00:00The Strait of Hormuz blocked the world's biggest liquefied natural gas plant attacked,
00:04energy prices soaring. This couldn't be more serious, could it?
00:09Well, it could, and it might get more serious because we have not seen more serious and more
00:17extensive attacks on the energy infrastructure. But more importantly, we have not seen the Gulf
00:23countries, the Arab Gulf countries, attacking Iran. So far, they have been defending themselves,
00:29and they have been defending their facilities from ports to airports to energy infrastructure
00:34to a certain extent. But the worst situation would be if they get more actively involved
00:41in this war, and that would be really a serious escalation.
00:46Now, the world's biggest gas field in Iran, that's been attacked. Now, this supplies most
00:50of the country's energy. So while we're now looking at mass blackouts across Iran, if so,
00:56what effect do you think this will have on the Iran's ability to fight back?
01:01You're right to point out that the attacks on southpars are less relevant directly to global
01:07markets for gas, unless what we saw Iranian reaction was to attack Qatar's facility, and
01:14that caused this kind of jump in prices and kind of mini panics so far in the market. But
01:20definitely the more exposed party to the attacks and southpars is the Iranian economy. Because
01:26despite sitting on such a massive field, and the second largest proved reserves gas reserves in the
01:32world, after Russia, Iran ironically barely export any gas and consumes most of the gas produced
01:39domestically. And that by itself is going to cause some serious economic problems, because that
01:45gas is used not just for power generation, but to run factories and industries. And we're seeing
01:51like, it's a serious dent, let's put it that way, in the Iranian economy.
01:56Let's look at the impact of these strikes on Asia. Which Asian countries do you think can cope well
02:02with these shortages? And which ones are in trouble?
02:05I mean, typically, any country that is that relies on the imports, whether from the Middle East or
02:12elsewhere, but particularly from the Middle East, and they have a low purchasing power, and the economy
02:18is not doing so well, then they are more exposed. And I'm thinking about the poorer, smaller Asian economies.
02:26Now, of course, everybody think of China, China is definitely exposed, because they used to buy a big
02:32chunk of the oil that came out of the Strait of Hormuz. But mind you, China is better shielded for
02:39many reasons. But chief among them is the fact that for oil over the last year or so, we have
02:46seen
02:46China building massive strategic and commercial oil reserves as if they were preparing for this kind of
02:53worst case scenario. And on gas, they also have a quite diversified base. So China is better shielded than
03:01others in the region. But you do have, I am more worried about countries such as Bangladesh,
03:06for example, or even Pakistan, and the economic toll the crisis would have on their own people.
03:12How far can the release of energy reserves offset the impact of rising prices, do you think?
03:19I think if we did not have the strategic petroleum reserves and the announcements that those reserves
03:24are going to be released, though we are still waiting for further, more technical details. I think
03:30if we did not have that card, we might have seen, we could have seen prices at much higher level.
03:37So the fact that we have that card kind of put a lid to a certain extent on how far
03:44prices can go.
03:45And this is where I want to highlight something that maybe for many would come as weird. But actually,
03:52given the scale of the crisis affecting the heart of oil and gas productions and exports,
04:00and energy infrastructure being attacked, production being shut down in major producers,
04:06and oil prices are only at the levels we are seeing, this tells me that we're not really in terrible
04:13territory. So that's something I mean, if you want to look at the glass half full or half empty,
04:19and if I look at the half full side, then that would be the side I would be focusing on,
04:24if I want to remain a little bit more optimistic.
04:26Carol Nakhla, thank you very much indeed for that.
04:29Carol Nakhla, thank you.
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