Why Oil Still Runs the World — ft. Daniel Yergin

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Cash is trash. Stocks are pretty attractive. Something's going to break. Forget about it. Welcome to Profty Market.

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but we have a big episode for you nonetheless.

We will be talking in this episode about oil, specifically the oil markets, which have now endured more than two months of disruption from the Iran war. Given all of this news, we wanted to take a step back

“and help make sense of oil's role in the world”

and what this extended disruption means for our global economy, also for global energy and wherever everything is going next. So we decided to bring in someone who has spent decades studying all of these topics, the intersection of energy, geopolitics, global markets, and we spoke with him

earlier this week while I was in Florence. He is essentially the man who wrote the Bible on the history of oil, at least that is one of a lot of people have said. He has regarded as one of the world's leading experts on oil. His Pulitzer Prize winning book, The Prize is considered

the definitive work on how energy shapes global power. So without further ado, here is our conversation with Daniel Jürgen, Vice Chairman of S&P Global and author of the new map, energy, climate, and the clash of nations. I would love to start with just a brief history from you

on Iran and Iran's place in the world of oil. And then we'll get into what's happened over the past few months. But for those who aren't aware, give us sort of the Iran and oil 101, what is their role in the world of energy. That's a very good question because I've been thinking about the fact

that the blockade against the export of Iranian oil demonstrates the degree to which Iran as a country for well over a century has been a country that has been made possible by oil. Iran in the 1960s was competing with Saudi Arabia to be the largest Middle East oil producers, much more oil than it's producing today.

And that oil wealth was channeled by the Shah of Iran into trying to turn Iran into an industrial power. He overplayed his hand, was overthrown. And the Islamic Republic came in and Iran has continued to produce oil, but often under sanctions, which have limited the amount of oil

that it can export. And in the last few years, it's been really exporting oil at a discount to countries like China. So it's not a big player in the way that it historically had been. And I still think back to Iran and Saudi Arabia were almost in the battle

to see who could produce more oil. But those days were a long past, what Iran recognizes by shutting the straight of horror moves gives it enormous leverage on the world economy and really shutting off a significant supply of oil in which the world depends.

So would you say that Iran's real power isn't necessarily the actual oil, but the fact that they are situated in a place where a lot of oil goes through. In other words, they're sort of the gatekeeper to global oil. Well, they're certainly the gatekeeper. 20% of world oil would go through the straight of horror moves.

We've also learned, if we had been talking about February 27th, and I'd said to you, "Oh, the straight of horror moves is going to be closed." You would said, "Well, that's probably going to affect oil. You might have said it's going to affect natural gas, but you wouldn't have said it's going to affect petrochemicals, helium, fertilizer,

the world economy and a much bigger scale than was anticipated. But right now, what Iran is doing is by shutting, trying to change the straight of horror moves into an Iranian canal for which you pay tolls, what they are trying to do, what they're doing is, if this continues for another month, we'll create shortages that will be felt all across the world.

We'll affect air travel, we'll affect agriculture, we'll affect the production of semiconductors, so they have a lot of leverage as long as they control the straight.

Is it the case then that the straight of horror moves has become more powerful,

or more important in recent years? I mean, clearly, it has been a significant passageway for oil, but you mentioned that if we had discussed this a few months ago before the invasion, if we were talking about petrochemical, or we would not have talked about petrochemicals, we would not have talked about helium.

And we would not have talked about fertilizer, which is really a big impact around the world, it's been felt in the United States. Does that suggest then that this is a new development, that the straight of horror moves has become increasingly more central to global trade,

“not just in terms of oil, but in terms of many other materials?”

Absolutely, because those Arab countries have established themselves as players in many different ways

in the world economy providing essential sources.

Right now, there is an LNG project in the United States that word is word as to whether it can go forward, because it depends upon steel, from Abu Dhabi, who would have thought that? So I guess the question then becomes, "Did we know this when we invaded?" More importantly, did Trump and did the administration know this when they decided to invade?

