than in previous energy crises?
02:39We shouldn't forget that renewables is mainly about producing electricity.
02:45And the one place that they replace oil is in electric vehicles.
02:51So, if a larger proportion of our vehicle park were electric vehicles, then that would be the case.
03:00Despite the very, very rapid rise of EVs and the rapid increase in sales,
03:06in terms of the overall vehicle park, even in countries like Norway or China, where they're ahead of the rest of us,
03:13is still actually quite small.
03:16And the most vital part of the oil economy, if you like, is actually the heavy goods vehicles.
03:23And there, we haven't got any replacements at all.
03:27I mean, governments around the world might be clearly deeply concerned about yet another cost of living crisis.
03:33Do national governments have enough policy tools left, like strategic reserves or price caps, to try to soften any blow?
03:43Or are we entering a new, more vulnerable period?
03:48Well, in theory, all members of the International Energy Agency, which are the OECD countries,
03:58are required to carry 30 days of strategic stocks.
04:02That can be either crude oil or refined products.
04:05So, in theory, if we had no new crude oil for 90 days, we would still be able to carry on as usual.
04:15Obviously, there would be pricing issues.
04:18But there are plans in place to deal with these kind of things.
04:24Even though it's expensive, I think the world would carry on working.
04:30The issue with price caps is we've seen in the past they tend to make the situation worse.
04:35So, in the oil crisis of the 70s, we actually had petrol stations in America running out gasoline because they had the price cap.
04:47So, that's something that the government should be very wary of using, I think.
04:51Jonathan, good to see you. Thank you for that.
04:53Jonathan Lamb, the oil and gas analyst at the finance and investment group Wooden Company.
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