- 14 hours ago
Energy expert Dr Anas Alhajji warns that if the ongoing war does not end soon, the global economy could collapse by early May due to the Strait of Hormuz blockage.
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00:01So let's put this in perspective. Are we now in the worst oil crisis since the early 1970s? In fact,
00:08possibly far greater in terms of its scope and scale. What are India's realistic options? How should India be countering
00:15it? Can the global economy cope with the crisis? Will it extend to fertilizer or food prices as well? My
00:22special guest is one of the world's renowned energy experts. Let's turn to him.
00:29And amidst the unprecedented volatility in oil prices, joining me now is a very special guest joined by Dr. Anas
00:37Alaji. He is one of the leading energy experts in the world. Joins me from Dallas, Texas. Appreciate, Dr. Alaji,
00:45you joining us.
00:46I want to turn to a tweet that you put in not too long ago. It says, if this war
00:51doesn't end soon, the global economy would collapse by early May. What exactly are you suggesting could happen in the
01:00next six weeks?
01:02Here is the problem that very few people are paying attention to. While all the focus is on oil and
01:09gas, there are too many things that are not oil and gas at all.
01:14So if we talk about helium, for example, 35% of the world's helium is traded through the Hermes Strait.
01:25You cannot make computer chips in general. You cannot make computer chips or semiconductors without helium. And companies are running
01:33out of storage. Yes, they can recycle helium, but that's not good enough. And you still need it for medical
01:39uses anyway.
01:40But we have, so that's the industrial sector of Asia, basically, is gone. This is one of the problems for
01:47South Korea, for Taiwan, and for China. This is a serious problem. Because I said 35% globally, but really,
01:55when you look at Asia, it is more than 90%. And then you move on to fertilizers, and that is
02:02the agricultural sector.
02:04Then you move to NGLs, which include LPG, which, as you know, India is suffering from that right now. You
02:10are hitting several sectors, because LPG is used not only for cooking, but it's used in many industries. So you
02:17are hitting the industrial sector in Asia, too. And then you are hitting all the food supplies, and you are
02:25affecting the supply chain. And then you have all those ships that have been stranded. We need the shipping. We
02:31need those ships, basically, to transport goods and services.
02:33They got stuck there. So you add all of this together, and we have no replacement. You can see where
02:40we are heading. We've already seen over 20 countries, basically, suffering. And we are only a few weeks into this.
02:47So what you're saying is that if this war continues, in the worst case, for another month or more, and
02:54if the Strait of Hormuz remains blocked, a strait through which 20% of the global oil supply moves, you're
03:00saying it will have an impact not just on fuel prices or oil prices, it will also affect fertilizers, food
03:08prices, and thereby create a global crisis.
03:11That's the crisis you're speaking about. Am I correct?
03:15Absolutely. And it is larger than any crisis we have seen in our lifetime.
03:21So even if you go back to the 70s, or you go back to the invasion of Kuwait or invasion
03:26of Iraq, this is larger than anything we've ever seen, because the Hormuz rate never been closed.
03:32This is the first time we've seen something like this.
03:36And the bigger issue that people are not paying attention to is that once the supply chain, aside from all
03:44the direct impact, we have the indirect impact coming through the supply chain.
03:48When that supply chain is affected, we have serious problems, because as you know, for example, phones or cars are
03:56manufactured in several countries.
03:59So one piece of that car or one piece of that phone, basically, that cannot be made, the whole supply
04:06chain will stop.
04:06So this is a bigger supply disruption than what you've seen ever, you're saying.
04:12You're also saying it's far greater than the oil shock of 1973.
04:17And we're seeing, though, the kind of oil price volatility.
04:22We're seeing them rising from $130, $140 per barrel, then coming down for a while, rising again, depending on announcements.
04:31Do you believe that this oil price volatility will continue as long as the war is there, as long as
04:37the Strait of Hormuz is blocked?
04:39And how bad could it get in terms of just oil prices?
04:43Let me point out that the Trump administration and President Trump himself is manipulating those prices.
