00:00Let's talk to Ellen Moore. She's president of Transversal Consulting and Energy and Geopolitical Risk Consultancy.
00:05Great to have you on the show again, Ellen.
00:08Look, oil seems to be settling around that $100 a barrel now.
00:12I mean, what does that mean for central banks that thought that inflation was pretty much beaten?
00:19Well, there really isn't much that they can do to control the kind of inflation that you see when energy
00:25prices go up.
00:26You know, at this juncture, you know, we've really been facing this supply crunch for a while.
00:31And a lot has been done to kind of delay the onset of it, both in terms of SPR releases
00:39from the U.S. and other countries.
00:42We've also seen China cutting back on its consumption globally of oil.
00:48But all of these things are now kind of converging.
00:51China is buying more oil now.
00:53Now, the U.S. SPR releases are ending.
00:56And now, you know, we're seeing increased military activity, you know, in the Persian Gulf.
01:02And this direct hit to the east-west pipeline is a real concern.
01:07We did see hits before.
01:09These were fairly quickly repairable.
01:11It doesn't seem like this is going to be the case now.
01:13And so we're just seeing a lot more supply under pressure.
01:18And so there really isn't much to do to arrest this, you know, price rise.
01:24We are seeing more oil come from Venezuela, but not anywhere near what's needed at this juncture.
01:30However, this is not a permanent condition.
01:33The oil supplies are there.
01:35The issue is just freeing up the transit routes to get them out.
01:41And so I think that central bankers should view this as a somewhat temporary issue in terms of inflation.
01:49But the issue is we don't know how long it will be temporary for.
01:54I want to talk about the east-west pipeline that Saudi Arabia has shut after an attack.
02:00Does that change the picture when it comes to spare capacity that the big oil producers said they've got?
02:07So it does change the picture a bit because this pipeline has really been critical in terms of continuing to
02:13get some flow of oil out of that area.
02:18So there are basically two bypass pipelines for the Strait of Hormuz.
02:23One is this east-west pipeline.
02:24Now, typically, Saudi Arabia was using it for products because they have a large number of refineries, you know, on
02:32the Red Sea.
02:33But it had been converted to sending crude oil, and they were actually shipping that crude oil out of ports
02:39in the Red Sea, both to Asia and then also up to, you know, their storage facilities in Egypt and
02:46through the Suez Canal.
02:47If that pipeline is out, yes, Saudi Arabia does have some, you know, oil in storage, but maybe enough for
02:54a week.
02:54And so if this pipeline is going to be out for longer than that, we are going to see issues
03:00in terms of getting that oil that customers have come to expect to, you know, to buyers, and that's going
03:07to affect global oil prices.
03:10Once it's fixed, those flows can return, although the threat that it could be disrupted again will remain.
03:17Oh, Ellen, we have to leave it there, but I know we'll be talking about this again in the future.
03:20Ellen Wold in Barcaratone.
03:22Thank you very much.
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