The State of Oil with Homayoun Falakshahi

Welcome to the HC Comortis Podcast, a podcast dedicated to the Comortis sector and the people within it. I'm your host Paul Chapman. This podcast is produced by HC Group, a global search firm dedicated to the Comortis sector. Today as we begin to wrap up the year, we return to the crude markets. What has been going on in the latter half of 2025, and what is the outlook for 2026? How do prices reflect the current supply and demand story as well as geopolitical risk? And what are the key tension points as we head into 2026 and how might the markets break? And what has all this meant for traders this year, and what might it mean next? Our guest is Homme Yoon Palak Shahi. He leads crude analytics at Kepler, the data analytics firm for the commodity markets. As always, you can really support the show by leaving a positive review on the platform you're listening on. And as always, I hope you enjoy the episode. Homme Yoon, welcome to the show. Hi Paul, thanks very much for having me. It's a pleasure. It's not a tough task if you'd like, certainly when you get into the details of catching up on where the oil markets crude in particular have been the second half of 2025. And then what we might expect, what are the key elements to look out for in 2026. So let's start with 2025. And I guess you'll sat around a dinner party for Christmas and so forth. I guess I'd try and sum it up something like, you know, it's sort of an oversupply narrative fighting against a political risk narrative if you'd like. Is that a fair assessment and can you dig into where we've been in 2025? Yeah, I think you've, I think you've nailed it, Paul. It's really, you know, you look at the fundamentals and a lot of what's happening seem and actually is quite bearish for prices, as you said, huge oversupply globally. And it's something that really kind of got accentuated in the second half of 2025 with, you know, back plus bringing all these barrels and, you know, they accelerated those hikes in the summer, but also non-up at plus production really boosting as well. You know, you had kind of a convergence of a lot of these projects starting at the same time or at least hitting, you know, their production capacity at the same time towards the summer. And so that meant 20, second half, 2025, a lot of, a lot more supply in the market. And at the same time, you know, you have prices have been declining trend really over the past, over the past few months actually, you know, really since the kind of, you know, risk premium that we saw during the Iran-Israel war. But since then, you know, it's been on a slow declining trend, but we haven't seen prices really crash despite, again, that oversupply. And I think one of the main reasons why it's what you outlined and it's the, you know, higher geopolitical risks that are to be factored in into prices and a lot of uncertainty is when it comes to, you know, what's going to happen around Russia, Ukraine, around Venezuela, maybe also around other places such as Iran, Israel, also, I think the conflict is kind of just frozen. I don't think it's dead. So I think a lot of these reasons have prevented prices from crashing. But on top of this, of course, you have other things like sanctions on Russia and also the Chinese stockpiling strategy of this also supported prices. There's unpack sort of some of the more interesting pockets of that story. And I want to go back to sort of that supply picture. And in aggregate, is this just a normal commodity cycle playing out? You know, 2018, 2019, people saw that actually, you know, there wasn't enough investment going into hydrocarbons that followed, came through tools sort of, you know, the energy shocks of 2022, and this is some of that paying off, or is there something else going on? And I know that's probably a different story for OPEC plus versus non-OPEC. But can you just help us understand, is this investment paying off, or is there something else going on? Now, I think you're right. I mean, a lot of that was actually expectable and was to be expected because, you know, apart from the US, which you can, you know, highlight as a place which, you know, the shared play reacts much differently to prices. And so we're much more, you know, short-term factors play a larger role in US supply. But apart from the US, you know, you look at the other main countries and, you know, if you, if you focus on non-OPEC plus countries, these are projects that have been sanctioned, you know, a few years ago. And so a lot of that was to be, to be expected. But I would say that, you know, the, the difference here is that you have a lot of supply that, again, has come at the same time. You look at some of these main, you know, places out of OPEC plus where a supply has increased massively this year, so I'm really talking about the Atlantic basin countries, the likes of Brazil, Norway, Canada, Guyana, and even Argentina. And yeah, you've had a lot of new supply just hitting the, again, reaching production at the same time, which is, yeah, a bit odd. And was to be expected, but I think that, you know, due to the fact that we've had some project delays and so on, that also has pushed, and also on the other side, some