00:00Let's get some analysis now from Dan Marks, who's a research fellow in energy security at the Royal United Services
00:07Institute.
00:08Thanks for talking to us here, Dan.
00:11Thanks for inviting me.
00:12So the dip that we've seen in the last day or so, is this the result of some real relief
00:19to the sector or is it people reacting to Netanyahu's comments with perhaps some hope?
00:28Yeah, I think that prices at the moment are being driven in large part by expectations about the conflict itself,
00:36how long it will last, how intensive the fighting will be and the extent to which energy infrastructure will be
00:43targeted.
00:44So obviously, after the attack on the South Paz gas field in Iran, there was concern that fighting would really
00:54escalate, that energy would become a major target and you could see real damage, including to the infrastructure that's still
01:03allowing oil and gas to get out of the region.
01:05And since then, Donald Trump has come out and said pretty strongly that he doesn't really want energy infrastructure targeted,
01:12Israel saying now that they're seeming to agree with that, at least for now.
01:17So I think that's in large part what's driving the price.
01:20So it is quite speculative and quite volatile around that kind of 195 to 110 kind of price.
01:28When you say that it's speculative volatile, am I correct in reading into that a little bit, that perhaps some
01:36of the amount of strategic reserves that can be falling back on, some of the contingency that has been put
01:44in place over the years, is all of that correctly priced in or are we seeing a lot of fear
01:49based around how dramatic these events are?
01:55No, I think they're being fairly well priced in many ways.
02:00The oil market is much more resilient than it was in the 1970s and early 80s.
02:06There are the strategic reserves, there's a lot more inventory, the oil market itself is much more sophisticated.
02:14And I think that's actually preventing oil prices getting quite a lot higher.
02:18The fear, you know, models in the past have shown much higher price increases potentially for closure of the straight
02:24of Hormuz.
02:24I mean, it is a massive thing to happen.
02:27So I think that that's there.
02:29That's keeping the price around where it is now.
02:32Really, it's a question, I think, for the markets of how long will the straight remain closed and how much
02:38damage is done that creates more long term issues.
02:42And is it perhaps the threat now is there is some contingency to get around the straight of Hormuz, a
02:50blockade.
02:50But if we keep seeing key oil and gas sites struck in the region, that's what's really going to start
02:57worrying people.
02:59Yeah, I mean, there's a lot of scope for escalation, actually.
03:04So at the moment, the straight is closed.
03:06There have been some attacks on facilities, the most damaging really on Qatar.
03:12But the pipeline, for example, that takes crude through Saudi Arabia and allows it to be put on ships in
03:20the Red Sea, that's not been attacked and it's operating fine.
03:24The UAE facilities that allow them to export still have been attacked, but they're still operating.
03:29So there's a lot of ways that this could escalate and get worse.
03:34It has actually been, to an extent, contained so far.
03:38And I think that's where the fear will be.
03:43And in terms of just what we heard from the UN Maritime Summit over the last few days, you know,
03:48thousands of ships stranded on one side of the strait.
03:51Other ships, as we know, have been struck and have had incidents related to the conflict itself.
03:57When was the last time we saw something like this?
04:02It's a good question.
04:04I'm not sure we've ever seen anything quite like this on this scale.
04:09Obviously, there was the period when the Suez Canal was closed.
04:12Also a big disruption to shipping for a few days, at least.
04:16But really, nothing like this has happened, at least since the revolution itself in 1979 in Iran and the oil
04:25crises that followed that.
04:26So a long time.
04:28Now, you mentioned at the start there how everyone is trying to figure out how long this will last.
04:34We've heard Netanyahu claim that it's not going to be as long as feared.
04:38We're also now hearing that these six countries will intervene to protect the Strait of Hormuz, but only in the
04:45event of a ceasefire.
04:48So everyone is trying to calibrate this question.
04:50And at the moment, it seems incredibly unclear.
04:53And if you were to put a sort of prediction, I don't think I think it's, you know, anyone's guess
05:00could be could be easily wrong.
05:04Yeah, I mean, the fact is that we just don't know, because a lot of it rests on how how
05:11does Iran view its interests when when it comes to the when it comes to de-escalation?
05:19So if if the United States and Israel say, OK, we've achieved our war objectives, we want to leave.
05:24Does Iran say, OK, well, we've also had enough.
05:28We want to we'll we'll allow the Strait to be reopened.
05:31And or does it actually say, no, you can't attack and, you know, kill our leaders and destroy a lot
05:39of our infrastructure and defense infrastructure and pay no cost when they can impose a cost.
05:45So what's the incentive for Iran to de-escalate?
05:48And that's really the question.
05:49It's hard to know who are the leaders even making that decision at the moment.
05:53How fragmented are they?
05:55How how hard line are they?
05:58And how do they see the interest of their regime?
06:00Because they may want to make a point, incur a large cost and deter future attacks.
06:06That's dragging it on for longer.
06:07Yeah.
06:08Dan Marks from the Royal United Services Institute.
06:11Thank you very much for speaking to France 24.
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