Did they understand that by doing this, you would disrupt not only the global supplies of oil, but also the global supplies of everything else, you mentioned fertilizer, which is of course necessary to grow crops, which is of course necessary to put food on shelves,

and then feed people, I mean, to what extent were we actually aware of how important the

“straight of our moves actually was? I think in general, it was not that awareness on a global”

basis about how the world economy had changed. And also, by the way, those countries export one other thing that's very important, and that's money. They have among the largest sovereign wealth of funds in the world, so they play a very important role in that regard as well. So I don't think it was on the agenda, and I don't think it was necessary in vision that we'd been the position that we're in today. When you saw the invasion, when you saw that when you

read the headlines that the US had struck Iran, what did you think and what did you predict would be coming next? I thought Iran is not Venezuela. Venezuela was remarkably successful. You got one guy out in his wife, and it's a whole different game there now, but Iran, you have an IRGC, which is not only a military force, but it needs a logical movement as well, and that the whole basis of that administered government has been based on their chance of death to America,

that the animosity of the US, and that they, in the sense, for many years, the US is wargamed what would happen to the Strait of Hormuz and with Iran. Iran clearly was wargamed as well,

“and built up very considerable missile capabilities. Indeed, I think was a shock when”

realized that the Iranians could send a missile 2,500 miles, so that they have really built themselves as a resistance state, and for them, this war is existential. Did this strike make sense to you in terms of timing, in terms of reasoning? Well, I did think about it one way, and those ways, I thought that in a sense that this war had been brilliant for 47 years, is the way I thought, but was it going to take this form? I think that probably the administration haven't seen

the decimation of the Iranian proxies in the Middle East and so forth, that this seemed a timely to do, and there was that congregation of senior leaders all in one place, a target of opportunity, but I do think of this quote from Winston Churchill to say, once a war begins policy and plans go out the window, and it becomes unknowable and unexplicable in terms of what happens, and I think we're in that state today, and I was just talking to some people in the Gulf

today for them on the Arab Gulf. It's absolutely intolerable to have a situation where Iran remains

been boiling for a while, and then we kind of reached a boiling point this year, was that boiling point,

the conflict that we saw within Iran, the persecution of their own citizens, was that the moment,

“was that something else? I think that certainly contributed to it to the sense that the”

regime's hands were really weakening that there was popular uprising opposition, but the notion that they also killed perhaps 30,000 people or more is very sobering because all the guns are with the IRGC with the militias and with the military. It may have been read that the regime was weak because of the scale of these demonstrations and the degree to which the rulers have ruined the economy. Iran today could have been a great force in the world economy. The

basis was there before 1979, and they've ruined it. It's a country where people have been impoverished. They don't have enough water. It's just, it's been very badly ruled. There were so many talented Iranians who were studying in American universities, getting PhDs and economics, engineering, who would have gone back, and some of them did go back with the Shah-Feld, but now many of them are in exile again. When you think about how the invasion has gone down so far,

it seems as though we keep on semi-claiming victory, or at least the administration continues to

semi-claim victory in various ways, but ultimately the result seems to be the same, which is that

the threat of homoose is still blockaded. The regime remains somewhat intact, or at least it's now led by the old leader's son. It still seems that the situation is extremely volatile in the ground, extremely radicalized. When you look at how it's unfolded so far, two months into this war,

“what do you make of it? Do you think that it's going to plan, or is it not?”

Of course it's been a war, but it was an aerial war. It was air powers, so there has not been a land invasion. I think it's thought that any boots on the ground is very precarious. It's the thing that Trump criticized everybody else for. The scale would have to be very large. Will there be a more focused military option to sort of regain control of the straight? Everything is more difficult now. Of course we're in an age of drones where an inexpensive drone can do a lot of damage,

and there are a lot of drones. The way I think about it, Ukraine was really the test batter, the beta test for 21st century warfare, in terms of both traditional warfare, but also drone warfare, and that is in terms of securing the straight of horror moves unless you can also take out the drone problem. It's going to be harder, but I guess I find it hard to believe that the situation we see now with a ran in control of the straight of horror moves will continue that it's just

