00:00Venezuela, Iran, causing a huge geopolitical risk in global oil markets.
00:04What does it mean for how the markets will react in the future?
00:07Well, I think there's a lot of focus on the fundamental impact of Venezuela,
00:11the fundamental impact of Iran.
00:13The geopolitical impact is by far the larger impact.
00:17And I think you need to think about this not through the lens of the Americans,
00:21who are a big exporter of oil, but through the lens of the Europeans,
00:25the Chinese, and the Indians who are big importers of oil.
00:27The world just got a lot more riskier.
00:30The way I like to liken it was when the Americans and Europeans
00:33froze the central bank assets of Russia,
00:36we saw a huge demand for gold because dollars became risky.
00:40This is identically the same thing for oil and all of the raw materials and real assets
00:45because they are becoming a lot more dangerous.
00:47So I'm China.
00:49I felt pretty secure about oil underneath the ground,
00:51whether if it was in Venezuela or in the world before.
00:54Today, I'm no longer.
00:55I want oil above ground.
00:57And so the risk, they take it.
00:58But so what does that mean?
01:00What does China do?
01:00And actually, is the outlook, you know, more bullish for oil full stop?
01:05Yeah.
01:05I mean, the market's got a record short based upon this oil supply glut.
01:08Let me remind you that oil supply glut is floating in dark fleet ships in places like the South China Sea.
01:14So if I were China, I'm looking at this and it got a lot more dangerous.
01:18Well, I'm going to go mine, take it all.
01:20And they bring it in.
01:21They already own most of those ships, Chinese insurance, you know, Chinese payment systems.
01:26So the odds of this thing disappearing and people beginning to hoard, I think, is a lot higher than what it was even a week ago.
01:32Jeff, how would you describe U.S. foreign policy when it comes to actually access to raw materials and oil?
01:38Is it, you know, by all means necessary, we will have it.
01:41But no, in fact, I'm picking on the Americans unfairly right now.
01:45But if I'm the Americans looking to the Chinese, the Chinese already did it to me with rare earth metals.
01:51So this game is already in play.
01:53And so what it's forcing is a re-rating of real assets, prices.
01:56And I think we're witnessing it.
01:58And if gold could go from $2,000 to $4,500 as they hoarded precious metals and diversify away from dollars,
02:05what happens if they start hoarding raw materials for a similar type of convenience yield?
02:09OK, this is the Curry chart.
02:11So let's bring it up.
02:12It's basically looking at raw materials overall.
02:14I mean, are we going to have record after record if there's, again, a price?
02:18I know you've been long bullish on copper.
02:21Does the record we've reached this month mark a peak or does it keep on going higher?
02:25Oh, I think it just keeps going.
02:26What this is is raw industrial materials.
02:30This is what I always used to look like when I was back at Goldman Research.
02:34It's telling you that there's tightness at the small little commodities that go into the manufacturing of everything.
02:40This is your underlying cost structure of the economy.
02:42And it's starting to rise and rise quickly, which is telling you it's a combination of hoarding.
02:47We look at new order to inventory ratios.
02:49They're beginning to turn up.
02:51It means there is a demand for inventory.
02:53And it would make sense given the type of political risk that's out there.
02:56What can do something about it?
02:58Who can do something about it?
02:59Can, you know, can OPEC Plus do something about it on oil?
03:01Can some of, you know, the BHPs and Rio Tintos of this world do something about it when it comes to raw materials?
03:06You know, it's a fine line.
03:08If you start bringing on the supply to push it down, then you run into capacity constraints.
03:12You run into capacity constraints, then fear kicks in.
03:15Bottom line is once hoarding begins to kick in.
03:17And you and I were talking about this, I think it was 2021, 2022, and hoarding took off.
03:22And these markets doubled in many cases.
03:25And I think as the hoarding begins to become more of a dominant feature in the market,
03:29what's different this time is in markets like oil, you got the short, you know.
03:34Two weeks ago, it was 230 million barrels short, bigger than what the glut is that's floating out in the South China Sea in these dark fleet ships.
03:42So the market going in is record short.
03:46Demand is not slowing down.
03:48It's picking up.
03:49And geopolitical risk is at, I would say, an all-time high.
03:53That's a recipe for a spike in prices right now.
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