04:50So they are manipulating them through statements by telling people, look, the war is going to end in a few
04:55days.
04:56And then a few hours later, we know that this war is going to linger.
04:59And then the Secretary of Energy is saying, look, we have the U.S. Navy basically escorting oil tankers.
05:07Prices dropped by $18 only to find out a few hours later that was a lie.
05:12And that was the tweet was deleted.
05:15So we have manipulation of the market, but through those statements and other things.
05:20No, you're making a very serious charge, sir.
05:23Dr. Anani, you're saying the U.S. President or someone close to him is manipulating oil prices.
05:29I am not the only one, by the way.
05:31There are thousands of people who are writing this and there are senators and congressmen who are saying it.
05:36So I am not the only one who is saying it.
05:38This is a very general conviction right now in the United States.
05:41You see it even from congressmen talking about it.
05:44But is there any alternative to taking the oil through the Strait of Hormuz?
05:51Saudi Arabia's east-west pipeline can bypass Hormuz, but it has limited capacity.
05:57UAE exports some oil through Fujairah, but without using the Strait.
06:03Are you saying that without the Strait of Hormuz being completely accessible to ships,
06:10there is no solution to what you're saying is a doomsday scenario in early May?
06:16We don't have alternatives at all and we should not talk about alternatives.
06:20We are talking about mitigation.
06:23When we talk about mitigation, we have mitigation that was the fastest
06:27and the largest mitigation came in from Saudi Arabia.
06:30They diverted the oil from east to west, and we estimate that to be at 4 million barrels right now.
06:37We want to see whether it will increase or not.
06:40So that is a mitigation.
06:42And I would like to point out that this mitigation should be compared to zero,
06:46not compared to pre-crisis exports, because that's a mistake,
06:51because without those pipelines, the exports would be zero.
06:55So it should be compared to zero.
06:56So this is a credit to Saudi Arabia.
06:59On the other hand, we have the pipeline from Habsham Field near Abu Dhabi to Fujairah,
07:05that before the crisis, it was carrying about 1.2 million barrels a day.
07:11The capacity is 1.5, so it can add about 300,000.
07:15Then we have another one in Iran that with capacity of 1 million barrels that goes from the north to
07:22the south.
07:23And it's probably carrying about 300,000 to 500,000 right now.
07:27Then we have the mitigation coming from Iraq by exporting from the north to through Turkey.
07:32It's about 200,000.
07:33So in total, probably we are talking about 5 million coming out of those countries.
07:39And then we have the release of the strategic petroleum reserves by the IEA, 400 million.
07:44And, of course, the United States within that, they are going to release 172 million barrels.
07:53Notice the following.
07:55Notice that as they mentioned those releases, prices went up.
08:00They did not go down.
08:02And the reason why, because while President Trump and others are telling us this is going to, the war is
08:08going to end soon,
08:09when they released that SPR, there were two messages.
08:13The first message is, when you release the largest release in history, you are telling everyone, look, we are in
08:18crisis.
08:19So the market panicked.
08:21And the second problem is, while they were talking about only days and the war will end,
08:26the release of the strategic petroleum reserve is over three months.
08:29So this gives the impression to everyone that this war is going to be long,
08:34and therefore, people adjusted their risk and prices went up.
08:37So in addition to that, we have mitigation coming from airlines canceling flights.
08:43So we have what we call demand destruction or demand decline.
08:46We have countries basically conserving energy.
08:49We have countries blocking their borders to exports of petroleum products, et cetera.
08:56So we have a decline in demand, too.
08:59So you add all of those together, you add the mitigation from pipelines, the strategic petroleum reserves,
09:05and decline and destruction in demand.
09:08And that will add up probably about to nine, 10 million barrels.
09:12We are still missing 10 million barrels.
09:14And as long as we are missing that, prices will continue to go up.
09:18You know, as I said, you're predicting a very grave situation.
09:21But you've also interestingly tweeted that the European Union's dependence on Russian gas is increasing.