but you know how that gets resolved. We're still going to see and it may be in surprising ways. Why do you find that hard to believe? Is it because they are too weak in comparison to American military forces? I mean, just as an observer, I look at it and I'm like, well, they still. I wouldn't have thought that they could last this long in control, but they seem to be somewhat in the, having the upper hand. It prepared for this and it looks like

your own companies they always talk about succession planning. It sure looks like the Iranians did

succession planning in terms of who will step in and maybe they've seen this pattern of assassinations. They saw what happened in Lebanon and you know, so they seem to have devolved

“authority to new leaders. Some people talk about moderates, but I think people who know Iran well,”

don't think they're any moderates there. I mean, there may be pragmatists, but they're not the same. As moderates, they're all for them. This regime is who they are and what they're defending and what they believe in. And Marta Dom is part of the ideology, actually. But to say, I just think that at the end of the day, all those Gulf countries cannot, you know, cannot abide. This control,

to fix it with new pipelines. In other words, we're still in the middle of it and it is the

“classic situation where, you know, people will make decisions, you know, one decision or another,”

but Trump does always go back to his favorite word, a deal. And deal, but then the question is

who you negotiate and deal with, you know, and do things. And we could see that there were clearly tensions between it appears between the negotiators and the people of the IRGC, which is the real power in the country now. This is, I mean, the big question of, and this is a market show. We're interested in the price of oil, but we're also interested in other things. But the big question for investors, it seems that there, as a consensus among investors,

that the prices of oil is going to come down at some point. That seems to be a given, but the question is when, how, for how long will oil prices remain elevated and will they remain

“elevated for such a long time that it starts to have a real impact on the economy?”

You got to say, what's your economy? Because in economic terms, the straight-of-home

moves flows east, 80% of the oil, 90% so Asia is already feeling it. Restaurant shut down in India because they can't get the fuels that you need rationing, gasoline, stations, clothes, businesses not operating, air flights being canceled, European, gasoline, air flights. You can see European inflation going up. The US is insulated because of our great because of the Shell Revolution United States. It's put us such a different position.

So there's already a big market effect. But I think the other part, the heart of your question, is at our sir-week conference. Again, and again, I heard the CEOs of major companies saying, the risk has been under is not being reflected in the price of oil. And the market price of oil, as you know, has sort of fluctuated up and down with, you know, pieces in hand, I know there's no deal. So but if you look at the price for pro-delivery of oil,

you see there that that's a higher price. So our own view is at this point and, you know, change of circumstances, change is we're going to see, you know, higher prices at least for quite a number of months to come because even if this miraculously ended tomorrow, it's going to take months and months to, you know, unwind what's happening, you know, and some production will come back. Most, you know, some of the countries, a lot of the production will come back. Some

that won't come back at the same extent. So there'll be still shortfalls. So I would think that

for the people following this podcast, what's really critical is to watch what unfolds in the next

month and to watch not only crude oil, but watch jet fuel, watch diesel, and watch LPG, those prices, because those are the prices, you know, of products that people use. Yeah, the point that which economy are we measuring is an important one. I was referring to the US, but yes,

“the impacts are far greater abroad and that's something that I think both US investors”

seem to forget a little bit and also just US consumers of news. Could you tell us more about how impactful this has been to either economies Asia being an example? I mean, to what extent will this have long-term impacts on Europe or Asia or any other market outside of the US? Well, I think for Asia, this is a real, very painful shock what's happening and for, you know, it's really almost a desperate situation for those countries because they were so dependent on

those supplies. I think for Europe this accentuates, what is this chronic problem of the weakness in the European economy? Because of the policies it's pursued, it's throttled investment, it's burdened businesses with so many regulations. We had the German economic and energy minister at Sarah Week at our conferences here and she was complaining about the European Union. She says if they manufacture a new regulation every day and it's so hard to do business there,

which is why you see the deindustrialization of Europe going on. This will affect travel, you know, even here I'm talking to people when I was, you know, before I left the United States, they were saying oh I'm buying my air tickets for the summer now because they're going to be 20% more expensive. We will see flights canceled and the US will not be as insulated as those other

came from the Gulf. So, you know, and for farmers in Africa in Asia, the fertilizer issue is a huge

