00:00Karen, what hope is there for a diplomatic breakthrough at this stage between the U.S. and Iran?
00:06Thank you, Jamana.
00:07I think what we're trying to analyze is the multiple scenarios, the multiple directions that this conflict and threat of really much worse conflict is coming.
00:19So I do think that President Trump would like to see some sort of deal.
00:24It gives him room to back down to some of the more really difficult military threats.
00:31He has no interest in a military takeover or governance of Iran.
00:37He's not interested in that.
00:39But something akin to a bit of a leadership reshuffling, some sort of deal on the nuclear program,
00:46and perhaps getting to some of the tougher issues which regional partners really care about.
00:51The Israelis are extremely concerned about Iran's missile stockpile.
00:56If he were able to negotiate on those issues, if Iran were willing to move position, then yes.
01:03But I think those are very, very big ifs, and it's more likely that we're in an interim period where we see both sides sort of buying time.
01:11Yeah, Karen, how likely is it that we get a perhaps repeat of the Venezuela template and that the figurehead is removed
01:23and the Trump administration cuts a deal with the remaining people who are still representative of the regime,
01:31but with the figurehead gone, i.e., could the supreme leader be replaced in a deal that the U.S. is seeking?
01:37I think that would be certainly a scenario that the Trump administration would look favorably upon.
01:44It is not something, of course, that the supreme leader would willingly concede to.
01:50And so that puts us into the realm of a whole lot of other possibilities,
01:55which, you know, really would depend how the rest of the leadership structure, how the IRGC responded to such a threat
02:03and what, you know, such a reshuffling would look like.
02:07And I think, you know, most people would assume that would entail some form of violence and attack.
02:13Okay. Keeping a close eye on what's been happening with energy, geopolitical premium coming out of these markets today
02:21with oil plunging around 5 percent, how much premium do you think was baked in to begin with?
02:28And is it justified that oil is actually falling so much on the potential for a diplomatic breakthrough?
02:35But, of course, no guarantee in the real possibility that both sides are just buying time here.
02:39Yeah, I mean, I think we've been seeing this for at least two years now,
02:43where in terms of regional risk and oil price, you know, oil markets have been extremely patient
02:49and waiting for some real threat to energy infrastructure to make a move into a price spike.
02:55So we saw a little bit of a climb in the last week, but really staying within the 60s, now back down a bit.
03:01This goes back to the fact that we have a very well-supplied market.
03:04We have a spare capacity that is available out of the Arabian Peninsula.
03:09And so there's no big fear until something, you know, really happens.
03:13And that is not where we are yet.
03:16And I think in terms of those scenarios, you could see a range of pricing.
03:22So, you know, if we start to see some sort of symbolic attacks,
03:25like what happened last summer during the 12-day war, you know, you get into the under $80 a barrel range.
03:32But if you start to see real limitations or attacks in transit in the Strait of Hormuz
03:38or attacks on physical infrastructure, then the market, I think, would change considerably.
03:46Yeah. But at the same time, Iran is still producing about three and a half million barrels a day.
03:51It's still exporting around one and a half million barrels per day.
03:55And that physical supply has not actually been impacted.
04:01That's exactly right.
04:02And so one scenario is, you know, probably the one that would be the easiest in some ways
04:07because of the presence of U.S. naval forces outside of the Strait of Hormuz
04:12would be to enforce more sanctions on Iranian exports to seize ships, to seize tankers.
04:20And that is something that, you know, maybe a scenario that we see in the future,
04:26the more enforcement of existing sanctions, there would be a legal basis for that.
04:31And it would see, you know, some decline.
04:33And that would, you know, impact probably the Chinese more than anyone else on the buying side.
04:38But there's plenty of supply elsewhere to make up for that loss.
04:43Yeah. And just a quick final for you.
04:45Obviously, we did have the OPEC plus over the weekend keeping production stable for March.
04:49But some people are saying what actually stood out from the announcement
04:52is what they didn't say about the rest of the year, keeping their cards close to their chest.
04:57And which tells you that should the need arise,
05:00there is still plenty of spare capacity that OPEC can bring to the market.
05:04That's right. It's available.
05:06And as long as there's no threat to, you know, transit or physical infrastructure,
05:10production infrastructure, that is absolutely ready and willing.
05:14And we've seen particularly from Saudi Arabia and the UAE,
05:17an interest in increasing their production and export.
05:21So they're on call.
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