09:28Hormuz crisis has put Europe back in Putin's grip again.
09:31India is looking now to get its oil, at least part of its oil back through Russia.
09:39Donald Trump had tried to impose sanctions effectively on countries that would trade with Russia.
09:47Do you believe all of that is in the past that Russia becomes now, in a sense, the big gainer
09:52from what's happening?
09:53And will Russian oil become a substitute for the oil that was otherwise passing through the Strait of Ormus?
09:59The biggest winner of all is Trump and the United States, followed by Putin.
10:06And then some other countries that are very far away, they benefit from this, just like Guyana, Brazil, Australia, for
10:14example.
10:14But the largest winners are clearly Putin and Trump.
10:19Trump is the largest winner.
10:20Now, I understand people are pointing out that...
10:23No, Trump is the largest winner because of the dependence on U.S. oil.
10:26And Putin is the other winner because, again, he's able to control gas and oil. Am I correct?
10:33Correct, but there is an angle to that I think the audience need to understand.
10:37That, yes, the United States is going to suffer in the short run, but the benefits are mostly in the
10:42long run.
10:43So we have to pay attention to timeframes.
10:45But we got to look at this in one of two ways.
10:49So either you look at this war as a war against Iran for its nuclear program.
10:55So that's one way to look at it.
10:57Or you look at this war against Iran as part of the global changes that we've been seeing recently
11:04that include the trade wars, the tariffs, the sanctions, Venezuela, Panama Canal, the Red Sea, and Greenland.
11:11If you put it within that concept, you have a completely different view about what's going on,
11:16regardless whether it is against Iran or Iran is just part of that big puzzle.
11:23The main beneficiary of the United States on several fronts,
11:26because the United States wanted the chip making, the computer chip making to move to the United States.
11:32They want the semiconductors to be made in the United States, not in South Korea, not in Taiwan, not in
11:36China.
11:37So they achieved that objective through blocking the helium out of it.
11:43And then when it comes to methanol, for example, that's another issue.
11:47The United States is the largest producer of helium, the largest producer of methanol, the largest producer of oil, the
11:55largest producer of natural gas, the largest producer of LNG.
12:00And all of them are blocked. All of them.
12:02Can I therefore ask you, what do you believe are the solutions for countries like India?
12:08Dr. Alaji, what can India do? We've just seen today, India is of course trying to buffer, to in a
12:15way protect the consumer by ensuring that excise duty cuts are there.
12:20But that apart, is India's solution simply to diversify its oil basket?
12:25Is that the only solution as long as this war continues?
12:28Some ships have managed to come through the Strait of Hormuz, but clearly not enough for now.
12:33What are India's solutions?
12:35Anyone who follows me on X or Twitter for years, including Indian officials, they know that I've been calling for
12:44a massive increase in strategic petroleum reserves.
12:48This has been years going on, probably almost 10 years. I've been calling on India. This is not enough. If
12:55you want to grow the same way you are growing, you need to do exactly like China.
12:59China has 1.4 billion barrels of crude reserves right now. India has about only 100 million. So you can
13:09see the difference.
13:11Can you repeat that for our viewers? Can you repeat that for our viewers? China and India?
13:17Yes. China has 1.4 billion barrels reserves. Okay.
13:23Right.
13:24So India has about 100 million in strategic petroleum reserves, and then it has the rest, some in commercial reserves.
13:31But India needs to increase its reserves substantially.
13:35So I'm talking about at least a capacity of 400 million of strategic petroleum reserves of all kinds, not only
13:43crude, but everything else too.
13:45So this is really the main lesson out of this experience. India, rightfully, has strategic reserves for fertilizers because of
13:56the dependence on the agricultural sector.
13:58They need to follow that steps, basically, and do exactly that for oil and other products. So that's number one.
14:06Number two, we do have a problem balancing the portfolio of imports.
14:12So when we talk about balancing the portfolio of imports. When we talk about a portfolio of LNG or oil,
14:19you have to create that portfolio where you minimize the risk of interruption with the lowest cost possible.