“issue. I wonder what this means for those economies relationship with the US because if you think”

about it from Europe's perspective, Asia's perspective, East Africa's perspective, they weren't doing anything, they were mining their own business, doing their thing, maybe they got their regulatory processes wrong. But ultimately it was the US that caused what is now their pain and potentially very serious and long-term pain. I just wonder what you make of what that will do to the US's relationship with those regions. This adds to pressure

in the relationship, you know, that they know where this came from. You see polls showing that the US is not seen in the same light as it was a few years ago and it's also the follow from what you've said. This crisis in the Gulf has also really become a crisis for NATO for US relations

“with Europe. We've seen President Trump announcing German troops being pulled out. US troops”

being pulled out of Germany because Chancellor Merch said that the Iranians are humiliating the United States and the humiliating President Trump and he got really mad about that. And so with very little notice there, so there's already a lot of tensions on NATO, but this is really highlighted in the NATO countries are saying what the Gulf countries are saying too, you didn't tell us you're going to do this and now we're left with the consequences of it. I mean we're more dependent

and a lot of very significant part of Europe's jet fuel was coming from one refinery, but this big modern refinery called Zur in Kuwait and they're not getting that jet fuel so liftox is canceling flights. We really have two energy shocks. We have the energy shock of what's happened the Gulf, then we have the other energy shock which is electricity in the United States and the

data center and the AL build out in the $700 billion that is going into it. And so you look at the

U.S. economy and when you see is it more than half or 75% of U.S. economic growth is coming from from the data center from AL. That's the huge offset in the United States to the economic costs of pains that's come from this biggest disruption in the history of world energy, but no other country has the hyperscaler spending money on that scale. So one energy shock is a negative of the other energy shock, a battle of electricity and the data centers is a positive, a big

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So why not you? Try Odo for free at Odo.com. That's OdoO.com. We're back with Profty Markets. Just to go back to our relationships with other nations and other regions, another interesting one is the golf. Because it seems as though this administration had developed quite a closed relationship with the golf regions, especially Saudi Arabia. There was of course the announcements of these multi-trillion dollar investments

that were supposed to come into the pipeline at some point for the U.S. between the U.S. and Saudi Arabia. But at the same time, it does seem as though we have massively destabilized that region, and there were the issues with desalination plants in Saudi Arabia. And just the fact that we've

basically started a huge, created, a huge amount of instability in that in their backyard.

Now you mentioned earlier that there's also at the same time the fact that a lot of these golf regions don't want Iran or at least the current regime in place. So I guess the question becomes, are they grateful for what has happened? Are they angry about what's happened? What does this do to America's relationship with the golf states? Well, I was in Saudi Arabia just a year ago

“when President Trump was there. It is this big investment conference where I think they played”

$600 billion of investment in the United States, and then I think that number was raised to a trillion, and the U.A. came in and it was quite an investment hall that was brought in. I think there's mixed feelings, and I talked to different people from the region. I get different

views. I mean, one senior person said the U.S. hit the hornets nest, and they never told us

they were going to do it. We have to figure out a different defense system, and we, as the GCC, at the golf cooperation council, we need to work more on our defense. So I think there is that one sense that they didn't tell us, and we're being hit, and no country was hit as much as the U.A. 2800 missiles and drones, because I think the U.A.'s economic model is the antithesis to

“what's happened in Iran, because it shows you how you become a global economy. But I think the”

message you also get from them, and I saw, you know, others I've talked to the last few days say, "Well, we can't survive with Iran." This Iran, as it's two dangerous force, and now they will go from nuclear weapons, whatever happens. And saying, you know, the U.S. started, it needs to finish it. No, I don't know what "finish it" means. So it's an ambivalent message, but, you know, they count on the U.S. for security, but then it's interesting that you see that it's

Israeli military technicians who are in some of those countries helping them defend against drones. And the U.S. had a big military presence there. I think the U.A. they shot down like 95% of the drones, but 5% and missiles did get through. So I think they're shaken, and it raises the question of what will be the role of the Gulf in the future. I mean, and that will very much depend upon what the outcome is here. Is there stabilization? So there's a sense of security.

