00:00Well, this really got the market moving yesterday, Carol, especially because OPEC are known for perhaps their more bullish outlooks, their more positive forecasts on demand.
00:09They now see supply demand turning in the near term.
00:13What is the impact all of this is going to have on markets?
00:15And do you think that with Brent around $62, we've already factored in for the extra supply?
00:22Well, you know, I feel like it's getting like reality check.
00:26OPEC is getting through its monthly reports because for the last few years, I would say they have been the most bullish on all demand and perhaps underestimating the supply growth from outside OPEC plus, even though themselves they put more barrels in the market.
00:42But so far, I think had it changed the market, not really, because if there is a consensus that towards the end of the year, we're trying to see the numbers being revised, being adjusted.
00:52And honestly, I did not know how OPEC was still expecting such a massive growth in demand compared to most of the consensus in the market.
01:02But now they are adjusting also to additional reality, which is the supply growth from outside OPEC plus.
01:08And to be fair to OPEC plus, they are not the only ones who tend to underestimate the growth in U.S. supply and the resilience of shale because prices have been rather subdued.
01:18And typically, you would expect shale activity to slow down.
01:22But almost every year, we tend to underestimate the efficiency gains that we are seeing in North America and how producers there are becoming much more resilient to changes in prices.
01:33And as such, we continue to see this growth in supply from the U.S. and elsewhere.
01:38Yeah, so that's only going to continue to hit.
01:42On the flip side, you have another short-term driver, which is that the Trump administration has really come down hard on those two Russian oil producers.
01:51And I wonder whether that is one of the reasons that prices are still relatively supported, to account for the possibility of this Russian oil having to be forced to be substituted by other producers around the world.
02:04I mean, I think prices are supported not because of what's happening in Russia.
02:09Definitely, it does have an impact.
02:12The sanctions are having an impact.
02:14But I would say it's China, the continuous buying from China to build inventories, both commercial and strategic, that have really supported prices and have put kind of floor on prices and have allowed OPEC to put more barrels in the market this year.
02:27But, of course, we cannot underestimate the geopolitical impact of sanctions, especially that now they are hitting Russian activities overseas.
02:36We saw what happened with Luke Oil, and they are running some of the important assets.
02:41I wouldn't say the biggest assets in the world, but they are not insignificant in the market.
02:47Now, of course, the longer the sanctions stay in place and if nothing else happens at the same time, perhaps we start to feel more of the pain in the market on the supply side.
02:59But I'm not too worried, A, because we have seen this coming.
03:02The Russians must have seen it coming.
03:04Any operator or businesses or governments dealing with Russian companies in a certain part of the world must have seen that coming.
03:11And it's not at the end of the world because you do have, for example, companies going bankrupt, having difficulties.
03:18So we do have alternatives and it's not going to suddenly cause a spike in prices.
03:25Carol, I've got a couple of minutes here, but I just want to ask you about the IEA and the revised scenario of seeing consumption for oil continue to grow by 2050.
03:34What do you make of this about face from the IEA?
03:37Well, look, the IEA has been under greater criticism these last few years because of the change, the shift and a massive shift in narrative.
03:48Remember 2021 when they said no more oil and gas investment needed if we were to achieve net zero.
03:53Now they are talking about in September, they published a report saying, no, there is a need for massive oil and gas investment because of the natural decline in fields.
04:01And now they surprise everyone by talking about, no, there won't be peak under current policy scenarios, not at least before 2050.
04:10And this contradicts what they said only a year ago.
04:13Now, one cannot help but wondering whether really the IEA is a fully independent source of data and forecasts and scenarios, as we would love to believe.
04:23Now, definitely, it is still standing by its line that they don't do forecasts, they do scenarios.
04:29And there is no denial then policy around the world, particularly at the White House, has not changed.
04:34But there is always a certain political influence coming into its narrative.
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