14:27You have to have those two together. What happens historically sometimes is they really lean toward the lowest cost at
14:35the expense of energy security. And that should not happen again.
14:39So they really should balance both energy security and the cost. And yes, it will be a little bit higher.
14:47But if you look at the cost of what happened just in the last four months, it's tremendous because they
14:54shifted imports from Russia to the Gulf and paid refiners.
15:02India refiners lost about $200 million a month because they shifted to the Gulf and the United States only for
15:11the Gulf to be closed. And now they have to pay for the same Russian crude, for the same ships,
15:17threefold increase, threefold.
15:20So instead of paying $40 or $45 for that oil, they are paying $110.
15:26But that's because, of course, that's because, of course, the fact is, Dr. Alaji, America made its trade, a trade
15:36deal with India conditional on India stopping to purchase Russian oil.
15:40You're saying India should have looked America in the eye and said, no, sorry, we're going ahead with Russian oil.
15:46Am I correct?
15:47I said that publicly even on several stations in India. That's absolutely the case. I think that should not have
15:56happened because, again, what we are going to see, and this is the second point that it's not only building
16:02that strategic petroleum reserve, but countries right now are moving toward tying energy to national security.
16:10And once you tie energy to national security, what you can tell the other country, look, this is my national
16:16security. You cannot dictate things over my national security.
16:20You want to talk about trade, commercial trade, freedom, et cetera, freedom of trade, that's fine. But when it touches
16:26my national security, there is no negotiations over that.
16:30So tying that inner security, it's a dangerous approach, by the way. But look, China did it. The European Union
16:36is doing it right now. Canada is doing it right now.
16:39And it seems that India has no choice but to do that. That will justify many things because economists might
16:46come in and say, look, subsidies are bad.
16:49Giving tax breaks are bad. There is negative effect, et cetera. But once you tie it to national security, no
16:55one can make those arguments anymore because it is national security.
16:59In conclusion, therefore, from what I gather, the long-term lesson is to ensure energy security. This Hormuz disruption has
17:10shown the irrepressibility of maritime choke points, the practical limits of pipeline alternatives, and the vulnerabilities of supply chains.
17:21So what you're telling us is to ensure energy security. So what you're telling us is every country now has
17:24to link energy security to national security, not be bullied into making short-term arrangements, but focus on building energy
17:33security for the future. Am I correct?
17:36Let me put it differently. The U.S. literally weaponized LNG anyway. Literally. So why other countries cannot do the
17:47same?
17:50Okay. Very well put. You're saying the U.S. has weaponized their energy security. Why can't other countries do the
17:58same? Correct?
18:00Weaponize their exports. Weaponize their LNG exports and oil exports because that's the pressure on India. That was the pressure
18:07on the EU, telling the EU, look, if you don't give me Greenland, I'm going to cut off LNG exports.
18:14That's weaponizing LNG.
18:15Okay. Okay. Okay. And you're saying, therefore, that the time has come, therefore, to relook and have a paradigm shift
18:22in how we look at the entire energy security paradigm that countries have created for themselves, including India.
18:32That's one big lesson in a way from what's happened in the last few weeks. As I said, you've given
18:39us a potential doomsday scenario that should worry us. And hopefully sometime the sheer shock of what's happened in the
18:46last four weeks will wake up the world. Can I ask you in conclusion, what's the worst that you think
18:52oil prices could go up to?
18:55I mean, there is no limit for oil prices until we reach the level of demand destruction. And based on
19:02our modeling, again, this is just modeling. This is not anything else. It could be modeling basically can give you
19:08kind of weird results.
19:09But our modeling basically if the average for Brent goes to 160. That's where we see demand destruction.
19:18Will prices go above 160 for short term? Yes. But 160 where we see the demand destruction.
19:25Okay. I'm very grateful that you've joined us there from Dallas Textus on this show today because, Dr. Alaji, you've
19:34given us in a way a real big picture as well as potential solutions to this global crisis.
19:41Appreciate you joining me here on the show today.
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