00:00Notable impact on the price of oil this morning after President Trump's comments.
00:05How are you reading them?
00:06I mean, it just seems to me that this market is very much headline driven at the moment.
00:13Thanks a lot, Jamana. Good morning.
00:15Yes, it is quite volatile at the moment.
00:18Over the last 24 hours, we have seen historical swing in the interday trading of Brent.
00:24And shortly after that, with the spike, we have seen over $100 and nearing $220 per barrel.
00:30We have seen this two consecutive events.
00:33One, potential releasing of strategic reserves from G7 nations.
00:38But also shortly after that, the U.S. President Donald Trump has signaled that the war is very complete and
00:45nearing quite soon.
00:46That has impacted the prices to fall down to the levels that we are seeing at low 90s.
00:53However, the geopolitical premiums are still there, but not at the level of accounting the supply disruption that we have
01:01seen over the last week.
01:04The closure of Strait of Hormuz is leading to some countries declaring force majeure.
01:09But also we are seeing potential shutdowns of prolific fields in the region.
01:16Can I just ask you, what is the actual, I was going to say, Aditya, what is the actual hit
01:22to physical supply that you're baking into your scenarios right now?
01:28So, as we speak, we are, the exports which are potentially at risk is closing into 6 to 7 million
01:36barrels per day.
01:37Certainly some part of the actual supply disruption is being rerouted through East-West Pipeline and through Yanbu ports in
01:44Saudi Arabia.
01:45And also we are seeing some diversions coming in from the UAE.
01:49But by and large, we are seeing 6 to 7 million barrels per day of exports being hit on top
01:55of LNG impact, as we have seen already last week.
02:01And can I ask you how far along the release of the strategic petroleum reserves, the SPRs, would go to,
02:09again, cushioning the blow of that anticipated loss of supply coming from the region?
02:15Any sort of reserves release would give some relief within weeks, a week or two weeks there.
02:26But then I think largely if the war or the conflict escalates into months timeline, then fundamental will largely drive
02:33up the prices.
02:34In two months or four months scenario that we are building in internally, we are seeing prices to reach up
02:40to $120 and $130 per barrel.
02:44The liquids market, which anyways pre-war was oversupplied, close to 2 to 3 million barrels per day of stock
02:52builds, will eventually see deficits strictly hitting in extended conflict scenario starting next month.
03:00So overall, pretty dire situation.
03:06So how, I mean, let's say President Trump actually sticks to his word and the war does end soon, quote
03:14unquote, or within a couple of days.
03:17How easy is it going to be for oil to get up and running again, for the LNG exports to
03:24get up and running again?
03:25I mean, are we going to talk about, is there going to be a bit of a time lag between,
03:29you know, the announcement that at some point, let's say the war is over,
03:33and the ability of these producers to ramp up their supply in a meaningful and timely fashion?
03:40That's a great question.
03:41So we could see supply responses picking up within two weeks timeline, but eventually we could see four weeks to
03:48more than a month to reinstate the entire supply.
03:51What the Gulf nations are doing well is to ensure their core fields are still producing at subdued capacity, because
04:00from a partial outages, it is easier to bring back the supply levels to the pre-conflict levels.
04:06But from a complete outage, it would be at least a month timeline.
04:11So that's the important signpost that we are seeing, which of these fields are completely shut down, which of these
04:18fields are partial shut down.
04:19From what it looks like, we could see a recovery starting within a two weeks timeline from the conflict easing
04:27down and reaching the pre-conflict levels in a month or four to five weeks time.
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