I think one consequence, too, is that it's going to accelerate which was already processed, building up a new drive, exploration to discover new resources, and other parts of the world, because it's said at some point the U.S. shale, the consensus for you, you know, which is made to the U.S. the world's largest oil producer by far, is going to flatten out. And therefore, people are starting to think, again, we've got it discovered new resources. It seems that one of the

learnings from this, if you're anyone other than the U.S. I guess, is that it's a lot better to be energy independent. You don't want to rely on anyone else really, because you don't know what's going to happen. And it seems as though this is sort of reflective of the disintegration of

that. If oil is represented of power, as you have written about before, the most starting to see here,

is that everyone needs to sort of create their own powers on their own, every man for himself. It seems as though that is the trajectory where we are headed, do you believe that that is one of the learnings from this oil crisis? Yes, in other words, you're saying energy security, which already went up. Energy security was forgotten about during COVID. Prices went down. It went up after Russian-vated Ukraine. And then you suddenly had Germany going around the world, asking people for

“liquefied natural gas or asking them for oil. This, I think, takes it to another level.”

Most countries don't have the advantage that U does. This incredible shell resource, which is

you know, been transformative for the U.S. position in the world. So the first step is, yes, try to be independent. Secondly, as you diversify your sources, which has been the premise of the Japanese energy policy ever since the 1973 crisis. And you want, as Churchill said, safety lies in variety and variety alone. When it comes to oil, I think it gives a boost in many places to renewables, which we'll be seeing, not about climate, not about sustainability, but about energy

security. So I think there will be a boost there. I've heard of projects in Vietnam that we're going

to be based upon LNG that are now looking to be based on solar panels from China instead of

“LNG from the United States. So I think that will be, you know, for countries you realize that”

adequate energy supplies, you know, are the foundation of your economy. And without it, you know, you don't, you don't need, you know, not only I don't have to be cannot be growth, you have social disorder. And you have pain and you people suffering. So I think out of this much bigger focus on energy security. And I think it means when companies will certainly be looking also to go where, now, maybe where can you go, Giana, Serenam, where are the places you can

go and develop new oil resources? I think Africa could well be a beneficiary of this. If governments get organized because they have resources there. And, you know, it doesn't depend upon the on the Persian Gulf. It doesn't depend upon the straight or foreign moves.

“The Eastern Mediterranean, gas, the Eastern Mediterranean, I think takes on new salience because”

it's close to Europe. Something that has struck me about the invasion and the straight-of-home moves being closed is how much it has emphasized and shown us just how dependent on oil and gas we really are, even today in in 2020, 6. And Europe, what is known is sort of the Bible of oil, your book The Prize, which you wrote in 1990. And it was really a demonstration of an illustration on how oil is the backbone of modern industry. And I guess when you look back

comparing when you wrote that book to now, are you surprised at all at the extent to which we are still dependent on oil, the extent to which that statement, that thesis is still true? It might surprise, I mean, since I live it, you know, on an ongoing basis and I've written these other books, I wouldn't say, surprise, but it is noteworthy that if you include coal hydrocarbons are still about 80, depending on what you measure, you use either 80 or 86% of total world energy.

