00:00Stephen, what is your sense, your read? How much visibility do you have on what is actually going through the
00:05Strait right now?
00:06Yeah, absolutely. I mean, we can talk about keeping the Strait of Hormuz open.
00:11We can talk about raining hell and fire down in Iran if they decide to close it.
00:16But effectively, if you can assure a tanker going through Hormuz, you're not moving oil through the Strait of Hormuz.
00:22So effectively, we've had our blockade. We're about, what, day nine, day 10 into an effective blockade.
00:28So that's 20 million barrels of oil that is not making it to the seaborne market.
00:32So we're looking at a significant shortage of oil, regardless of the rhetoric coming out of both Tehran and Washington,
00:39D.C.
00:39Effectively, we're looking at two, at best case, three weeks.
00:43And I'm being optimistic there of a significant global shortage of oil.
00:47If we do not get that straight flowing with a significant amount of restoring the oil, that typically flows there
00:53on a daily basis.
00:54So, Stephen, where and in what do you expect to see that show up first?
00:57In Asia, in oil product? What are you looking for?
01:00Yeah, absolutely. We're looking for it and we're seeing it now in Asia.
01:03Now, of course, there's the talk about release of the SPR.
01:06We are at about between the United States and Western European countries.
01:09We have about 1.4 billion barrels sitting in reserves.
01:12If you release that oil, realistically, you can get about 5 million barrels a day onto the market.
01:17That would supplant a quarter of what has been lost through Hormuz.
01:21But the bottom line is its location.
01:24That oil, if it were to be released, gets released in the Atlantic Basin.
01:27The oil that comes out of the straight mainly goes to Asia.
01:30So look at the Asia markets.
01:32And we do. We're looking at that.
01:34We're looking at the Dubai market, which is a market for the Asian market.
01:39It's a sour oil.
01:40Trades at a discount to Brent, typically, because it's an inferior oil.
01:44But it's trading now at a $10 premium in the spot market relative to Brent.
01:49So that is clearly a telltale that Asian refiners are scrambling to get heavy barrels to replace the Arab heavy
01:57that has been lost through the straight.
01:59So we're clearly seeing it now in Asia with that inversion of the Brent-Dubai spread.
02:04However, when you start to look at further out, when we get to the month of June,
02:08Brent is now trading at a $10 premium to Dubai outgoing this summer.
02:13So that's the market's way of telling you they expect to see some sort of resolution with the straight-of
02:18-home moves
02:18and ease into Asian refiners between now and the month of June.
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