projects reached production earlier, like, for example, the one Guyana, FPS, so in, in, on the yellow tail field in Guyana, in the reach production, two, three months in advance. So yeah, a lot of that production hit the market at the same time, was to be expected. And that's also, I think, why, you know, we haven't seen such a huge reaction from the market, despite the fact that, that means there's a lot of over-supply. But as you say, I think, you know, these are typical cycles in the industry, and it means that I think if we look forward to 2026, but especially beyond 2026, it also means that we're probably going to have potentially more supply problems because we haven't invested enough in the past two years. These are projects that were sanctioned more than three years ago. This is that sort of $500, $600 billion gap that the IEA signalled, and many people think it's a lot more, right? We've kind of got through this period, but actually, if demand doesn't tell, well, even if demand continues as expected, there's that big investment gap. And if demand doesn't fall as expected, and maybe, you know, then it's, it's a different story. But maybe we sort of talk about that a little bit later, but the, okay, so then, so you've had, and as you say, this is kind of, in some ways, very much an Atlantic story, a South America, or a central and South America story, with Guyano and Suriname and these huge finds in Brazil coming online and Argentina and stuff, but predicted, and so the market was factoring that in. If I remember back to this time last year, we were having conversations with a few of your colleagues in other firms talking about this sort of what OPEC might do, and this potential that OPEC might just tank the market like it did a decade ago. And to sort of, you know, for various reasons, that, that people just tell us what, what does OPEC actually done in 2025? Has that surprised people, you know, have they sort of threaded a middle, middle course? What have they done? Yeah, I think it's a very good point, because indeed, you know, as that increase in non-OPEC Plus was expected, the key there was really OPEC Plus's action, what was OPEC Plus going to do. And I have to say, yeah, they took most of the market by surprise, I have to admit, including ourselves, you know, I remember, at the beginning of the year, simply because of the oversupply that we saw coming already without those OPEC Plus barrels, incremental barrels were betting on the fact that they would have to delay their production increases. But, yeah, they took the market by surprise, and I think it's a significant shift, quite a big strategic shift. Obviously, not just, I think, there's things behind the scene as well, you know, it's not just pure market, old market dynamics at play. I think it's also down to geopolitics and other factors that may have played the role. But if we focus on the old market side of things, I think it's a huge, strategic shift because they were saying their strategy actually, you know, become a loose-lose strategy. Not only they were, you know, withholding production, you know, not reducing production over the past two, three years between 2020, end of 2022 and 2024. Now, at the same time, you had prices, you know, on a steady decline over the past two years. So, it's not like, you know, they reduce production, but at least their revenue is kept steady because prices would increase. They may have actually allowed for prices to drop at a slower pace than what they would have, but it was becoming a losing strategy on both sides. And so, I think the fact that, you know, they've actually went ahead, they actually went ahead and took a huge shift in their strategy is quite meaningful. And I think forward-looking, you know, it's something that we believe will continue and we think we'll actually, they will reap the rewards probably after 2026 because 2026, it looks still quite oversupplied, but after 2026, it looks like we, at least we do believe that prices could be reversing the trend towards the upside. And so, it's more the long-term play that they've been playing here. So, they kind of win back market share, they potentially delay other projects, push out competitors, non-OPEC competitors, and then in 2027, when that kind of supply gap comes through, that lack of investment comes through, they're in a great spot then, it's kind of the big picture strategy, right? Exactly. Exactly. I mean, you look at, you know, OPEC Plus production versus non-OPEC Plus, OPEC Plus production dropped by 860,000 miles per day in 2023, it dropped by 1.3 million miles per day in 2024. Meanwhile, you had non-OPEC Plus output that jumped by, at the same time, so when OPEC Plus was dropping by 860, non-OPEC Plus production was increasing by 1.6 million miles per day. And then when OPEC Plus dropped by 1.3 in 2024, non-OPEC Plus increased by 725 KBD. And even this year, despite the fact that they've changed their strategy, we still see non-OPEC Plus stronger than the OPEC Plus increase. So OPEC Plus, we believe, has increased on a year-on-year basis by 700, when non-OPEC Plus increased by 1.4 million miles per day. So yeah, I think, you know, this really indicates the market share that they were