Javier Blas on Why Oil Could Go Much, Much Higher

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“Hello and welcome to another episode of The All Thoughts podcast, I'm Tracy All Away.”

And I'm Joe Weisenthal. Joe, one of the weirdnesses of our current market moments is that you have both these oil analysts who keep talking about how the straight-in-four moves closure is like the theoretical exercise that the entire market used to have nightmares about. This was like the big risk in the entire oil market. And yet, and yet, if you look at the actual price of oil and where it's traded, I mean, it's gone up.

It's gone up a lot. But it's not. It doesn't strike me as panic levels.

Yeah, I mean, it's going up a lot. And you know, it started the year. I'm just looking

at Brent. It started the year on 60. It had climbed to around 70 before the war started now at one 15. So it's a huge move in some sense. But it's not even in 2022 levels, which

“were very high. And that all that's true. And yet, there's this disconnect I don't understand,”

like, why isn't it a 200 yet? Or whatever. Because the straight-in-four moves as close. It's that are wise and even higher. But then the other thing is, okay, like prices are up a lot. But then you look at like what governments around the world are doing. And it's like, hair on fire panic, particularly in East Asia. So you get stories about, you know, Korean

government workers being told to drive on, drive to work, depending whether they're licensed

plate number, and even an odd. Like extreme. A very nice understanding. Yeah. And so I'm trying to, like, it still feels like there are some puzzle pieces here that I'm trying to fit together. Absolutely. The other thing I would say is it feels also like there's this disconnect between what's going on in the financial world and what's going on in the physical world. Yeah, and there was this really interesting note. This wasn't purely related to oil, but you could kind

of extrapolate from it. But it was from Bloomberg Green Markets the other day. And they were talking about Eurea coming out of the Middle East and the pricing that they've been seeing from it. And one of the analysts says the real issue on pricing is that while sellers and buyers can quote almost any price, nothing is actually getting out of the golf that reality makes most discussion academic rather than representative of actual business. So I wonder how much of that is happening

in the oil market as well, where you have all these quotes that are flashing across the screen, but like for barrels that are essentially not going anywhere for a while. Yeah. And I still totally get it because right, like these things do have to settle at some point. And I don't know I'm confused. And then there were those headlines early on about how physical oil quoted in Oman were $50 a barrel above the front month. Many things I don't understand. So

we have to talk to someone who can answer all these questions for us. The great thing about an oil crisis show is that we will learn about all the oil benchmarks throughout the entire world. Okay. Well, we really do have the perfect guest. Someone who's been on the show before, who a lot of people have requested us to bring back to talk about this particular moment in time. So without further ado, we have of course. Have a blast. He is the energy and

commodities columnist over at Bloomberg. Been writing about the stuff for a very long time. Have a thank you so much for coming back on all bots. My pleasure seems that every time that you come back is because of what crisis. Yep. That's right. Okay. Well, let's just jump into it. How bad is this one? It's bad. And it could get really bad. But in any any crisis, there are two elements that they are very important. One is the size of the disruption and the size is huge.

And then it's the length of that disruption. How long it goes. And so far, the disruption is relatively sore left. We have been a month. So that's one of the reasons why we are not at crazy high oil prices yet. It's just because it's a bit too early. Give it a few more weeks.

“And certainly we will get there. But so far, the crisis is relatively short-lived. How short-lived?”

Well, look at 2022 with Russia. We are still at it for years later. Or look at how long it took for the resolution of the invasion of Cuba in 1990. That was about eight months. So at times we forget how long or their crisis were and they were a lot longer than this one. Okay. So now connect that to what we're seeing with governments around the world. Like already going into rationing mode. Almost everywhere you look, particularly you see it a lot in Africa already,

a lot in East Asia. If the story is okay, the price hikes haven't exploded to crazy high levels

