00:00Julie, let's talk about how the global oil market is adjusting as a result of what's been happening here over
00:04the last few days.
00:04We'll talk about the U.S. in just a moment.
00:06But looking at it globally, we've seen the startling images of how little traffic there is in the Strait of
00:11Hormuz,
00:11heard about how some countries, including Saudi Arabia, are trying to reroute a lot of the oil they're producing.
00:16Just give us a broad look at the way in which the global energy industry is trying to change as
00:22a result of what's happening here.
00:24Well, I mean, historically, about between 17 and 20 million barrels a day of oil goes through the Strait of
00:31Hormuz.
00:32About 15 to 20 percent of the world's liquefied natural gas also goes through the Strait of Hormuz.
00:39Since the beginning of March, virtually nothing has left.
00:44The straits are effectively closed.
00:47They're not physically closed, but threats of attacks and attacks that have been carried out on ships transiting the straits
00:57have created a situation where owners and crews and charterers don't want to take vessels through.
01:03And that has left a real problem for both oil and gas.
01:08We did a survey at the end of last week.
01:11There are about 75 super tankers inside in the Gulf.
01:17Almost 50 of those are full.
01:21Others are being used for long-term storage or are related to the Iranian trade.
01:28We calculated there were just nine tankers that were empty.
01:34Each tanker can take about five hours worth of total Saudi production.
01:40So, you know, you've got about four days' worth of Saudi production that can still be put onto tankers in
01:48the Gulf.
01:48And that's if nobody else produces anything.
01:50We've already seen reports that both Iraq and Kuwait are cutting back their production
01:57because their storage tanks on land are full and they don't have anywhere else to put the oil.
02:02Saudi Arabia, as you said, is diverting crude across to the Red Sea.
02:08But that route isn't sufficient to take all of its exports.
02:13So we have a backlog and oil isn't getting out.
02:17And while the West and the U.S. in particular is much less dependent on Middle Eastern oil than it
02:25was back in the 1970s,
02:27the price is global.
02:28So if China and India can't get the oil that they need from the Middle East,
02:33they're going to try and get it from somewhere else.
02:35Prices are going to go up for everybody.
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