So, I mean, that will change. We see Renaissance of nuclear. We see, although that will take time to unfold, but it does bring home the fact that the world is still dependent, highly dependent, but the huge change is the change in the position of the United States, you know, because in a sense oil prices now are partly formed in the United States in a way that wasn't the case before. And that has given the U.S. flexibility. I mean, if we were importing lots of oil,

would we be in the have carried out the kind of attacks and Iran that we are, maybe, you know, you wouldn't have done it with the same confidence. When you think about the future of energy, what does this go? I mean, there have been all of these debates as to whether we should be investing more in nuclear, whether we should be investing more in solar and wind. Obviously, the administration has been generally against solar and wind. What is the future of energy at this

there's been this focus on supply chains. And what we've seen, if we can think about that this is a very huge supply chain that's been disrupted with many ratifications that we've been talking about. And one of the other books I wrote was the Commanding Heights, which was about how the age of globalization came about and how it was playing out. And this goes back to your remarks,

basically, which was if we look back on those years that were, you know, not so long ago at all,

it was sort of this easy globalization, goods move easily, services move easily, people move easily, visas were not a problem at all. All of that has changed, so we really are in a more

“fractured world to begin with. And I think, and oil was a global commodity until Russian rated”

Ukraine. And then you got a fragment of a divided partition world market in oil. So that whole trend, as you were suggesting, is to a more divided world. And that does make countries put more emphasis on security and resilience rather than just lowest cost. And to the degree that they can diversify their energy supplies, they will. If we're living in a world, you said a more fractured world from an energy perspective. And if, you know, we saw this, the invasion of Russia into Ukraine,

and now we've seen this invasion of America into Iran, and a lot of this does have to do with oil, and it has to do with the flows of power and energy, it's hard to imagine a world in which energy prices just aren't more elevated for the long term. If this isn't, if this isn't inherently more risky world from an energy perspective, if there is a greater concern about invasions, about the supplies and flows of oil and gas, I don't really see how this couldn't mean

that oil prices and gas prices and energy prices in general will not just be higher for longer.

“I think that's right. I mean, I've learned that, you know, markets do change. If we were in the”

first three weeks of this year, the whole focus was we're going to have such a surplus of oil

we're having because so much energy prices are going down. And, you know, and I think our base for thinking about how much oil prices have gone up should not be from the date of when the war started, but from January, early January before the buildup. So we were like $60 a barrel. But I think if there is a concern about security, people will, you know, people will pay up the cost of energy. We'll be higher as people try and build security into their systems. Obviously,

the global energy markets will be dynamic and they will have been flow. You know, as you mentioned, the prize came out a long time ago, a couple of decades ago, put it that way. But I recently rode a new epilogue to bring the book back. And I said, one of the enduring lessons of the prize

and one of them is that there are hundreds of characters in that book with the two most important

characters are supply and demand. And as that balance changes, it will affect prices. But I think people will, as you say, after this, will say, how do we build greater resilience into our oil and gas supply system? Just as in the United States, the question is, how do we build greater resilience into our electric power systems so we don't have the blackouts? We'll be right back and for even more markets content, sign up for our newsletter at proftymarkids.com.

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We're back with profg markets. When you look at the U.S. as an energy power on the one hand we're

my understanding is that the U.S. is very energy independent. The U.S. is a net oil exporter.

“But for consumers, I think the experience is, well, my gas prices just went up 30%.”

And I'm being told that we have an abundance of oil, but for my perspective we seem to seem to have a scarcity of oil as reflected in how much I'm paying for gallon. To what extent is the U.S. actually independent? Is it overstated, understated, or is it correct? Somewhere in between would say relatively independent. And we can see that our gasoline prices have gone up, which is say 30%. But our gas stations are not

empty of fuel, but that we are part of a global market and global prices do get radiated back. And inventories are coming down in the United States. And Jeff Field prices go up. Act flows back into the economy. So the sort of global prices flow back and still at the end of the day, there is just one price. I mean, we need to export some qualities of oil and import others because it runs more efficiently in our refineries. But so we still are part of a global market

and we're not. It's not like we have a Berlin wall all around our economy. And the concern is that if this continues a month from now, we'll feel those pressures more. And of course, that becomes a huge political issue. You know, there's no price in the United States that matters more politically than the price of gasoline. Do you think that that would be enough? That political pressure would be enough to have an influence on the way that this administration

handles this war? I mean, on the one hand, they might want to see it through, but on the other hand,

if gas is sort of the most important price, I think I would agree with you. Then perhaps they'd

