00:00First, the moves today, what a time for Sarah Week to take place.
00:04I mean, this is probably a historic conference.
00:07Is that all anyone is talking about, the war and the impact on energy markets?
00:15Well, there are two levels of the conference, if you like.
00:19They're the presentations, you can hear one right behind me.
00:22The conversations are about Iran, but they're also about energy more generally.
00:26There are lots of elements of this conference behind the scenes, away from the podium.
00:31That's really all anybody, yes, wants to talk about at the moment.
00:34It's extraordinary volatility, as you say, and uncertainty.
00:38We've seen these massive price moves today.
00:40It's still not clear when the Strait of Hormuz will reopen to regular tanker traffic.
00:45You know, one of the things we think about, too, Simon, is just how much, you know, major executives,
00:51major companies are kind of looking through the war, even though we are not quite sure what the timeline still
00:57is
00:57and which headlines to basically believe.
01:00But having said that, there is destruction in the region.
01:04We know that.
01:05We've talked a lot about Qatar and their LNG, and that's going to take three to five years to rebuild.
01:10So is there some understanding that we're going to have a different floor, perhaps,
01:14under energy markets for a while just because of the build back?
01:19I think that's quite right.
01:22It's a very important point.
01:23And I think we heard, for example, from Mike Worth earlier saying that, in many respects,
01:28he doesn't see the futures market, the old futures market, fully pricing in the physical disruption we've seen.
01:34I mean, what we're also starting to hear from some executives here is that this disruption will last a long
01:40time.
01:40In some senses, it might even be kind of permanent.
01:43We saw that dramatic attack last week on Qatari facilities.
01:49The Qatar energy said that damage could take up to five years to repair.
01:53And even sort of beyond that, we've now seen something that has never happened before,
01:58which is the effective closure of the Strait of Hormuz.
02:00And so, henceforth, going into the future, that's always going to be a possibility.
02:05Previously, it was always theoretical.
02:07Now we know it can be done.
02:09And it's always going to be a threat that hangs over the region, possibly to some degree,
02:13unless we see radical change in Iran.
02:16Why is that such a difficult – and look, this is literally the trillion-dollar question –
02:21but why is that such a difficult waterway, given the value of what moves through it,
02:27given the power of the militaries that want to see safe passage for ships?
02:32Why is it so difficult to control that waterway, to make it safe?
02:39It's a hostage to geography.
02:40If you look at the topography, if you look at the Iranian coastline,
02:45the proximity, the narrowness of the straits and the proximity of Iran to that waterway,
02:52it's effectively at the mercy of Iran.
02:55And absent, as I say, a complete political change in Iran,
02:59ultimately Iran's got the say here.
03:01It has the leverage.
03:02And until it backs down or agrees to no longer interfere
03:07and try and control traffic through the straits, the options are limited.
03:11And that's why we are seeing speculation about U.S. military action boots on the ground.
03:17And this is deep concern to the energy industry because it has, as I say,
03:22torn up the rulebook.
03:23Beforehand, this is just a theoretical idea that perhaps this could happen.
03:27It is now happening.
03:29And we are seeing history in real time.
03:30Well, on that, Simon, speaking of history in real time,
03:33CBS reported just about a half hour ago that some U.S. officials estimate
03:37that at least a dozen Iranian mines are situated underwater through the Strait of Hormuz.
03:42Again, this is according to CBS.
03:44The organization cites another U.S. official as saying the count was less than a dozen.
03:49I imagine that makes it more difficult, if there were some agreement reached,
03:53to actually just open it right up.
03:56Yes.
03:57Well, that's right.
03:58It's not going to be immediate.
03:59Even if it happens later today and both sides, say, reach a deal,
04:04well, it's going to be weeks at least before things could maybe resume some sort of normality.
04:10As you say, if those mines really are there, there's got to be a demining exercise.
04:14There's got to be some guarantees for ship owners.
04:17Look, we have scores of tankers in the Persian Gulf not moving through.
04:24And there's been concern that they can't get insurance.
04:28The reality is they can get insurance.
04:30What's happening is the ship owners are choosing not to take the risk at all.
04:35The risk of attack is real, and we've seen multiple attacks since the beginning of this war.
04:40I love you had a story out basically tracking what's going on at Sarawik,
04:46and you mentioned Dan Yergin, who's so well-known, of course, to the energy industry
04:51and obviously key at this event.
04:53But something he said, I guess, last week, that the first act was the Russian invasion of Ukraine.
04:58Now we're in act two of the return of energy security.
05:02And I do think about, Simon, or how should we be thinking about we as someone who covers the energy
05:08markets, you two,
05:09and then I think about the investing audience, that are we once again now thinking that each country
05:15has to be thinking about their energy security and what that means in terms of their own domestic production
05:22or their alliances because these are two big events that have certainly roiled the energy markets over the last few
05:29years.
05:32Absolutely right.
05:33I mean, Dan said that in the context of, we've called this before the energy trilemma in previous years here
05:40at Sarawik in Houston,
05:43which is this idea there are three sort of considerations.
05:46There's the energy transition.
05:47How do we get to a cleaner future?
05:49Then there's affordability.
05:50How do we make energy cheap and plentiful for people around the world?
05:54And then there's energy security.
05:55And how do you juggle these three things?
05:57During COVID, that seemed like a good way of looking at the market.
06:01Certainly since the invasion of Ukraine and now, as of the last few weeks, energy security trumps everything.
06:08You've got to keep the lights on.
06:10And what we've seen recently, I think, is driving conversations right now,
06:14probably in every government, literally around the world, to varying degrees.
06:19How do we ensure that we are not exposed by any big future geopolitical upheaval?
06:26Yeah.
06:26And just as we think about just 2026 alone with Venezuela and then now this,
06:31it's hard not to kind of focus on that.
06:34Hey, Simon, just one last question.
06:36This is several days where it's all about the global energy markets.
06:39What are you listening out for?
06:41What are you maybe looking forward to?
06:42Is there a speaker or individual in particular that you think is key
06:45and certainly someone that we should pay attention to?
06:49Well, we have a lot of other CEOs coming up.
06:53It's a long list of – we're hearing from the CEO of Shell, for example, later on.
06:58We've got other interviews here on Bloomberg's television.
07:01One thing I would say as well, as much as Iran dominates, you just mentioned Venezuela there,
07:05we're going to hear from various people in Venezuela over the next few days.
07:10That's a huge interest to the energy market, particularly as it promises potentially greater supply in the next few years.
07:17And the other big theme here, which is almost getting kind of lost here today,
07:21but it hasn't gone away either, is the challenge of powering the AI boom.
07:25A lot of discussion here, a lot of really sort of quite involved debate about the complicated challenges there.
07:33So that's going to play out through the rest of this week here in Houston.
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