really losing. And I think it's even more telling when you look at the exports from these countries. It's really telling, you know, unfortunately I cannot show you that graph here, but I remember that I created one where you easily see that those exports from OPEC Plus dropping the past two years continuously, but at least on a quarterly basis, when non-OPEC Plus increased. So and I think, you know, you look at what happened this year, it is already starting to pay off in the sense that you look at the past two quarters, Q3 and Q4, where we are currently in Q4. We are seeing exports from OPEC Plus overtaking, exports from non-OPEC Plus, well, non-OPEC Plus, X was still growing, but at least the pace of growth from OPEC Plus is stronger. And the difference we're talking of about 500 KBD in higher in terms of OPEC Plus exports growth on a year on your basis in Q3 and Q4 versus non-OPEC Plus. So it is already starting to pay off. I think this is probably the first key point of this strategy, and if I were to describe their strategy and decision-making, at least on a pure old market, you know, focus, I would say the first one is market share, and the second one probably is managing that spare capacity. Because if you remember over the past two years in 2023, 2024, sometimes we had some shocks which triggered a short spike in prices, but then usually prices after a few hours sometimes or sometimes in the days. I mean, short shocks like bombing Iran, you know. Yeah, that's one of the four in 12 hours. And yeah, and I think one of the reasons why every time you had prices coming back very fast cooling down was because the market was aware that the level of spare capacity within OPEC Plus was still very, very high. And at the beginning of this year we had assumed, I mean, our number estimate was that OPEC Plus per capacity was at 6.5 million miles per day, which is roughly around 6% of global demand and much higher than historical levels of usually that spare capacity globally is more around 3% and most of that in Saudi Arabia. So I think the key goal for them is to bring that level back to closer to historical levels of, you know, 3 million miles per day, so that when there's a market event that should trigger a spike, then the market, the bulls would, you know, would not shy away and would be much more comfortable holding onto their positions. The energy and resources sector is experiencing unprecedented change. To help navigate this change and capture its opportunities, HC Group launched Enco Insights, a global advisory network dedicated to the sector, providing senior advisors and subject matter experts to investment and infrastructure funds, law firms and corporates. Enco Insights leverages HC Groups 20 years of connections in energy and commodities to give clients the expertise they need when the stakes are high and insight matters. Learn more at encoinsights.com Yeah, it's there. So in some ways, we're in danger of thinking of a world that hasn't experienced inflation or at least I am, right? So I think of $60 oil and I think, yeah, that's not too bad. But chat GPT tells me that if you do inflation adjusted for the price versus a decade ago, it's basically the same, right? So today's price, inflation adjusted to compare to 2015 is $43, which is basically where we were in 2015. So are we actually in an oil market at the moment where it is completely reflecting that over supply prices are unbelievably low and probably in some ways at that kind of base level that we hit a decade ago in an idea of the commodity cycle. Is that a true picture than thinking crew prices are okay and that reflects political risk? Is it actually, they're at rock bottom, is just that we've had 40% inflation since 2015. I think for sure, that's absolutely true. And it's actually something that if you look at the OPEC+ press release and what they say, that they focus on, say, highlight the fact that if you compare all the commodities in the past 10 or 15 years, oil has been extremely stable in terms of prices, despite the sort of prices that we saw and the increases that we had in 2022. And I think that the main divergence here between oil and other commodities is obviously, if you look at demand, even though the demand is still demand growth right, and we expect that to continue for until at least early into the next decade, but that demand growth is obviously really, really weakening. And we are seeing that shift take place especially in places like China where demand is already plateauing partly because of the growth in the EV fleet that we see in the country. And I think that's one of the key differences between oil and other commodities. Look at most of the other commodities, thinking gold, silver, copper, aluminium and so on. We're potentially, we could be at the beginning of a new super cycle for some of these commodities. And it doesn't look like it's the case for oil because of over-supplyable, but I think more fundamentally because the month for oil is already nearing its peak. And unfortunately for bulls, there's not much that really can be done. So I think there is going to be, there's still going to see cycles in the oil space, I think it's hard to force prices really strongly going on the