00:02The reason being is really our vulnerability is our lack of stockpiles.
00:08And why is that important?
00:09Well, if we just measure petrol and diesel,
00:13which are the two fuels that we consume the most here in Australia,
00:16we've only got about 25 days left.
00:19That's based on government statistics,
00:21and the last of those was for the end of December.
00:25So what they are as of today, I don't know,
00:27but it'd be somewhere in that ballpark.
00:30Nevertheless, that's not a long period of time.
00:33And so we are vulnerable.
00:35It makes us vulnerable to price rises,
00:38and what we've seen with the wholesale price,
00:40that's the international price of oil.
00:44We've seen that rise 20% over the past week.
00:47Yeah, it's definitely hitting us here in a very vulnerable position, as you say.
00:52We also know with the wider impacts being felt,
00:54but Q8 has cut oil production.
00:57Tell us about that.
00:59Yeah, with the Q8 and what we see with other oil producers is,
01:03because the Straits of the Permers is shut,
01:06well, rather, you know,
01:07Iran is starting to blow up any ships that go through there,
01:12except its own,
01:15that they don't have the storage capacity to keep on producing.
01:19So because the shipping is being constrained,
01:22that if they keep producing, they've got to store that production somewhere,
01:27and they're running out of storage capacity themselves.
01:29So that's what's limiting their ability to produce further oil.
01:35And the war is pushing up gas prices.
01:38Yeah, that's the...
01:39So we've got a couple of key areas that Australia is very vulnerable.
01:43So, as I mentioned, petrol, diesel, but also gas.
01:47Fortunately, gas price, local gas prices haven't risen.
01:50But what we've got to consider, particularly here on the East Coast,
01:53is that the domestic gas price here on the East Coast
01:56is quite linked to the Asian gas price.
02:01And that's mainly measured in the LNG,
02:05because not only is the Strait of the Permus important for oil suppliers,
02:09but it's also very important for gas suppliers,
02:11because we've got one of the world's biggest producers there, Qatar.
02:16Both Qatar and the UAE, between them,
02:18that they account for about 20% of global LNG suppliers.
02:23And so if that's cut off, that has a...that's had a big...
02:27Most of that gas flows to Asia.
02:29And so what we've seen, both in Asia as well as in Europe,
02:33we've seen a very strong rise in the gas price,
02:36actually far stronger than what we've seen in the oil price.
02:40So, you know, this is not a short blip,
02:42as many had hoped it was going to be.
02:44Do you think people...
02:46Markets are really factoring that in at this point?
02:48I think they're starting to.
02:50I think what we've seen over the past week is...
02:52In the first day or so, you know, it happened last weekend,
02:57and I think markets were expecting...
03:00Because what we saw in the reaction in the oil price
03:03was quite a modest rise.
03:06They thought that, you know,
03:07maybe we're looking at another quick solution
03:09like what we saw in Venezuela in January.
03:12But actually, what it's sort of turning out to be,
03:14it could be a far longer conflict.
03:18And so that's starting to be factored into prices.
03:21So with the oil price, for instance,
03:23that's now over $90 a barrel.
03:25That's the first time it's been up there in about two years.
03:28And it actually...
03:30If we measure back from the beginning of the year,
03:33before the Venezuelan event, that was...
03:37So we've seen an almost 50% rise in the oil price.
03:40That will flow through to Australian prices
03:43because we import about 80% of our transport fuel needs.
03:49So that's everything.
03:51And so we are very vulnerable to the international flow of oil.
03:57Finally, Kevin, as this conflict continues in the Middle East,
04:00Russia is benefiting from it.
04:02Tell us about that.
04:03Yeah, what's happened in the past couple of days...
04:07I mean, if we wind the clock back a few weeks,
04:10the US told India that it was...
04:14..it didn't want it to buy any more oil from Russia
04:17because both India and China,
04:20which are both big oil importers,
04:23they were the biggest buyers of Russian oil.
04:26So these sanctions haven't impacted China
04:29because I think China probably ignored them anyway.
04:31But with India, the US told India,
04:35look, you can't buy any more Russian oil.
04:37But that's now being reprieved until April the 4th.
04:40What the US has said in their rationale for that decision
04:44is that it would only affect the oil
04:46that's actually on the water at the moment,
04:49that's in transportation,
04:50in order to not disrupt global oil supplies.
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