00:00You've seen China come out and urge parties to, you know, back down and at least let the
00:06energy flow, right? How bad does this get? What's your base case?
00:12Well, our base case is that these straits need to start to operate again. But how quickly that
00:18happens is a question. And just following up on what you were just asking, you know,
00:23were we prepared for these attacks on the other Gulf GCC countries? And the market was not.
00:30And that's where I think we have to remember it takes time for the market to react. What has reacted
00:35most quickly has been the shipping market. And that is both in rising freight rates and also in
00:40changes to insurance and also declarations of force majeure. China, Asia, they are most dependent on
00:48the Middle East in terms of LNG flows. That's more than 80 percent of where they get their flows
00:54from. So it is very important. And globally, we do not have inventories in LNG and natural gas the way
01:02we do in oil. And that includes also Asia, which has even lower inventories than we do in Europe.
01:09So at full inventories, we have around 25 percent of winter demand in storage in Asia. It's around
01:188 percent. Right now we're in much lower storage levels because we're coming off of winter. So it's
01:23very important what China is saying. Nadia, you talked about the strait. What other than oil and gas
01:31gets impacted by this practical closure with, you know, container ships basically just with anchor
01:36dropped at this point? Does, you know, dry goods get impacted? What about consumer goods?
01:44Everything that flows through there right now is very dangerous, but the impact is more outsides
01:50towards LNG, LPG, and then finally the tanker markets because of what is a more dangerous cargo,
01:58right? If you hit an LNG tanker, which is valued at $260 million, $250 to $260 million, an LNG vessel,
02:07it's not a tanker. And then you have the cost of the cargo. And at the same time, the explosion
02:13makes
02:13it so that your crew cannot be rescued. You then have with LPG, again, this is much more flammable.
02:21And then finally you have tankers and tankers, you can normally get the crew back. But that has a much
02:26bigger spill in danger to it than in terms of container ships and so forth.
02:34You have a great statistic in your notes that freight constitutes now 14% of the cost versus the cargo,
02:41where normally that's about 2%. Who can afford this premium, Nadia? Who gets the oil and gas?
02:49Yeah, so that refers specifically if you were to take a tanker from the U.S. Gulf Coast. And going
02:56into this
02:56weekend, the cheapest crude in the world was USWTI and Venezuelan, that was unsanctioned. And in
03:02particular, China, since the invasion of Venezuela by the U.S. has not bought any Venezuelan crude. So
03:08now that is the cost of flowing all the way to China. China has around more than one year's worth,
03:14almost 400 days worth of emergency strategic petroleum reserve in terms of their own oil demand
03:21for cover. But they are the spare refining capacity in the world when we are in refinery maintenance
03:29season in the U.S. and Europe. So that is one to watch because this can very much affect China.
03:35But
03:35they can, of course, choose not to send diesel and jet fuel over to Europe at this time and only
03:42take
03:42care of themselves. The biggest impact, I think, in terms of danger is India. India only has 30 million
03:49barrels of inventories, which is about 15 days stock cover. They are an extremely important
03:55refiner. They are very close in terms of the Middle East. And they have said they're not going to buy
03:59Russian crude, at least the national oil companies. So we may see that they start to take the 60 million
04:07barrels of sanctioned crude of Russian that's floating, 30 million barrels of Iranian crude.
04:12We just had a headline, in fact, a little time ago out of India saying that it had eight weeks
04:17of
04:18oil left. Very briefly, Nadia, we're out of time, but we're in a pretty warm spell at the moment.
04:22It's kind of shoulder season. Is this good timing, at least?
04:29Yes, it is. In a sense, so long as we don't get a winter spell, then absolutely it's not the
04:37worst
04:37time. But on the flip side, we're at very low storage and we don't have the excess floating storage
04:44for LNG that we have tended to have after Russia invaded Ukraine. We didn't have it actually this
04:52last year or the year before. But that is something that traders typically have. Right now, we don't
04:57have that spare capacity on reserve to fill those shorts. And when we look at the prices right now,
05:07Asia is pulling LNG towards itself rather than allowing it to be here. So we have the UK where
05:15it's trying to pull out of Europe. We're in a tough situation here. The US, of course, as a huge
05:21natural
05:21gas producer is in a much better situation.
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