ups towards the upside, even in the event of political shocks. And that's because the pace of demand growth is just not there. But what does that mean for OPEC+'s strategy for 2017 and beyond when they see this lack of investment coming through? Are we just simply saying that the price of oil is still bounded by this fundamental lack of demand? Even if there are going to be price spikes, they're just not going to be as high as we've seen historically. And I think so. And I think there is that realization already within OPEC+ and especially for the leader of the groups, the Arabia, there's the realization that especially in the short term, it's hard to see very high prices. Now because of the lack of investment in the past two years, later in the decades, after 2026 and 2027, prices we do believe that should be a bit higher than where they are now, but not massively high. Probably we could head closer to an average on the year around $80, $90 per barrel brand, I would say, which again would be much more comfortable compared to where we are now. And inflation adjusted is somewhere like that 60 that we've kind of got in our heads right now is not being too bad, right? Yeah, absolutely. Yeah, indeed. Yeah, I just find it sort of fascinating that actually we sort of, you know, I've been salving myself as this idea that it's at 60, but it really is. It's at my historical 40. Okay, so let's, and we're going to come on to what this has meant for traders. And, you know, sort of a sneak peak is as obviously it was a bit of a rough start of the year, but a slightly better second half when kind of all of the rule by tweet got replaced by some more normality in terms of supply and demand and fundamentals and a bit more directional. But the, we can argue that, but yeah, let's talk about that demand piece. And again, thinking about this time last year, we'd had that sort of first slew of data out from China that was like, you know, this actually looks like they've sort of hit the peak demand, peak oil demand. You know, there's been a tipping point in EVs. You know, has that narrative been strengthened in China and actually where we have seen demand, it's for being for their strategic reserve. What's going on there? Yeah, that's a, I mean, that's a good point, Paul. I think, you know, look at Chinese demand. It's, it is plateauing because of, you know, huge massive fleet of of EVs. And they're probably, you know, starting to, I mean, it's a trend that I would say probably is going to accelerate. And as in most of the EV makers in China, actually looking more at going overseas as well as expanding overseas now that domestic market is starting to get that saturated. So you look at them on growth in China. It's still there, but and it's still actually one of the biggest, the largest growth markets, you know, for oil, for coal products, for example, we're talking of about 350,000 miles per day growth next year. So yeah, it's not much when you compare it to total Chinese demand. It's like a, a jump of about 2%. But it's still much more than, you know, what you can find elsewhere in Europe, for example, it's stagnating in the US. It's only growing by like half of those volumes in China. But I think you look beyond the core products. Actually, what is going to be overtaking core products in the next two, three years, we do believe it's going to be the cases is the increase in the month where PG and ethane. And that's due to, you know, a lot of new PDH plants being constructed and implement and launched in China. So that actually is going to have also another impact, by the way, you know, it's more a detail of the oil market, but it's going to have an impact on the crude quality pricing and differentials because, you know, the plants over there are going to be looking more for the lighter, sweeter type of barrels that they can process at those type of new demand centers. And I think you're right, you know, this year the Chinese stockpiling story has been a massive one. And it's probably one of the main reasons why prices haven't dropped much in the second half. And, you know, you look at between March and right now in December, China has absorbed about 90% of the oversupply that we had globally. So that's really a key, I would say, factor and reason to continue watching over the next few months to try and assess if the market is going to break, if you know, something has to give, is it prices? Or is it not going to be the case simply because China continues to buy, to massively buy? And I think if you look at their storage capacity, which they are strongly expanding, everything seems to suggest that it could continue next year. And it is actually, we would do believe going to continue. And we do think that, you know, this year they built their inventories by more than 100 million barrels. Next year, you know, we could have at least as much as a build, if not more, because of even higher capacity. Now, there's a few reasons, you know, why they could be doing this, maybe linked to the geopolitical situations, maybe, maybe they are expecting something around Russia, around Venezuela, around Iran, who knows? But also, maybe they are preparing for something else, you know, there's some rumors in