Well, you are absolutely right that what is really cushioning the market right now is a number of buffers that we're going through. One is regular inventories that every country, every refinery has to normal functioning. Then it's also the strategic inventories that zone countries own, particularly industrialized countries like the United States, Europe, Japan and also China. Those have been mobilized in most places have been released. And also we enter the crisis with

a market that was over supply. There was even floating in the storage. That is when an oil tank

has been loaded, it's on the high seas, but they cannot find a buyer and just basically sits

on the high seas looking for someone who will take the oil. And we have quite a lot of that just going into the crisis. So there was quite an element of buffer through the system. I'm probably a larger buffer than in normal circumstances because the market was over supply. That is helping to cushion or to mitigate the crisis. Where we are seeing some actions by government is where countries are closer to the crisis, which is the straightaway, the hormones. So the closer that you are to that

“location, the more action you need to take because you typically depend more of that flow of oil”

coming from the Middle East and also because you are impacted earlier. If you are moving oil

from Saudi Arabia into India, that's only a few days at most a week of sailing time. If you are

moving that to say the Philippines, that's about 15 days. It's longer you are moving that oil into Europe probably around three weeks and it's even longer you are moving that oil into say the United States where Saudi oil takes about 40 days. So all of that means that the crisis is felt in some places quicker than in other places. Also, it's how the global oil market works and to put it in quite simple terms and I'm afraid that I have to go with colonial vocabulary. But the oil market

is divided in two large chunks. East of Sweth and West of Sweth. This is like, you know, the British empire was still around and everything was east or west of the Sweth Canal. Countries that they are

east of Sweth, mostly Asia, rely a lot on Middle East oil these days and therefore they are impacted

earlier on the crisis. West of Sweth, Europe, Western Europe and the whole American continent is a bit detached from that market and therefore the crisis will hit then much later. So I know a bunch of EMH pros are going to get mad at me for even asking this. But like,

“could you get a situation where you can't get oil at any price in certain countries?”

I mean, in an absolutely full-blown crisis where we have the state of Hormous clothes for many months, we may have a long war in Iran. Yes, I think that we can get into a situation that no matter what you are offering for a barrel of oil. No one is willing to sell because that will be a wall of sport bands where every country is trying to keep the oil for themselves, etc. And I think that yes, I can see an scenario in which no matter how much you are paying for a barrel of oil,

you may not find a buyer or you may find a note barrels for whatever you are offering. But that will be in that really extreme extreme situation. I have a very rudimentary oil 101 class. Actually, I found a free book on my sidewalk called oil 101 yesterday and I picked enough. I should have read that. I don't know. It's crazy. No, it's like a full-on book. You know, this book Morgan Downey, it's a very thick book. Oil 101. Someone just put it on my sidewalk. Anyway,

“I have an oil 101. Wait, are you sure someone's not like laying in the house for you or something?”

It's a sign. I'm trying to lure you out of your house. But I'm going to ask you an oil 101 question because it, when we see, okay, Brent crude, 115, 25 is at the time. How is the Brent benchmark formed? Oh, gosh. Okay. Sorry. No, it's a simple question. And I complicated why effectively we are talking about a bunch of crude oil from the North Sea. Okay. So mostly UK and Norway, but also crude oil from Texas that comes across Atlantic and through effectively bias and sellers

on the physical market, we get a price that then cascade into the financial market. But here is a very important. I guess the reason I'm asking is because I associate Brent with the North Sea and that's west of the Suez. And so when we're talking about east of the Suez oil, why is this the price and how connected is that price to the oil moving that actually affects

They are about 250 different grades of crude oil that we track on a given time. And Brent is just effectively a short harm for the average barrel in the world. And it's not really the average barrel and certainly not the average barrel that comes from the Middle East. So you will have to look at benchmarks like Oman Dubai that they are closer to the quality of the Middle East oil. And those benchmarks are a bit higher that what Brent is trading today.

But if I may suggest forget about the price of a barrel of oil. Okay. No one cares about the price of oil unless you are someone producing oil in Texas or Saudi Arabia or you are someone who owns a refinery. Those are the people that care about the price of a barrel of crude.

“The rest of us, you and I, we care about the price of a refined product because that's what we consume.”