“give up that aims in order to make the vote as happy. Well, that's why I think it's so volatile”

and not really predictable about what's going to happen because, you know, there are many factors from Iran's nuclear capabilities to the straight of our moves to drone warfare, shipping, but also in that mix is what happens in gasoline prices. And, you know, we're moving into an electoral season and, you know, you're going to hear from a lot of Congress people about the price of gasoline. So I think this is a very difficult sort of vector in which to make decisions.

And at the end of the day, it's really going to be one guy who decides here. And we don't really know whether he has what interlocutors there are on the other side in Iran, who have the credibility to make a deal. But the president has carved out that this is about the nuclear

“program. And so I think it's hard for him who would be hard to then say all over and we haven't”

resolved that in some way or gotten some kind of deal. Do you think that a deal would ever occur a deal? It takes two to tango. And it would depend upon whether either Iran's the notion that the blockade has put such pressure on the Iranian economy that it starts to disintegrate and they really do have to do something. That could be one thing that that leads to a deal. And I think the notion, as been articulated for the blockade, is if Iran is trying to wage war

in the global economy, this is a way to wage war in the Iranian economy without using military weapons. Will we see there's been some instance that maybe there'll be a restart

This is really a real conundery of how how to bring this to a conclusion.

You mentioned earlier that there is a discrepancy between how Wall Street is pricing oil, how people who are trading from trading flows in New York are pricing oil versus actual physical traders of oil. The people who actually work in the oil industry that their views don't necessarily line up. Do you think that Wall Street and markets in general are mispricing oil? Are they not

“understanding something? Well, I think they are responding to narratives to what is said to a notion”

that this will come that rationality will prevail in this will come to an end sooner. I think the industry is looking at the logistical disruption at the constraints of where the shortages are and is looking down at the supply situation. And I would say that right now in our own work when we at S&P we see if this prevails we see a situation for a global supply position that's much more difficult a month from now than it is today. You also said earlier that it's all dependent on one person.

I guess in your time studying oil, studying the history of energy, have you ever seen the future of the markets so dependent on such a small handful of people? The decisions that were made to put the embargo on half a century ago were made by small number of people and then one person really got on planes and got it solved and that was Henry Kissinger.

“But I think at that point, probably the people doing the embargo actually wanted to get out of it”

because it was a precarious position for them as well to be doing it. But I think I can't think of any situation since then where I mean you've actually phrased a very good question in which so much of what happens in the world rests on such a narrow base of decision makers. You know we're talking one person in the United States and a couple of us a few of his advisors on one side and kind of a handful of leaders in Iran on the other side who have a very different

vision of the world. They have no desire to see you know international hotels built in Tehran. They want to maintain their system of power even if 80% of the population wants them to go. It's they've been opposed to huge cost and right from the beginning, you know I write about

that in the prize when they took power, they did mass executions of people so they've never

hesitated in the name of their revolution to kill people almost indiscriminately. We mentioned earlier that this is partly about the possibility of a nuclear proliferation event but at the same time we had been told by the administration that then nuclear capabilities had been ruined or had been destroyed which brings up the question of what is this all about really and it seems that this is to your point. This seems to be the most critical lever of power that exists

in the world which is whose controls the supply of oil, whose really in control of the energy. I guess what could we learn from this about how power works and who really dominates our society today.

