00:00Sarah, good to have you with us. It does seem like the oil market is recalibrating.
00:07It is definitely a short term, quick reaction to what OPEC report was today, that next year,
00:16the market is going to be somehow balanced with a very slight, small oversupply, which is really
00:22insignificant. But obviously, in their previous forecast, they were looking into mostly deficit.
00:28So that's a reaction to that. It is about demand and supply that U.S. government shutdown has
00:36weighed down pretty much on consumer confidence, consumer sentiment. With it opening up,
00:42will that change the picture in terms of oil demand at all?
00:46Of course, because, as you said, it's going to have impact on consumers' confidence and also
00:52economy. But also, if you're looking closely, again, this is a very quick reaction and change
01:00of sentiment to the OPEC report. But if you look at it, even still the OPEC reports that demand is
01:06going to still grow steadily. It's not going to be strong, but it's still growing. And the supply,
01:13there's not a huge change from the previous expectation that is there. Also, there are other
01:21factors. We are still not sure about the Russian sanctions, other geopolitical factors. So again,
01:28that's a sentiment that has been in the market for long about the glut in the market in 2025 and going
01:36through 2026. How bad will this glut be through 2026, you think?
01:45Well, I mean, again, if you look at it, I don't think this is going to be significant. Something
01:50that we should consider and think about it is that in 2025, the oil prices were not really swinging so
01:59much and they were pretty much stable, particularly in compared to other commodities, which this is
02:05actually very important. And it's definitely some of that credit goes to the supply adjustments that
02:13OPEC had. Yes, since April, they have been increasing their production, significantly unwinding
02:19some of those cuts. But we see that the pattern and trend have been cautious and adjusted to the
02:25market. For instance, since October, that the weather was mild. The last quarter, their production
02:31increase was slower. They announced that in the first quarter of next year due to the weather and also the
02:37expectation of additional supply and the inventories that are actually high. They're not going they're going to
02:46pause their increase. But something that I think it's important and market has reacted to that is that this
02:53current today's report by OPEC somehow indicating that while OPEC has been always trying to
03:01reiterate the fact that they are adjusting their production based on the market needs, but it's also
03:07slightly hints that OPEC is not ready or is not going to give up its market share or cut back to
03:13production if the demand is around the same expectation, the same volumes growing at the same pace that we are
03:22expecting. So the fact that they kind of hinted that they are not going to cut back production or maintain
03:30their production is strong along with the non-OPEC production increase. That also has impacted the
03:37market sentiment. So OPEC wants to defend its market share. In terms of prices, though, you know, how low is it willing to go?
03:48Again, we can see it's there are lots of speculation in the market, but still there are so many waiting
03:59and looking at the average of 60 or the range of 60 to 65. You have a still a lot of questions with China
04:06continue filling up SPR. We have this year 2025 higher than expectation. Chinese stockpiling oil, which
04:16obviously adds to the global demand. But also, again, we have the wild card of the Russian U.S. sanctions on
04:25Russia. And many expect that if they go to full implementation, it's going to cut a significant
04:30amount of or considerable amount of Russian oil, which could have impact. So there are a lot of
04:36questions to answer. But again, like today, we also had another report coming out, and that was IEA's
04:42world energy outlook that while the OPEC obviously had the impact on the market, because it kind of
04:51gives out the perspective and prospects of a short-term market. The IEA had a U-turn on their
04:57long-term view, which kind of indicates, unlike the previous expectation, which is based on countries'
05:03policies, that the oil and gas are not going to peak by end of this decade and they're going to
05:09continue to increase the demand for that. And that, in fact, shows that countries' policies
05:15and energy strategy has changed toward a higher demand, which, again, that's putting it in
05:22perspective. Maybe we're talking a lot about short-term, what is going to happen in 2026,
05:28but looking at the medium and long-term, the story would be different.
05:31Right. Sarah, you touched on geopolitics. We know that Ukrainian drones have damaged Russian
05:39refining capacity. How much damage has that been, and what impact will this have on the oil market?
05:48Well, definitely, the point is that the refinery capacity in Russia, definitely, if Russia cannot
05:55allocate that additional, the oil that cannot process domestically to export, it's not going
06:01to have a significant impact globally in terms of crude oil. Definitely, it's going to put pressure
06:07on Russian products supplied to the market, which eventually could have impact slightly on the crude
06:14oil. But the point is that this is another, going back to geopolitics, this is another uncertainty in the
06:20market, and that security of infrastructure. And as the Russia-Ukraine conflict is going on,
06:28the risk of security of facilities and infrastructure, because the attacks have been so far on
06:36refineries, but it could easily be on the exporting facilities, production facilities, these are all
06:41aside from sanctions. So again, while we are talking about the glut in the market, we cannot forget about
06:48the geopolitical risk, and also the fact that OPEC plus has already increased their production and
06:56unwind many of those plots. So, while we have inventories at a higher level, but OPEC plus and
07:02OPEC, generally the spare capacity that market had in the past couple of years, it doesn't have it. So,
07:09the spare capacity is much thinner now.
07:11Sarah, lots of speculation on whether or not India has stopped buying cheap Russian oil.
07:18We heard from President Trump saying it's not happening anymore.
07:22What's your take? What are you seeing in terms of oil flows?
07:28Well, of course, we still see the flows to India, but what is important is that
07:33the private, particularly the private refineries have taken the sanctions more serious. Definitely,
07:44there has been a close, you know, India has a close discussion, ongoing communication with the US
07:51government, and they are discussing definitely India's energy security is also important. So,
07:58it might take some time. It might not be an overnight fact or an overnight possibility that India would
08:08replace all of this oil that has been going from Russia to India, but we see that mostly the private
08:14refineries and those refineries that are exporting products to countries, particularly Europe, US and
08:20Japan have already changed their, they stopped or reduced their allocations from Russia. But again,
08:29I would say that this is an ongoing discussion between the two countries, definitely India and US and
08:38energy security of India is important. So, it's not going to be overnight and imports to
08:44India become, it goes to zero, but we see that the trend that is decreasing.
08:48Right. And then of course, it's not just about India, it's also about China and its shadow fleet,
08:54bypassing, circumventing the sanctions. How is China doing in terms of what it is getting from Russia?
09:05So, China has been suplementing sanctions both, I mean, on multiple sanctioned countries,
09:12that's Iran, Venezuela, and also including Russia. But China, again, historically, the history of
09:20China's complying with US sanctions, I would say China was in full compliance with US sanctions during
09:29the first term of President Trump. So, it's very much, again, two countries' negotiation. It's either
09:35a carrot or stick. We can see that it's very much depend on China's will and ongoing negotiations that
09:44they have with the US governments, particularly due to the tariffs. So, again, when it comes to China,
09:52it depends on refineries. We have government refineries, private refineries, they all have
09:58different approach. But yes, China much more slower.
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