We consume gasoline, we consume diesel or we consume other refined products that they are embedded into a service that we are buying. Think about an air fair ticket. We're inside that ticket. They have a big proportion of that that is jet fuel. Or you are buying a cap made of plastic. Well, that is, you are buying effectively some kind of transformed NAFTA. Obviously, you know, the transformation and the retail market. And so, but what matters really is the price of refined

products. And there, actually, we are beginning to see particularly in the south, is Asia markets, some very extreme prices. So, well, did you look at the price of crude or a brand or WTI or Oman? Things look relatively contained. You know, we are trading around 100-100 dollars a barrel.

“That is well below the old-time high. If you look at the cost of diesel in Singapore,”

which is a benchmark for the Saudis Asia market. The price there is approaching $200 a barrel,

which is something that we have never seen. So, the refined product is where really we are seeing

the real tension. This is exactly what I wanted to ask you. So, if you look at the benchmark prices for crude oil, we have seen higher prices before, right? And relatively recently, in 2022, but if you look at the refined products, we are getting to places again that we haven't seen. What explains that disconnect? Like back in 2022, why didn't we see the higher cost of crude feed into refined products the way that we seem to be seeing now? For true reasons, one is because we

have lost not only a lot of crude oil production, but we have lost a significant chunk of refined

“production. The Middle East also has a lot of refineries, which are export refineries. They are just”

devoted to the export market. And the global trade of refined products is a lot smaller than the global trade of crude oil. So, even a small reduction of supply could have a much larger impact.

You think about the market for the global market for crude oil, which is 100 million barrels,

around 60 million are traded globally. But if you look at the market for say jet fuel, that market is a lot smaller, and we have lost a significant proportion of the refineries who are serving that international market for jet fuel. And therefore, prices are reacting much more stronger than we saw in previous crisis. There is also the way that the world of refining works. As son refineries are slowing down intake of crude oil, because there is not enough crude oil in the

market. But we have not really seen yet the consumers reacting the same way. So, what is happening is the refining world is acting as a buffer in between crude oil that is not there. And consumers that they have not yet realized that the crude oil is not there. So, the refining market is trying to

basically get that to together. And the way that it can only do it is by a stream pricing and

indicated consumers, "Hey, I don't have enough crude to make this refining products. So, please, can you stop demanding the refining products?" And the police is basically $200 a barrel diesel. - I should just say we're recording this on March 31st and a headline. Just hit related to this. Trump tells allies to buy US jet fuel or take it from Hormuz. - I have no idea if we have spare jet fuel. I do know that speaking of refining products

though in East Asia, one of the charts that's probably gone the most viral is that Singapore jet fuel chart. And that more than any other chart price shows that gap that Havye is talking about

now, the 2022 highs. So, that speaks to it. - Havye, you're just down in Houston. Are any Americans from your perspective, are we going to pick up this slack? Do you see American oil

“entrepreneurs doing more drilling and exploration to take advantage of these high prices?”

- I mean, for sure, at the $100 soil, everyone is going to try to do more. It just makes

basically because he makes a lot of money. I mean, a US sales producer in Texas was looking to sell

his oil about six weeks ago for $60 a barrel and it can sell the oil at 100 today. So, everyone who can increase production a bit is going to try. But do I see a massive amount of extra drilling coming in the US over the next three months, which is what really we need it? No, that's not going to happen over the next three months. And also, we are losing so much oil that, you know, it doesn't matter what the US sales producers do. I mean, it will help on the margins,

but the gap is big. And, you know, I have been discussing with some of the colleagues on the

“newsroom and with analysts and traders, how big is the gap? Is it a million? Is it 9 million? Is it 10?”

Is it 12? I mean, at the end of the day, it almost doesn't matter because we are talking about there about 10% of the global oil supply. I mean, whether it's 8% or 11% it really doesn't really matter. We are losing so much oil that either the conflict and soon or prices need to move much, much higher. I mean, I am surprised that we are not much higher. And in some ways, it really speaks about how good the White House has been at Jawbone in the market, may verbal intervention, may threats,

may promises, a lot of them falls, but it has worked in preventing a lot of the panic buying that we have seen in previous crisis. What's going on with US natural gas? Because if you look there, I mean, we are talking about like, you did market moves in the oil market, even though those have risen, if you look at not gas, not gas has actually come down. Yeah, not gas in the United States is trading almost as a 6 month low, considering what is happening

