00:00Oil prices have been incredibly volatile again this week because of the uncertainty around
00:04supplies getting through Hormuz and prolonged holdups. For more on the impact on financial
00:09markets and energy prices, we're joined now by Osama Rizvi. He's an international economic and
00:14energy analyst. So good morning, Osama. Welcome to Europe Today. So first question, are markets
00:19reacting rationally, do you think, to the risks right now? Or do you think investors are
00:23underestimating how serious this could become? Well, thank you so much for having me today.
00:28I think it's a bit of both. When you see the markets, there seems to be a continuum on which
00:35the reactions can be purged upon. For instance, the oil markets, look at the oil markets. A few weeks
00:41ago, the difference between the physical markets and the paper markets was huge. The spread was
00:46somewhere around $36 to $38. But now as we speak today, that spread seems to be shrinking. But is
00:52the conditions or the circumstances better now? Are the circumstances better now? Not at all.
00:57So which means that markets are sort of divided, confused. They are in a haze as to what will
01:04happen next. And this confusion, uncertainty is what is fueling this dual behaviour, I would say.
01:11But moving forward, one thing is very important to understand that fundamentally speaking,
01:15from oil markets to the financial markets, the chances of both turning ugly or things getting worse
01:21are unfortunately more than them getting better before.
01:23And you said the markets are feeling confused. What about consumers? How concerned should
01:27consumers, should we be about fuel prices rising further at the pumps?
01:32Well, consumers have been very clear about what is going around and also been very clear in terms of
01:39their future confidence regarding the global economy. For instance, economic confidence in Europe
01:45is down. When you look at the US, it's at the US-Michigan Consumer Sentiment Index is down to multi
01:52-years low.
01:53You look at the cost, input cost, especially in Europe, it has increased to a four-year high.
01:58Similarly, you know, you look at across the consumer centres, I think it's showing confusion.
02:05It's all very gloomy, isn't it, Osama Rizvi? But thank you so much for joining us this morning and bringing
02:10us all your analysis.
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