00:00Well, let's pick up some of those themes and talk to Gaurav Sharma, the independent energy analyst.
00:05Gaurav, welcome back. Good to see you.
00:07I mean, is the world really so dependent on the Strait of Hormuz?
00:10Can the world's oil industry reroute and look for oil elsewhere?
00:16Good to see you, Jeremy.
00:17I think one thing I would say is, yes, if you look at the figures themselves, they're tremendous figures.
00:23Not just 20 million barrels per day of who goes through it.
00:27If you take the combined volume of liquids and gases and convert them in barrel terms, we're looking at 30 to 33 million barrels per day.
00:34That includes LNG, LPG.
00:37Now, almost half of those cargoes are going to the east and in particular to China.
00:43And it's not just Iranian cargoes.
00:45You've got Kuwait, Saudi, Iraq, Qatar, all in the mix.
00:49Now, it's for that reason alone that it seems a bit outlandish that the Iranians would attempt to close off the Strait.
00:57It's something they've been threatening.
00:58It's not a new threat.
00:59They've been threatening this from the mid-80s.
01:02But the proof is in the pudding.
01:03They've always threatened, but they've never, ever attempted to do it, nor have they ever done it.
01:08And there are two simple reasons for this.
01:10Number one, you cannot upset your primary hydrocarbon or energy client out in the Far East, which is China.
01:17And number two, they'll be met by overwhelming force by the U.S. fifth state.
01:22So it is kind of outlandish.
01:25Now, in terms of dependency, the world has changed.
01:28And if this was happening back in 2015 instead of 2025, same point in the year, we would probably be looking at $100 oil prices.
01:36The only reason it's not happening right now is there's an awful lot of non-OPEC crude up in the market from Brazil, Guyana, Norway, and the United States itself.
01:47And that's keeping a lid on things.
01:49So what's your guess?
01:50How will this play out over the coming weeks and months?
01:55I think what we are seeing right now is that Iran is trying to work out.
01:59They've been hit by a series of strategic strikes.
02:02Of course, they've retaliated, they're firing missiles into Israel.
02:07But some clear heads need to prevail.
02:10What is Iran's next strategy?
02:11Of course, it will need to save face.
02:14There will be some kind of retaliation.
02:16But that retaliation won't be in the form of closing the strait.
02:19It seems extraordinary that after the pandemic and after the world's experience of global supply chain crisis with so many of the things that have happened over the last six years,
02:31that we are back in a place of such dependence and concern about one particular choke point.
02:37I mean, that does seem extraordinary, doesn't it?
02:39Well, absolutely.
02:41It works out in terms of supply chains.
02:44There are a number of countries in this world who have diversified sources.
02:48And the big five, especially the big five, U.S., China, Japan, South Korea, and India,
02:52they have a diversified pool of suppliers, which is precisely why the oil price is not overshot towards three figures.
02:58But at the same time, there are a number of nations who are overtly reliant on Middle Eastern crew.
03:05So hence the tension, which then gives paper traders the sort of the room to say, well, what if?
03:11And the moment you talk of what ifs, the sentiment spikes the price up and then reality prevails like it did this morning.
03:18We started at 80.
03:19Now we're struggling to hold 76 dollars per barrel with Brent prices.
03:23And that's that's really a sentiment driven affair.
