00:00For more on the latest price increase, let's bring in Osama Rizvi, Global Market and Product
00:04Strategist at Primary Vision, who joins me from Lahore, Pakistan. Good morning and good to see you.
00:12Good morning to you as well, Stephen.
00:14So, energy prices in Europe are rising again. What is driving this latest increase and how
00:20concerned should consumers and businesses be?
00:24Well, as we spoke last time, I think this is just another continuation of the recent events
00:29if you look at the data points, Stephen, there are some positives coming out because the
00:35recent figures show that flows through Strait of Hormuz have recovered a little bit.
00:39They've recovered to 80 percent in some cases to their pre-war levels, but this will take
00:44some time if the benefit persists for that benefit to prickle down to the consumers.
00:49So, my analysis regarding the consumers suffering economically for the next few months still
00:55stands true, unfortunately. And recently, we have seen some refresh strikes as well, Russia,
01:01Ukraine especially, and, you know, refining sites. So, refining is what matters because
01:05the products, diesel and other things, that is what we consumers consume. It is not the crude
01:10oil that we're consuming. So, this needs to be looked very closely.
01:13We just heard from EU Energy Commissioner Jorgensen, who was sort of lukewarm on President Trump's idea
01:20to ask European countries to release some of their diesel reserves as he mulls a ban on diesel
01:27exports. Would releasing diesel reserves have the desired effect on the markets?
01:33Well, this is very interesting. I think of many consequences, what the recent war has given,
01:39you know, to the world is a sudden and painful realization of energy security, and it's still
01:44dependent upon the fossil fuels. So, European reserves, 300 million barrels represents around,
01:49even if all of them are released, it will only cover around 10 to 11 days of the world's diesel
01:54demand. And the European countries also have to have around 90 days of diesel and other reserves
02:00at their home. And Trump's demand, which amounts to around 670,000 barrels per day,
02:07it already talks about around 40% of the diesel reserves being depleted. So, I would not be very
02:13surprised at the European Energy Commissioner's remarks, because we are living in a world where each
02:18country, each man is for itself, right? This is the era of energy security, and I would not think
02:25that this is going to have a very significant impact on the global diesel prices.
02:30Interesting. How much of the current price pressure is coming from global oil and gas markets,
02:36and how much is specific to Europe?
02:39Well, I think two main hubs. So, 20% of the refining capacity in Gulf is off, and around 1
02:47.2 million to 1.5
02:49million barrels of exports are down when we consider Russia and Gulf. So, these are the two main hubs that,
02:55from where the pressure is originating from, Europe and Asian markets, on the other hand, are on the
02:59receiving end. When you look at Europe, as well, you know, the policy lacunas or policy anomalies,
03:05we have seen that in the past few years, from 2009 until now, 30 refineries have already been closed
03:11or converted. So, now, you know, this is giving a wake-up call that maybe we need to have the
03:16approach of energy basket in place, where fossil fuels and renewables coexist, and we stop, you know,
03:21pitching them against each other or demonizing any form of energy. So, this is what's going on.
03:27So, Europe has spent the past few years trying to reduce its dependence on Russian energy,
03:34and are we now seeing the costs of that strategy sort of feeding back into consumer prices?
03:41Definitely, and I think it's very difficult these days, actually, given the integration of global
03:47economy, that you can really just wean yourself off of anything. Of course, Europe has increased its
03:53gas exports from Norway. Norway provides a lot of gas to Europe, and then LNG from U.S. U.S.
03:59has
03:59become the largest provider for LNG for Europe, but each of these countries have their own limitations
04:04as well. So, in the time of crisis, you know, you need to look at China. China, as a principle,
04:10do not buy anything more than 15 to 20 percent when it comes to their energy. China is now considering
04:16Brazil as their export partner. The Canadian seaborne oil exports to China have increased
04:23more than 200 percent year-on-year basis. So, they're not just relying on Iran. So, we need to,
04:29I think, take a page out of their playbook and diversify our energy supplies.
04:35Very briefly, Osama, any advice to consumers?
04:40Just don't spend any extra and save as much money as you can and also buy gold.
