00:00 Speaker A <\/p>\n
Ben, uh, you write here out of the straight of Hor moves traffic where we’re back to near a stand still again, but you say the world has adapted. What does that that mean exactly? Uh, Ben? What what’s different now? <\/p>\n
00:21 Ben <\/p>\n
For sure. Yeah, it’s a bit of a disconnect we’re seeing this week. The the data we’re coming from the straight itself is pretty dramatic in terms of the traffic going through. This week, as these attacks and counterattacks have happened, we’re seeing about ships passing each day in the teens. That’s down from 50 just a few days ago, not to mention over 100 before the war happened. <\/p>\n
00:46 Ben <\/p>\n
Yet, at the same time, we’re seeing kind of a bit of a collective yawn from the markets in terms of the impacts here. Brent Crude is up over the last week, but about 6%. That’s a relatively modest increase and well below $100 a barrel that we saw during the war itself. And the market conversation today on equities is very different, um onto other subjects other than the Middle East to a large extent. What what underpins this is this idea of the world adapting as you as you mentioned. <\/p>\n
01:13 Ben <\/p>\n
That line um which I quoted comes from an outfit called Alpine macro, which is a part of Oxford Economics. They say the world’s adapted, rerouting oil is going to buffer the blow here as well as countries like China that are oil importers being able to kind of tamp down their their demand if needed to kind of cushion the overall global economy if it comes to that and if this if this um if this conflict continues. <\/p>\n
01:42 Ben <\/p>\n
What also I think is is underpinning this optimism is a sense that this is a blip to an extent. This is this is a a big back and forth this week, but we’re not entering a new long-term war in the in the months ahead. You know, if if this week’s a blip then it’s fine because ships will be able to get through in the weeks ahead. If the three week ceasefire we seen a couple of weeks ago was a blip, that’s a significant problem going forward if this if this continues. <\/p>\n
02:07 Speaker A <\/p>\n
You may you mentioned China there, Ben. Just what role is China playing here? <\/p>\n
02:11 Ben <\/p>\n
Yeah, they’re they’re a big role and it’s on a it’s on a couple different fronts here. On the demand side is China has been surprising the world for over four months now about its ability to essentially crank down its oil demand um and seemingly not have major effects. China doesn’t release a lot of their the reserves data, so we don’t know exactly the situation there, but we’re not seeing effects in China itself. Oil shortages or things like that. That seems to be massive strategic petroleum reserves that they’re able to deploy. <\/p>\n
02:49 Ben <\/p>\n
They they’ve been able to deploy for recent months and they’ve actually they’ve had the last few weeks to stock up with a lot of Iranian oil headed their way and still going to be headed their way for weeks to come even if even if it stops in the short term. China’s close relationship with Iran is another important factor here. One of the events this week that I think was expected that could have rattled markets is the US reversing its plan to to um lift sanctions on Iran and oil, sanctions are back on. <\/p>\n
03:22 Ben <\/p>\n
But as Capital Economics pointed out in a note, most of that oil is headed to China, who doesn’t really care much about US sanctions. So that flow is expected to continue which will which will which will go out to the entire economy. <\/p>\n
03:41 Speaker A <\/p>\n
So the conclusion is, uh, Ben, you know, bottom line, this appears manageable. I’m just curious though, I mean, are there are there risks out there, Ben, that you think investors, you know, could be underestimating? <\/p>\n
03:59 Ben <\/p>\n
For sure. Yeah, I’ll say I’ll give you three different risks that I think are being a little perhaps underestimated. The first two is I’ve mentioned in passing already, the duration and the intensity questions. The kind of this optimism we’re seeing is based on the idea that the straight of Hor moves will be open in the month ahead. If you’re a shipper inside now, you may have to wait a while, but this will die down and there’ll be open passage. Maybe it stops, maybe it starts, but if you have a ship, you’ll eventually get it through. <\/p>\n
04:31 Ben <\/p>\n
So that that is what’s underpinning this. If we’re in four weeks from now and it we’re in a full-scale war that’s intense and the straight is closed. That’s a real different situation. I think you’ll see this mood change overall. The third one I would add is Iran’s willingness to kind of pull out all the stops to toll the state moves. That is what is underpinning the conflict this week. <\/p>\n
05:04 Ben <\/p>\n
Iran went after three ships, they they attacked them because they basically weren’t playing ball with Iran to register with its with its straight authority that is a clear precursor to to tolls. President Trump has even sort of talked in kind of baffled terms about why Iran is willing to go all out for this, risk a big war with the US, renewed war with the US because of this toll. But they’re clearly this is clearly a top priority for them. <\/p>\n
05:43 Ben <\/p>\n
And the question will be how far they’re willing to push after this 60-day ceasefire, if if we get to that point, Iran does say they have the ability to to go for tolls. So this that that’s another risk that I think we’ll be talking about for months to come if if Iran is doesn’t back down from this tolling position. <\/p>\n
06:01 Speaker A <\/p>\n
All right, Ben, thank you. Appreciate it. <\/p>\n","protected":false},"excerpt":{"rendered":"00:00 Speaker A Ben, uh, you write here out of the straight of Hor moves traffic where we’re…\n","protected":false},"author":2,"featured_media":198868,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[28],"tags":[36799,102,21240,722,101],"class_list":["post-198900","post","type-post","status-publish","format-standard","has-post-thumbnail","category-strait-of-hormuz","tag-freight-traffic","tag-hormuz","tag-international-tensions","tag-president-trump","tag-strait-of-hormuz"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116891933965983087","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/198900","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=198900"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/198900\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/198868"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=198900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=198900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=198900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}