on the global energy market, almost incredible. I mean, the reason there is US shale and the reason

is that you cannot export gas easily. For exporting gas, you first need to cool it down, liquefy that basically means having an enormous fridge that cools gas from room temperature to minus 160 Celsius, then it liquefy and then you can put it on a tanker and send it to the rest of the market. Because we have limited liquefaction capacity, even it does increase in quite quickly, that creates a bottleneck that means that the US and Canadian gas effectively strapped inside North America,

and that's keeping prices completely detached from the global market. And that is a huge difference from previous episodes of high energy prices. Even in 2022, the price of US natural gas went from around $3.5 dollars for dollars to almost $10 dollars per British thermal unit. This time,

it's staying at around $3, actually below $3 at MBTO. And that is incredible. Because it means that

the heavy US industry, electricity generators, chemical companies, fertilizer companies, it's like there is no crisis. Well, everyone else in the world is suffering, the US is completely insulated. There is something odd and perverse about some of the disparate impacts here, in terms of who is behind and who is catalyzed this war and which side of the Suez, you're on there and who is feeling the brunt of it. But that actually, you mentioned fertilizer,

we've talked about fertilizer on the podcast. These are the type of things in a food insecurity that creates serious political instability potentially around the world. How worried are you? We all

“know you as the oil and the oil guy, but you've written a lot about food over the years. I remember”

you wrote a great piece about in 2022 about how rice is going to come to the rescue and people couldn't get as much weight. So I know you know the food world too. How concerned are you about food and the sort of fallout from there? Today, I'm not very concerned. This could all change if the war just goes on for months. If President Trump decides that he wants to invade Iran with ground troops, etc, etc. But now, I'm not very concerned for a number of reasons. 2021 was

If you look at Russia and Ukraine at the time combined, they accounted for around a quarter of

global exports of wheat and barley around 15% of global exports of corn and even much higher percentage for some vegetable oil like rapeseed and some flour. The Russian invasion of Ukraine, the battleground, was one of the richest fertile farmland in the planet. The battleground of the crisis in the Middle East is deserts and a piece of sea that we call the straight or horse moose. It doesn't have the same impact in terms of global supply. It does have an impact on fertilizer prices.

So it did also the 2022 war between Russia and Ukraine, which is still ongoing. But fertilizer prices require time to have an impact on food production. And also, while, yes, the numbers are very scary and you look at the global fertilizer market, just focusing on Korea, you look at that market and I say, oh boy, it's going up a lot. We are approaching the 2022 record high. But that is a problem in many markets. It's a problem that is not a food problem. It will be a fiscal problem.

And the reason is that duria fertilizer in particular is massively subsidized in the developing war, particularly in places like India and Pakistan. So the problem there is going to be for the Indian government, Kanye the fourth and spend billions of dollars extra subsidizing fertilizer. Less so is it going to be a food crisis in India? Because the fertilizer I think is going to be there, is used that you are the finance minister in India. You have a big problem there.

“That's how I'm seeing the problem. And also, the global food market is in a better position that”

almost any time in the last two or three decades. Inventories of wheat are very high. Inventories of rice in particular are at an all-time high. And while you mentioned rice, while we are worried about

fertilizer prices, et cetera, et cetera, et cetera. If you look at the most important benchmark for

rice prices in Asia, it's about to heat at 19 year low. Good. Well, not if you're a farmer. No, not if you're the best majority of people who need to eat most people on farmers. Sure, but but look, as I said, this all depends on how many days, because you have fertilizer prices for for several months high, diesel prices very high, then you start eroding the flexibility on the system. And you don't want to go, the weather can be very funny. And it is wicked, but weather

when we just really need good weather. So my main concern right now will be what I'm going to be looking at. It is last a couple of more months. Then my main focus is going to be how good is the

“monsoon. Are we going to have a good monsoon season in India? Or is it going to be about one?”

Because if we have a bad one, then we have a problem. Yeah, I've been reading about the fertilizer your rea tenders that the Indian government does periodically. It's just really interesting, like, you know, this big exercise to purchase, subsidize your rea. And so far from what I understand, they've been putting it off because of the uncertainty in prices. So who knows what's going to happen? But okay, Ukraine and Russia have come up a couple times in this conversation.