Power comes in many different forms and we could also say look at you know we've never had

companies at the scale of the hyperscalers and the amount of money and indeed you know what are they 40% of the stock market. So that's a form of concentration too but

“but you know I think this did start off being about the Rans nuclear weapons”

but now it's about the straight of hormones which has turned out to be an incredible piece of leverage at least for the short term for a round to try and control the world economy. We don't see so much in the United States but to see it in Asia and increasingly in Europe and in the African

Well I still think that I think China's a winner because it stayed out of it and we'll see

when Trump goes to China in less in about two weeks now even though China has benefited from

“cheap oil from Iran it's built up reserves but I think it sends a message that you know we don't”

do things like this but of course we don't know what they're going to do about Taiwan and I think Vladimir Putin is a big winner because the sanctions have been relieved on his oil. He's replenishing his war chest with higher prices and attention is shifted away from the Ukraine war. It's funny in a way Ukraine has benefited from this because they're the country that is knows how to fight against drones and they've showed up in the Gulf countries now and have

done deals with them to help them in their defense against drones and so it turned out that Ukraine has some cards here to play it was at one point instead it had no cards but it's building coalitions Europe is a kind of as a loser too going back to what we said about the fight over NATO that this is really accentuated it Iran's not really a winner because their economy isn't such bad shape I guess we could say there are tactical winner right now with their control

over the most critical maritime choke point in the world which has been recognized to be such for

decades I mean the seizure of the Strait of Hormuz has been the nightmare scenario for decades

“and now we're living now the nightmare has come into the daylight and what about America?”

Well we said that the American economy right now is being driven more than anything else by AI data centers and just this unprecedented level of investment that's unfolding far greater and just adjusting for inflation than any other infrastructure build in the history of the country so that's kind of balancing out but gasoline prices what this is doing to farmers in terms of fertilizer prices because again it's global markets there being being felt but

well truly only know who the real winners are when this is over it seems that you're being diplomatic to America because I look at what's happening and some of the things he said that I don't see how we have come out on top in any way shape or form on this if especially to your point if this has empowered both Vladimir Putin and the CCP and China what I meant is that we have a lot else going on in our economy that is gives us kind of ballast that others don't have

“that's what I meant and that we've been well despite the prices ticking up at the gas station”

we've been much more insulated from it than anybody else so that's what I meant in that sense that our stock market is not expressing concern about an oil crisis. What does this mean for the future of energy the fact that this has happened the fact that we are living in a more unstable oil world how does the future of energy unfold from here? I think it means increasing drive from diversification even if wind is not popular in the United States right now from the administration

point of view renewables will get a boost I can see right now solar is the quickest thing that can be done to meet electricity I think other countries will look more renewables I think I think Europe has it just I think just Europe has really deep problems that they are having great difficulty dealing with you know we won't see the impact of this nuclear renaissance for five years or so but there's sure a lot of money that's going into it one small modular reactor company just

went public without a good nine billion dollar valuation so there's a lot of optimism and we see

nuclear power plants that were shut down that are now being brought back Germany is now saying we made a mistake shutting down nuclear so I think all of that you know there there's not an endless possibility of things you can do hydrogen which was very big a few years ago was really faded away but I think like your portfolio you want to diversify portfolio of your investments

in companies but in terms of where you get your supplies and where you get them from and I think

it's not like there's any people who's want to miracle solution there's not a miracle solution to providing the energy for 120 trillion dollar world economy but diversification and and not cutting the budgets for research and development and technology because you know we do need new answers as we go into the you know look out beyond you know out into the century and

“but for now it turns out oil and gas are still pretty darn important.”

Daniel Jogen is a highly respected authority on energy international politics and economics he is the vice chairman of sb global and the Pulitzer Prize winning author of both the prize the epic quest for oil money and power and the new map energy climate and the clash of nations he has served on the U.S. Secretary of Energy Advisory Board under the last four presidents he holds a BA from Yale University where he founded the new journal and a PhD from Cambridge

“University where he was a Marshall Scholar Daniel this was fascinating we really appreciate your time”

well thank you great to be on and wide range in discussion this episode is produced by clay Miller and Alison Weiss and engineered by Benjamin Spencer our video editor is Jorge Carty our research team is Danchlan is a bellicntill Cristina Donahue and Mia Solverio Jake McPherson is our social producer Drew Burris is our technical director and Catherine Dylan is our executive producer thank you for listening to property markets from property media if you liked what you heard give us a follow

“and join us for a fresh take on markets on Monday”

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