00:00As I speak now, as a result of IEA action, additional barrels of oil are flowing, flowing to the market
00:10in Asia.
00:12And on top of those barrels being released right now, more and more are coming from IEA emergency reserves, both
00:20crude oil and oil products.
00:24Yeah, the International Energy Agency Director Fatih Birol there with a look at oil supplies, especially those emergency supplies coming
00:33to markets.
00:33And we have already seen the price of oil decline in recent days, especially from their recent highs.
00:40And this, as we have heard about a trickle of tankers being able to pass through the Strait of Hormuz,
00:47that has led to some optimism that we might see the market mobilizing again.
00:54Secretary Besant has also talked about prices potentially being much lower than $80 a barrel in a couple of months.
01:02Let's discuss all of this with Rebecca Babin, Managing Director and Senior Energy Trader at CIBC Private Wealth Group.
01:08Rebecca, really good to have you with us.
01:10Of course, we have seen the trickle of tankers through the Strait of Hormuz.
01:13We saw the UAE's Fujairah port also reopening.
01:18But at the same time, we're getting news now that another oil field in the UAE, the Shah oil field,
01:25gas field, is halting operations.
01:28What's the picture right now in the energy space?
01:32So I think you bring up two really good points.
01:34And this is what the energy markets are really grappling with.
01:37On the one hand, we're getting some signs that there's easing, whether it's through traffic through the Strait of Hormuz,
01:44as you said, a trickle, but directionally better than the direction it was going.
01:49We also get some rhetoric that there may be an off-ramp emerging in the background, while at the same
01:55time we still see energy infrastructure targeted.
01:58So there's this push and pull that's constantly kind of dragging the market higher and lower each day, just based
02:05on the sheer amount of headlines that are hitting.
02:08I would say today's action was reflective, as you said, about maybe the emergence of flows starting to move through
02:15the Strait.
02:15Some rhetoric that was softening.
02:18And lastly, as you mentioned on the lead-in, the barrels from the SPR potentially starting to be tendered in
02:24the United States, which caused traders to kind of hedge out that exposure.
02:29So it's not a one-story market.
02:32This is a market with about 100 stories running at once that's frantically trying to determine how much supply is
02:40off the market and for how long.
02:43The how long is such a key question, right?
02:46Because you talked about the positive narrative around the flows, and a lot was based on potentially that Iran and
02:52Israel might be communicating as well.
02:55This is what the foreign minister of Iran, Mr. Arachi, tweeted, saying that the last communication that he actually had
03:03with Mr. Witkoff in the U.S. also was prior to his employer's decision to kill diplomacy with another illegal
03:11military attack on Iran.
03:12That this was solely to mislead oil traders and the public.
03:17How difficult is it right now to gauge where the conversations, if there are any conversations between the two sides,
03:24are going?
03:24And what will traders be looking at when it comes to physical data on the ground about supplies?
03:31So I think if we're going to put how difficult this is on a scale of 1 to 10, it's
03:35a 12.
03:36So figuring out what's happening as a non-military and non-DC analyst, this is all extremely challenging.
03:44But I think if we bring it back to the markets and we look at the supply picture, the market
03:49is keenly focused on two things.
03:52How much production is being shut in in the Middle East?
03:54That number is growing.
03:56It was 4 million barrels last week.
03:57It's about 7 million barrels now, and that's before products.
04:01So we're looking at shut-ins and how long that crude is going to be held off the market and
04:06where inventories go from there.
04:07And as you said, time is the enemy here for volatility.
04:11As this extends out, the implications kind of compound throughout the market, making the supply disruption have a more pronounced
04:20impact on price.
04:21So that, I think, is where the market is focused, is where is that supply?
04:26How long is it going to be shut in?
04:28Are we getting any ships through?
04:30And with the rhetoric in the background kind of playing back and forth, maybe it causes a little bit of
04:36speculative money in and out of the market.
04:38But I think traders themselves are much more focused on flows than rhetoric.
04:43That doesn't mean rhetoric can't move markets.
04:45I just think for the pure crude traders, they're a little deeper in the numbers.
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