00:00And now to the energy crisis. The European Commission is treating the loss of refining
00:04capacity as a vulnerability that Europe can no longer afford to ignore. Energy Commissioner
00:10Dan Jorgensen warned that the prolonged war in the Middle East should serve as a wake-up call.
00:15The EU should ensure that there is an adequate refining capacity at home, he said.
00:21This warning came as the prices for crude oil and diesel rose across the board yesterday.
00:26Markets reacted to reports that the U.S. is preparing to renew strikes against Iran after
00:32the midterm elections. To discuss the latest developments, I'm now joined by Osama Rizvi,
00:37global markets and product strategist at Primary Vision in Lahore. Good morning to you.
00:43Good morning to you as well, Stefan. I'm in UAE at the moment right now.
00:47Wonderful. So, oil, diesel and gas prices are all up again. Are we witnessing another temporary
00:54market panic or the beginning of a much bigger energy crisis?
00:59Well, it has never been temporary since the start of the war, actually. Whatever you see right now
01:04is a long extension and rather something that has become a structural feature characteristic of the
01:11market. Whether the war restarts or not, whether there is an escalation or not, it is going to take
01:16some months for the supplies to restore and hence for the refineries to get what they want and hence for
01:22the prices to come down and consumers to feel okay. So, this is a structural baked-in factor,
01:27unfortunately, and we'll have to suffer from it from the next seven to 12 months minimum.
01:32Why are especially diesel prices rising so sharply? Is there something fundamentally wrong with the
01:37global market for refined fuels?
01:40Well, diesel, above all the fuels, is really central to the global economy. Upcountry movement,
01:49downcountry movement, agriculture, farmers, all of them, food transportation, they use diesel as a
01:55feedstock, right? So, diesel has low stocks already globally. Then, we discussed it last time as well,
02:02lots of refineries are closing down. 1.5 million barrels of refined products going down as well.
02:08In Europe, 10 to 15 percent of refining capacity has been disrupted in the previous few years. So,
02:14all of that had culminated into what is called a diesel crisis. And many analysts are. I'm also on
02:20the verge of declaring this. This war is actually a diesel war. It's becoming a diesel war. And that is
02:25going to choke the global economy if it gets worse.
02:29And Europe seems particularly exposed to the diesel crunch and the comments of
02:36Commissioner Juergens and its testament to that. Why is the continent still so vulnerable to
02:43disruptions in global fuel surprise?
02:47Well, interestingly, and, you know, Europe has have had some issues with the policy making,
02:53policy direction, actually, according to myself. The shift or move for renewables at times we saw
03:00that triumphed the realities of the energy security. And hence, what we are seeing right now is that
03:06there is a crisis of refining. There is a crisis of diesel production plus diesel reserves. Moving
03:13forward, I think it will really benefit not only Europe, but also the world. And this is happening
03:17east of Suez, actually, that there needs to be a refining, you know, revolution in the world.
03:23More refineries spread across the world so that they don't become vulnerable to such a geopolitical
03:29crisis.
03:31And, Osama, if tensions in the Middle East ease tomorrow, how quickly would oil and diesel prices
03:37actually fall?
03:39I don't think it is going to be very quickly. The crude oil prices, yes, they can fall. We have
03:44seen some
03:45restoration of both the flows through Hormuz and the production facilities in the Gulf. So that is one thing.
03:51However, that reaching to the refineries will still involve a lot of high transportation cost.
03:57Three dollars of transportation cost before the world. Now it costs around twenty dollars to
04:03transport the same oil. So it is going to take three to five months for this to die down and
04:10the dust to settle down.
04:11So well into next year, then.
04:13Definitely.
04:15All right. Osama Rizvi, as always, thank you for your analysis.
