00:00Can you help us track how the dominoes are falling at the moment?
00:02Weather shortages are appearing in what product and where,
00:05and where you think it's going to show up next?
00:07You bet. If you look to Middle East, you look to Asia, what you're seeing is jet fuel,
00:15for instance, trading over $200 a barrel. You look at gasoline and oil trading in $150 a barrel
00:22range. What you're starting to see in Asia, where accessibility is the issue, you're starting to
00:27see conservation measures, work from home initiatives, et cetera. So you're seeing price
00:33start to impact demand in Asia because they're feeling the brunt of it immediately. That's the
00:39risk over time is that that availability issue spreads beyond just Asia, moves across the globe.
00:47And that's one of the reasons you're seeing this release from the strategic petroleum reserves
00:50across the world. Dan, do you see a possibility for oil prices to go back to $65 or $75 a
00:56barrel
00:57if there is some de-escalation right now? Yeah, if you open the straights, if barrels move through
01:03the straights, regardless of why, prices are going lower. We're trading WTI below 90 today. You'll go
01:11well below that if the straights open up. You will then move. So $65, $75 feels to me the landing
01:20point
01:21when things are back to normal. Hard to get to normal. What's normal look like on a go-forward
01:26basis? Is Iran in charge? If they are, there's going to be a risk premium that you've talked
01:30about on your program already this morning. So I think $65, $75 would be a logical landing point
01:37if you snapped your fingers and everything went back to the way it was. That feels like a challenging
01:43outcome. Some people are arguing, whether it's Morgan Stanley or Carlyle, that already there is
01:47a risk premium that needs to be baked into oil prices, even if there is some sort of de-escalation
01:52because that new normal is so hard to put your finger on. Why do you disagree with a
01:57lot of these analysts saying that oil prices are never going back to that and that, frankly,
02:01are stuck at these levels or above for the foreseeable future?
02:05Yeah. Well, right now, the market's pricing in something like 10 or 15 million barrels a
02:12day offline. If that number comes down, I think price comes down. It doesn't go back to where
02:16it was. And the longer we go, and this I think is the key issue, we're burning up 70 million
02:23barrels
02:23of inventory every week. This stretches into April and May. You're going to have a market that's
02:30dramatically tightening and you're putting consistently, every week means a higher floor.
02:37So right now, if we think things go to 65, 75 and this conflict lasts for two or three months,
02:45the 65, 75 goes up 10, 15, 20 dollars a barrel. So that's, I think, where the more bullish folks
02:51are coming is they're expecting this to last for a while. And if it does, you know, prices will be
02:56higher, kind of painfully higher. Dan, we talked a lot over here in New York about how insulated
03:01America is. They're not going to suffer from shortages because we produce close to 14 million
03:05barrels of crude per day. It's not quite true. It depends what state you're talking about.
03:09The average across the country right now for gasoline is about four. For California,
03:12it's higher. And as you know, California, very dependent on importing refined product
03:17from abroad, from elsewhere. Dan, how are you tracking how things are building? What kind of
03:21tension could we see in the coming weeks for California? Yeah, California is in a pickle.
03:28Um, their policies have, have resulted in refineries shutting down, lack of production in the local
03:35market, um, reliance on imports. And so, you know, the, the worst it gets in California, it's a big,
03:42it's a big headline focus and they are most at risk. They look more like Asia than anywhere in the
03:49U.S.
03:49And so, you know, the easiest measure for all of us, uh, at home is just watching what gasoline prices
03:56do. And if U.S. prices nationally move from four to five, which they would, if this conflict continues,
04:05then I think you see California take even another step higher. So, uh, they've got a structural problem.
04:12Yeah. I don't think the U.S. is going to let it, you know, let it go crazy, but, you
04:17know, as, as U.S.,
04:19rest of the U.S. ratchets up, so will California.
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