What's going on with Russian oil? Right now, listeners can't see, but have a is smiling. Tell us have you? Well, it's almost like a boy. If we didn't have enough with the Middle East, here is Ukraine. And you cannot blame Ukraine is fighting for survival. So they are hitting Russia as haras they can, whatever they can. And that means hitting their oil terminals. In the past, they were hitting the terminals in the south of the country. That's the black sea, but they have found a

“corridor to send drones, long distance drones into the north, into the Baltic. And I think that the”

Russians were caught completely off guard. They they didn't think that that Ukraine will be able to hit the terminals in the far north of Russian territory. So they were not very well protected, or usually with Ukrainians were extremely good at it. But the terminals have been damaged significantly. We don't know for sure the sten of the damage, but looking at the satellite pictures, it looks bad enough.

So we may be also losing potentially 1 million dollars a day of Russian oil.

It's not really the time. Again, you cannot blame Ukraine, but it's not really the time when you want to be losing more oil. Yeah, it's pretty wild, right. So in some sense, there have been the stories about, okay, Russia benefiting because of relaxed sanctions and surging prices. But on the other hand, just from the global perspective, here is more supply that's being taken off the market.

Last night, we got the Wall Street Journal headline that maybe Trump will be comfortable

“ending this war even if the straight of her moves is not back to normal. And Iran passed a law”

that codified that said the straight of her moves won't go back to normal. And it's going to collect a toll, it says, and so forth. Let's say, okay, the war ends. Let's say Trump decides to unilaterally end the war without resolution here and like how big of a fundamental change is this to the Middle East. If it's sort of accepted that Iran has a straight of her moves told booth, could this be a tolerable situation for the region? Like, what is that? What is the

significance of that? I would be surprised if the region was to be happy with Iran having a toll

both on the straight. I don't think that any country should be happy that an international

straight just becomes, you know, a toll booth for passing ships. I mean, like what is a stop, Morocco or Gibraltar or Spain to impose the similar situation in the Mediterranean or Denmark in the Danish history in the Baltic. I mean, you or Singapore on the Singaporean straight, you create a very, very bad precedent for international peace and free shipping. I will be surprised if countries in the Middle East were happy to it. Will they need to accept it? I mean, at current prices of $100,

“say that you, you are an Esport country and you have to pay half a dollar per barrel as a fee.”

I think that that's something that everyone will say well, you know, I mean, we are still selling the oil at $100. So instead of $100, we are selling that 99 and a half, that's pretty good to me.

So I suppose that some of the oil will flow, but you let Iran basically to dictate times and dictate

times forever and that will mean also that that Iran has a very tight grip on policy and economic decisions that his neighbors have been doing independently before. Yeah. So I cannot see that on the long time. I don't see also countries like China being particularly happy with other arrangements, but if anything over the last five years or so, we have seen things on international diplomacy and international security that I said before now, that's not going to happen and then I have to

with my heart. Sorry, I just got a visual of having a eating his, his hat. Um, okay. With, with, I spring from San Ali Voil on top of a thousand nine of course. All oil into the nose. Yeah. Okay. One thing that people have talked about for I'm pretty sure the duration of all of our careers are attempts to move away from pricing oil in dollars. And if you think about the current situation, there's something very perverse about seeing the dollar go up because there's

a scramble for barrels of oil, because of an action taken by the United States. From your contacts in the oil market, is anyone talking about like actual currency pricing for barrels at the moment? Is this something that is going to get renewed traction? No, I don't hear anyone. I mean, certainly Iran may be happy to take other currencies, has been relatively happy to take Chinese yuan and also other currencies with, as problems on, on convertibility. Everyone else will

still want the dollar. And the way that it was put to me to a leading producing country in the Middle East and I was talking to, to the head of the central bank. I'm going to not name the country. But they said to me, so if I switch from the dollar to say the yuan, I move from a relatively high interest rate to a low interest rate. I move from full compatibility to a lot of problems to compare. And I move from maximum liquidity to no liquidity whatsoever. And then the central bank

of an also like, why I would like to do that? Why I would like to really take a step back

“on my currency. And I think that the yuan is not there, jet for oil producers. And everyone that is”

using other currencies that the dollar to price the oil or to invoice the oil, they are doing it because they are under American sanctions. They are not doing it because they want to do it. They are doing it because they have no other option that to do it, just because they are on the naughty corner of the U.S. Dressory. So I feel like the 2022, 2023 inflation crisis, commodities crisis, really delivered a near death blow to a lot of the decarbonization dreams of the 2010s and so forth.

