00:00Well, joining us now is energy markets expert Dan Dicker. He's also the author of the book
00:03Oil's Endless Bid, Taming the Unreliable Price of Oil to Secure Our Economy.
00:07Dan, it's great to speak with you. I'm going to pull back the curtain a bit. You and I were
00:11in a
00:11green room, and you admitted to me this is a dire time in global energy, the likes of which you
00:16haven't seen before. So let's set the table with that. Give us a sense of how bad the picture is
00:21for global oil markets, global energy markets right now. And we hear the president, President
00:26Trump, saying straights open, it's going to be like a gusher. Oil's going to be flooding out of
00:30there. What does that mean, yes, for the market, but for the price that people are paying at the
00:34pump as well? Right, David. So what you have is you have the rhetoric of the president, obviously,
00:42jawboning a market where the physical realities are starting to assert themselves, where they
00:47hadn't so much for the last three months of this war. I mean, we basically had stockpiles,
00:52and I'm not talking about state-run stockpiles. I'm talking about generic stockpiles that are held
00:58by oil companies. In some cases, they're sovereign stockpiles, but they've been withdrawn from to try
01:06and cushion the blow of this export disaster, the likes of which, you know, I've never seen in my 45
01:12-year
01:12history of oil. I mean, there's six to eight million barrels of oil that's not getting to its source
01:18on the global marketplace every day. This has been going on for a long time and continues to go on,
01:23no matter what the heck is going on with, you know, memorandums of understanding and deals and
01:30whatever Trump says is going on in the straight-up form, which is not. And so you're down in the
01:36global stockpile area of about half a trillion barrels of oil globally. And that is just incredibly
01:45significant towards, you know, what's going to happen in the marketplace if a huge amount of oil
01:53doesn't reach its targets at some point pretty darn soon. And even if it does, it might not be enough
01:59to stop what is a tremendous issue with global supply. So, you know, what I see in a marketplace
02:09is a bunch of, and this is, you know, where I really come in, where there is some insight I
02:15can
02:15provide, there's been a jawboning, so there's been a trader's reluctance over the course of the entire
02:22war to pay up for oil that should be a heck of a lot more than $110 or $115 where
02:30it ran at its height.
02:31If we had this kind of global supply shortage, you know, in normal days, you know, in the years that
02:39I've been trading it, it would have meant a price of oil far higher than, you know, $110 or $115.
02:46And now what's happening is that the traders have been so frightened to own oil because, you know,
02:54Trump was announcing 32 deals, you know, every separate Sunday. There was a deal coming. When the deal
02:59finally came, you know, these traders weren't long, and now they're spectacularly short at $75,
03:05$76 a barrel. Now, to give you some perspective, this is exactly the range that the oil was in for
03:13two years prior to this war. We had been hovering between $55 and $75. I mean, it's the upper end
03:20of
03:20the range, but it was, you know, the part of the range when oil was as boring as I've ever
03:25seen
03:25in 20 years. And, you know, supplies were very steady and there was really nothing dynamically
03:32to make the price of oil go up. And now we're at a place where we're at the upper end
03:37of this
03:37deadly boring range that for some reason takes, turned the risk premium of the supply from something
03:47that was being underpaid to a relief premium that's being incredibly overpaid, in my view. So,
03:54you know, looking at oil right now, particularly with the tenuous nature of this deal and what
04:01will happen with the straight, you know, I find that the marketplace right now and gas prices
04:05are being overly, way overly optimistic to what likely will happen over the course of the next 60
04:11days. Okay, Dan, you are speaking my language because this is something I say every time we have
04:16an oil person or a markets person. As someone who covers diplomacy, I keep looking at these MOUs and
04:21these tentative agreements that fall apart almost six days later. And I don't understand, it's like
04:26Lucy and the football, why people keep buying in every time there's messaging from D.C. or from the
04:31Middle East that this is going to get solved. When even if, look, even if the 60-day things holds,
04:37to me it seems like you're still going to have a higher cost for this product, right? Because as we
04:42were just talking to the U.N. Secretary General, it is going to cost more to get people to be
04:46willing to
04:47go into the Gulf because there is a higher risk factor. It's going to cost more to get mariners to
04:52to be on the ships because they don't want to get stuck there for three months in case this all
04:56falls
04:56apart again. Do you foresee a higher price, a higher floor basically for just the cost of doing business
05:02in this region? And why isn't that being reflected in the oil markets? Right. And this is really the
05:08thing that I try hard to translate to people outside of the trader world because, you know, that's
05:14what I've done. That's been my life for the past 45 years. Understand if you're a trader. Try and
05:19understand for a second. If you see a fundamental reason for oil to be $120 and not $80, you would
05:26normally buy a market and you'd go in there and you'd sit there and you'd buy oil at $80, $85,
05:31$90.
05:32But what happens when you do that? What's happened for the past three months? Every time you buy oil at
05:36$90, $95, Trump announces some crazy, you know, they've got the outlines of a deal. Oil falls $6 or
05:43$7 overnight and you lose $6 or $7,000 for every lot of oil that you're long. That's an instantaneous
05:51loss that you take. You sit there and you're sitting on a premium that the president of the
05:56United States with his mouth can destroy you with every time you take a position like this. And,
06:02you know, after you do this two or three times in the market, which believe me,
06:05I haven't done because I know what's coming and I've seen this story before. But, you know,
06:11I can see, you know, fellow traders, every time they go in, oh, this oil market's fundamentally
06:16worth $125. And they're right, except for the fact that, you know, you can't get anybody to
06:21significantly hold oil through it. There's no speculative reason. And we're driven, unfortunately,
06:28in the global markets by the speculators, the ones who are inside. We trade eight times more oil
06:35than there is physical oil in the world every month. Our price is tethered to what traders do.
06:43And the traders are not willing to buy oil for all the reasons that you've seen. Oil goes down to
06:50unreasonable prices. The question becomes, when does the physical reality of these low stockpiles
06:57actually hit the financial markets that are controlling the price of oil? And unless this
07:03deal gets done, you know, to a much more firm degree, oil starts to flow seriously and rebuild
07:10some of those stockpiles that have been draining for the past three months, that physical market is
07:15going to assert itself in a way that we've never seen asserted itself before. And what that drives,
07:21of course, is it drives a price that doesn't go from $75 to $85. It's a price that goes in
07:27the space
07:28of a month from $75 to $135. And that's why you've seen guys like Mike Worth at Chevron and the
07:37Exxon guy,
07:38the vice president, come out and say, look, when this happens, stockpiles are a disaster and it's
07:43really bad out there. Don't blame us because we've got nothing to do with it. It's not our fault.
07:49But when these stockpiles reach the physical reality of the futures markets, you're going to
07:55see a spike like you never saw before. Unless, of course, they manage to get this thing, you know,
08:00significantly correct. And you do start to see these oil tankers run. And obviously, you agree
08:07with me, that's going to be difficult, if not impossible. I mean, they've had the Iranians claim
08:12the straits are closed today. The Americans are going, no, it's open. I mean, what do you believe?
08:17What do you believe? What I know is that it isn't freely flowing, not yet anyway.
08:21I believe what Dan Dicker believes because he said I'm right. So we're only booking guests
08:24who tell me I'm right from now on.
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