the market as well. It's pretty terrifying, right? And we actually did an episode in the summer on wheat markets, it's called it war and wheat. You know, talking about actually when you went back, you could see Germany start to stockpile core commodities prior to, you know, launching both invasions in both world wars. So, I mean, yeah, it's not sort of particularly heartening to hear that. Where does this rise in oil on the water come in? Can you tell us what that is and what that potentially means as well? Because that seems to be the story of right now. Yeah, I think, you know, it's really the result of partly the result of that oversupply that we've started to see kicking in, especially in the summer. So, I would say that it's, again, mainly the result of that, but not only, you know, there's a lot of, I would say, short term, medium term, reasons as well, other drivers that have explained that. So, just to give you some perspective, you know, we've seen oil on water volumes jump by about 200 million barrels, even a bit more since September, and to put that into perspective, that's about 20% increase. So, it's quite massive because, you know, the pace of the increase and the length of it is just comparable with a crisis that we had like COVID five years ago. So, very significant. And at the same time, you know, you could think that oil supply, it is going to impact the market structure. You know, if there's that much oil supply, we should have seen, you know, market structure heading to contango, for example. And it's not the case. I mean, of course, the backwardation isn't that steep right now on, on the key bench marks in the oil market, but it has weakened quite a lot, but it's still in backwardation. So, I think for to us, indeed, it indicates that, yes, there isn't over supply in the short term, but a lot of that is also linked to other factors such as, and what the main one we think being that there is kind of a divergence between where refining capacity right now is and where the supply is, the supply increments are coming from. And that's because if you look at this year in 2025, you had, if I'm not mistaken, about 600 KBD of the domestic closures. And that's mainly in the west of Suez in, you know, Europe has closed to three refineries. Likewise, in the U.S., you found, for example, in October, no later than October, you had the closure of the Los Angeles refinery earlier in the year you had the closures of the, the closure of the Houston refinery. And so, those, and that means that the month for actual crude has come down because of those closures. And on the other hand, the new capacity is more in the east, in the Asia, in the Middle East. And so, that means that also, you know, the crude has to be on water for a longer time, longer period because it is originating now incrementally from, from the west of Suez. And the demand is, is actually mainly located further away, such as in Asia. So, that's part of it. So, travel, travel days have gone up, basically, as part. Yeah, yeah, absolutely. I guess the question is, so you can, there's all this sort of the redirecting of flows and these, and so forth. Is, is there anything apart of this story that all the traders are, you know, loading up on VLCCs or sort of parks somewhere, quietly waiting for a big oil, you know, for price, for contango markets. I mean, is that, is that, is that any of that story? We're not seeing that. We're not seeing that because if you, we have done a quite an extensive study looking at this topic. And one of the metrics that, for example, we were looking was the pace of, of, you know, where, how, how, the pace of, of moving for these ships like the, was, for example, have we seen slow steaming? We seen some, some tankers move, let's say, two or three knots slower than, than, than usual. And it's not the case, actually. So, I don't think that's, that's one of the reasons. I mean, also, another reason behind this increases the sanctioned barrels. And the fact that there's, you know, you've had those sanctions on Russ, the flu coil recently, increment, increasing sanctions on Iran. And at the same time in China, and at the end of the year, you know, most of the private refiners have reached their, the, the maximum for the, for the quota. And it's true that the new quotas have been released just about last week, I think, two weeks ago, early late November. But it, it's also, it also has reduced the willingness from some of these refiners in China, for example, to import in the short term, very short term. So, there's the sum of that, those factors, which are more short term driven, like these, the Chinese quota constraints, some you could say, more medium-term driven, driven like the sanctions on, on Iran, on, on Russia. I'm saying medium-term, because who knows, maybe you can have an agreement tomorrow on Russia, Ukraine, and some of these sanctions, get, get lifted. I think that's part of that. The open arbitrage is also part of, part of that meaning that the barrels from Brazil, US are, are still cheaper than barrels from the Middle East to, into Asia. And actually, if we look at the destination of this crude, most of that increment, incremental build is going to, to Asia. Think out