And we saw, you know, we know a bunch of companies and countries sort of quietly ditched their goals of net zero and all that. It seems like this is going to have it further effect on this. But especially because, um, Asian economies, I imagine it sounds like coal is going to be ramped back up, et cetera. But there's an interesting dynamic and I forget who talked about it. You know,

an efforts to reduce oil consumption. Could we see this situation in which we essentially have

electrification without decarbonization? That basically we see this boom for electrification.

Maybe you were the one who used this term. Someone was talking about it, might have just been

“you. But more electric cars and more coal at the same time. I think that we can't. I think that”

that's a very good way to put it because I think that we can't have a simultaneous push to try to get to reduce your dependence on oil and to reduce your dependence on Middle East oil in particular. It's going to be unsafe, particularly if we run somehow still has some control whether it's a tool both or some kind of de facto control over the, over the street of Hormuz, who would like to be dependent on Middle Eastern oil in that situation. Because you think that

there's going to be a crisis six months on the road. And the solution for that is going to be,

you know, more generation with coal. And we are seeing that just, you know, across the whole of Asia, whether it's poor countries like Pakistan or India or the most developed countries in the region like

“Japan, all of them are going for more coal right now. But I think that we are going to see also”

over the medium and longer time. We are going to see a movement for more solar alongside batteries. So I can see the role of LNG, uh, liquefy natural gas, a squeeze out of the electricity system with a push for more coal as the immediate future and more, you know, down the road with more solar and more batteries. Uh, effectively, you know, at least for a few years, means perhaps more electrification, but with more carbon intensive production of that electricity, which is not exactly what the doctor

recommended. No, um, having one of the reasons we wanted to talk to you other than, um, a bunch of our listeners, having clamoring for us to have you on. But you, of course, wrote an excellent book called The World For Sale Money Power and the Traders who barter the Earth's resources. You're very plugged in to the commodities scene. What's been the most surprising reaction or

“thing that you've heard from that space over the past month or so? Uh, I mean, I think that”

they are a couple of things that they are very interesting. One is how little relative the price of natural gas in Europe, which was the epicentered of the 2022 crisis has moved. Yes, sure. The price of natural gas will refer to the benchmark as TTF, such benchmark for Europe has gone up a lot of 70% since the crisis started, but it's around the same level as it was 14 months ago. And actually, today, or the last time I checked the price this morning was lower than four weeks ago.

So, it went up a lot at the beginning of the war and since then has kind of flattened or come down. That is an indication of how much LNG supply is coming into the market. A lot of it is coming from North America, the US and Canada. That really is something that a lot of traders, physical traders, new, was coming, but I think it still has to surprise on hedge funds. And alongside is the price of electricity, because at times we focus on oil and we see energy crisis through the land

still of 1970, 1973, 1979, the first and second oil crisis. But the global economy has changed a lot since then, and yes, of course,

gasoline and diesel are very important. But electricity is really what powers today. The global economy, you go to, you know, your bakery downstairs or your coffee shop, that's all electricity. And the price of electricity increase a lot in 2022, particularly here in Europe, with so prices, we look at German prices as a benchmark for the whole of Europe. And I typically look at the one year for war, because they kind of is moved out a lot of the months and day-to-day volatility. The one year for war for electricity prices

in Germany went up to nearly 1,000 euros per megavad hour. It's now around 90. So, when people talk about, are we seeing an energy crisis like 2022? I said, look, if you look at refined products or even crude oil, yes, it's bad. If you look at gas in Europe, it's getting uncomfortable, but it's no bad. In the US, they have not even noticed that there is a crisis. If you look at the electricity market, it's like, someone said the war crisis, because we are a normal crisis here. I mean, I have not seen

anything moving. And I think that that has been quite, at the center of conversations. And it's also one of the reasons when I told to central banks, which they are a bit more at ease that they were in 2022, because in 2022, the four major energy commodities, electricity, natural gas, coal,

we have seen a movement in oil and a bit of natural gas in Europe and Asia. No, everywhere else. Call has barely moved. Electricity is just basically relaxing and having a very spontaneous yesterday. All right, have you? Thank you so much for coming back on all thoughts really appreciate it.

