00:00For more, we can bring in Osama Rizvi, founder of Rizvi Insights.
00:03Good morning, Osama. Thank you so much for joining us. So it was a tense weekend,
00:07but now there does seem to be an agreement on the table to talk.
00:10Should we treat this announcement, though, with a degree of scepticism?
00:15Well, thank you so much for having me. I think, as we've discussed before,
00:19we will see this back and forth and the MOU will continue to be very fragile in its nature.
00:24It has to be like that. But when I look at from a fundamental or practical point of view,
00:30even for the U.S. side, the cost of inaction clearly outweighs that of the action.
00:35So if they go down further the path of escalation or a war, we will see a host of problems
00:42propping up from U.S. Treasury yields rising to 5 percent, which has never happened before.
00:47And every time they neared 5 percent, we saw some sort of good news being released into the market.
00:52We will see oil prices once again rising up, election a year and so on and so forth.
00:57Whereas the cost of inaction would only be a loss of political capital.
01:01And if you look at the figures recently, it has already been depleting.
01:04So I think a practical and more sane way would be to go down the inaction pathway.
01:08And I think that is more probable, hopefully.
01:10And of course, we've seen the last couple of days tits for tat exchanges with Iran making it very clear,
01:15Osama, that they would be controlling the Strait of Hormuz.
01:18What's the biggest risk, do you think, in the next few days?
01:21I think, to borrow Bradford DeLong's word, this whole situation regarding Hormuz is a densely rated Gaudian knot.
01:29So this ought to have such repercussions that nobody can understand.
01:34It will remain, unfortunately, as far as I see from a geopolitical point of view,
01:38it will remain under the control of Iran.
01:40Nobody will be able to open it from maybe other than diplomacy.
01:45But at the same moment, at the same time, I think shipments and tankers will continue to flow because it
01:52serves both the sides.
01:53Well, you mentioned that word diplomacy.
01:55Is there any realistic chance now for diplomacy?
01:58I think it is.
02:00The longer we go on without any serious escalation, the better the chances become of this conflict being resolved through
02:08diplomacy.
02:08However, we have to look at the past.
02:10We have to look at Israel.
02:12We have to look at Lebanon.
02:13There are so many actors involved.
02:14So I think it will remain precarious.
02:16It is tenuous.
02:17And the situation will keep everyone and all the markets on the edge of their seats.
02:22Very much on their toes.
02:24And just regarding the markets, we saw oil prices spiking since the attacks actually resumed.
02:29What are you looking out for this week?
02:31Oil prices are actually an oddity at the moment.
02:34If you look at the fundamentals, U.S. stocks are at 20 years lowest point.
02:38There is no reality in which WTI can be where it is right now.
02:41So either oil prices will reassess the risks and rise or maybe remain rage bound.
02:46I don't see them following to levels like 40 or 50 anytime soon.
02:51OK, Osama Rizvi there with his eye on the ball.
02:53Thank you so much for your insights as always.
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