00:00Well, if you think about the conflict, the initial reaction to the conflict, Russia-Ukraine back in 2022,
00:08we saw that initial pop and then sentiment settled down.
00:13This is really no different in my view.
00:16I understand it's very treacherous right now, but I would suggest to you this,
00:20that the markets seem to be reacting fairly rationally to what we are seeing with this volatility.
00:27Keep in mind that the equities, the energy equities are lagging this pop over the last two days for both
00:36crude and also for natural gas.
00:39Natural gas here in the U.S., Henry Hub benchmark, that seems to be much more tame relative to TI
00:47and Brent.
00:47Of course, the dynamics there are somewhat different.
00:50But I think if you would have asked me Sunday what I would have expected, the volatility is definitely there.
01:00This seems to be fairly in line.
01:01I would say that if the infrastructure gets destroyed, if marine logistics become an issue, supply chains become an issue,
01:13a more permanent issue, then I think all bets are off and the uncertainty will prevail over rational minds.
01:21Talk to us about China's role in all of this.
01:23They are the biggest buyer of Iran's LNG,
01:25and they tried or have been trying to persuade the country from targeting vital energy export infrastructure.
01:31How do they fit in here and what are the best case and worst case scenarios for them?
01:36Well, we spoke on this over the weekend.
01:39And if we were to look at China's preparation for this, there is roughly, call it, 50 million barrels of
01:50floating storage right now in the Asia corridor.
01:55That's a significant supply that is available to not only China, but also the Asian buyers.
02:04China has been stocking oil significantly.
02:07Secondly, there's roughly 2 billion barrels of capacity.
02:11I think there's somewhere around 1.5 billion in storage at the moment.
02:17The IEA suggests that somewhere around 90 days of demand.
02:21I believe that China is somewhere north of 120 days at the moment.
02:26So there seems to be sufficient stockpiling at the moment.
02:32Now, as we move forward, again, if we're talking more about destruction as opposed to delays or disruption,
02:42then I think all bets are off and we could see a triple handle on Brent and TI.
02:50But, you know, when we talk about natural gas here in the U.S., we just put out a note
02:55this morning talking about how the U.S. operators are somewhat more isolated and insulated from all that's going on
03:03right now.
03:04And how we should not expect any incremental barrels coming into the market or incremental molecules coming into the market
03:12to take advantage of this price rise.
03:15If anything, you'll probably see the opposite happen, more hedging by the U.S. operators since capital discipline, the mantra
03:23of capital discipline, that shareholders desire, that remains and that remains persistent for 2026 in our view.
03:31Hey, Vince, when and to what degree will we see higher prices at the pump?
03:37Well, you know, you would most likely start to see it as we move into the spring session.
03:46Of course, summer is just around the corner as well.
03:50So it does take some time to funnel through more sustainably across the U.S.
03:57But you would you would see that bleeding in considering that wholesale prices are now up as well.
04:04So, Vince, what's the role in OPEC here?
04:06Are they just going to open up the spigots and take advantage of higher prices?
04:10So earlier they they suggested that they that they would delay any action.
04:16I believe, considering where we are, where we stand today, you could see them propose loosening balances, providing additional capacity.
04:28Of course, Saudi has the most excess capacity and you could see it introduce barrels into the market or suggest
04:35they will introduce barrels into the market to sort of calm the market somewhat.
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