Joe, great to talk to you, have you? As always, a couple things stood out to me from that conversation.

So it seems like everything is very relative in commodities at the moment. Like the relative price moves really seem to matter and like quite different to each other. So the idea that maybe we shouldn't be focusing on the crude price so much. It's more the refined products where we're releasing

“the impact, which is what matters for everyday consumption and economic growth. And then secondly,”

the idea that we still don't have that much movement in natural gas, which is kind of weird, but also relevant, if you're worried about inflation, because that would be, I think, like the primary channel electricity prices through which you would see higher prices return to the economy. Yeah, I mean, look, also, I mean, gasoline prices are going to go to $5 very plausibly diesel prices in the US are up. So it's going to, there's going to be a strain. But I do think that is, as you say,

the really key thing. It is like that, that, you know, it really helped me understand this,

was just this idea of distance between the straight and where you're in consumer. Right. And you have to figure too that, like, if the distance is fairly narrow and short and you're getting your oil from your next door neighbor, you're going to have less, you know, less reason to hold

“a lot of stocks and so forth. And so when you see these headlines in the stage, like they're”

already in rationing mode, like I sort of get it, whereas in other parts, you know, there's not a ton of imports west of Suez from Saudi Arabia, Saudi Arabia. But there is some. So in some of these areas or some of these longer distances, like the Philippines, et cetera, this sort of drop dead date or whatever, maybe that's a little too extreme. But the sort of the true moment the crisis hits hasn't hate yet. Everything's relative, Joe. Everything's relative, yeah.

Well, the other thing I was thinking though is, you know, these buffer stocks have helped the market, yeah, whether this crisis so far. But I just like, I have to imagine that if things were to get resolved in next, I don't know, a week or two or even month, that everyone around the world is going to be scrambling to rebuild some of their style of the same time. Yeah. I just don't see like that immediate pressure on price necessarily, dissipating that fast, but there's still seem to be a lot of

people in the oil market who think it is. It's a pretty weird time. And you know, one of the things,

“I think, like, of the very early days of the war, one thing that perhaps kept oil prices,”

someone contained was like, oh, Trump is going to talk about it. Right. He does it. There's not much appetite for any pain. And then I think the next step which we're in right now is, and this next leg up that we've seen, we have seen Brent futures trade close yesterday at the highest prices yet in this crisis. The next leg is probably, well, Trump couldn't check it out even if you wanted to because Iran gets a say. And then the next stage may be, well, maybe Trump gladly decides

to end the war. Iran still controls the straight of our moves to some extent. How does the world live with a toll booth, et cetera, which is not great for anyone not thrilled, but also, perhaps, I don't know, maybe like the market could live with that for a while. So we seem to be maybe moving, I don't know, it'll be interesting to see if this latest headline, how long that stays with us. And if that becomes the new meta that, or the new narrative that will just be,

yes, this is not great, but this is not great is better than no movement at all. It's very seven stages of, yeah, yeah, it does feel, it does feel like, we moved from denial to, like,

deep back in, and then reconstructing, and then, it's finally accepted. Yeah, all right, shall we leave

with there? Let's leave it there. This has been another episode of The All Thoughts Podcast. I'm Tracy All-Away. You can follow me at Tracy All-Away. And I'm Joe Wiesenthal. You can follow me at the store. Follow our guest, Javier Bloss at Javier Bloss. And of course, check out all of his Bloomberg opinion columns. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashal Bennett at Dashbot and Kale Brooks and Kale Brooks. And from where Adlott's content, good at Bloomberg dot com slash

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