00:00Why is crude at 100, at 90, and not close to the 200, given this straight's been shut for three
00:05months?
00:06You know, it's a little hard to explain.
00:08We really are seeing markets tighten, inventories draw, demand for products around the world still very strong.
00:17I think there's this belief, and we're experiencing it again the last few days,
00:22that the end is near, the conflict is nearly resolved, and flow through the straight will resume very quickly.
00:29And that has kept the back end of the curve lower than it might otherwise have been.
00:34And I think the psychology of the market has been this is closer to the end rather than the beginning.
00:40But what about the physical world? When will inventories be at the very bottom?
00:44Before long.
00:45We are steadily drawing inventories down on products, on crude, in locations around the world.
00:53I think June and July are going to be critical months.
00:56And you can see the trajectory of these inventories in the data, and it's concerning.
01:02Do you see any physical shortages right now around the world?
01:05We do see some in some Asian markets, and we've seen some rationing.
01:09We've seen work weeks adjusted, other demand measures imposed in some of the countries in Asia.
01:16Markets are very efficient at moving products and barrels to where they're needed.
01:21And we haven't reached a crisis point yet.
01:24But the inertia in the system is very, very strong, and turning that is not easy.
01:30One of the main sticking points the U.S. has when it comes to negotiating with Iran is this idea
01:34of the tolling.
01:36Would Chevron consider paying a toll?
01:39No, we wouldn't.
01:41Do you know how people are paying a toll?
01:43I've heard reports of people using cryptocurrency in various countries.
01:49I think the Treasury has come out this week and sanctioned the new authority that has been put in place
01:56to oversee transit through the strait.
01:59It went from a toll to a navigation fee to something else.
02:03Would you pay a navigation fee?
02:04A comp.
02:05I don't know enough about any of these things to say definitively.
02:09But look, freedom of navigation through international waterways is a very well-established principle.
02:14And anything like this would begin to say that countries adjacent to an international waterway can charge some sort of
02:22a transit fee.
02:23There are many other places in the world where that principle could be applied, and not just to energy products,
02:29but to all freight moving through the Straits of Malacca, the Bosphorus, pick your choke point.
02:36And so that's not a principle, I think, that most countries in the world would find acceptable.
02:42And so that's not a principle.
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