of that 200 million barrels, we're talking about 150 million barrels, which is going to Asia. And, and most of the remaining is still unknown, because, you know, for us, it takes sometimes a few days or weeks to, to exactly estimate where the, the destination of these, of these cargo is, is, and I think, lastly, on this point, which is, again, quite interesting, because it, it points to why markets haven't really crashed, despite this huge build on the water, which in the end is going to mean a build on, on land as well, right, because these, these, these barrels at the end of the day are going to hit the, you know, onshore, and are going to, and the first place goes to be, being stored in, in onshore tanks. And it's the fact that if you look at the product side of the, of the story, the products on water have actually been decreasing over the past, over the same period. So since September, you know, we had 20% or roughly 200 million barrels increase in crude water, but you have, we had the 50 million barrels drop in products on water. So that's roughly about a 10% decrease in products on water. And again, I think it really points to, to that dichotomy of that divergence between where new refining capacity is, and, and the fact that new, kept new refineries are also kind of slow in terms of ramping up the operations, such as, for example, dangote in Nigeria, having had a lot of issues. And, and the fact that products, products market are quite tight. Stronger margins mean that, you know, we, this really is, is an indication of a looser crude market, but a tight product market. That means that, you know, the, the prices are still holding up quite well, despite the huge build. Yeah, yeah, which brings me nicely to say, I guess one final comment talking about 25. We can put our crack our crystal balls out and have a look at 26, but the, you know, the narrative from trading performance in 2025 is essentially being one of very tough for the most parts in general for crude trading desks, better performances from the products desks. I know, obviously, you're not, you're in the business of a supply and data to these guys, but do you have any, because, you know, where do you think that's coming? Do you agree with that narrative as a synopsis and where do you think that's coming from? I mean, I think, um, yeah, first of all, I agree. You know, you look at, um, where margins are right now, refining margins, where cracks are, a lot of volatility. You look at where, how crude prices have been behaving, for most of the year, and that includes in the market structure. It's been a lot more boring, I would say, in a not so, so much volatility, or at least you had some volatility, but in a much narrower range. So I'm not surprised to hear that, you know, the traders have been doing a lot more, a lot better, I would say, on the products side of the market. And I think where this is coming, it's mainly, so there's two main reasons, I think. First one is, again, the decisions that we're taking before 2025, so the closure of some of the, some setups in the Atlantic basin, mainly in the U.S. and in Europe. And new refineries coming up, being a bit slow to ramp up the likes of Dango-Tina-Geria, the likes of Dospocas in Mexico, or other setups in Eastern Asia. And the second point, and the most important one, is the, I think, the big flip in the U.S. positioning on the Russia Ukraine, or which allowed Ukraine to really ramp up its attacks and drone operations against Russian infrastructure. Because I think most of those, you know, that spike, that increase that we have seen in the products market, or at least that volatility, is really due to the fact that we are seeing not less Russian products hit the market. Russian crude exports are still very high, they're actually at almost an all-time high, as I speak, despite the sanctions on Russia and the Ukraine. But exports of Russian diesel, especially, have almost halved, you know, since, you know, spring this year. And that has really allowed for a huge reshuffling of the products market, with, you know, countries like Brazil, for example, becoming shorts in diesel, and so turning up to new markets for the diesel supply. And that means that, you know, generally speaking, stronger margins have really allowed for a much stronger products market. And that also, you know, supported crude markets. Because otherwise, I think that we probably would have seen oil prices drop a lot more than, than what's been the case so far. Hello, I'm David Hunt, Founder and Management Director at Hyperion Search. Founded over a decade ago, Hyperion Search has helped organisations from major utilities to startups recruit their leadership teams and key individual contributors, to accelerate both their growth and the energy transition. Our three main verticals are renewable power, energy storage and the immobility. The energy transition and the talent that delivers it has been our passion since day one. To find out more of the Hyperion Search.com, or listen to my ladies and clean tech podcast, available on all platforms. I guess the segway there really is Russia, Ukraine, and then we also need to throw Venezuela into that mix. And, you know, the US being the source of geopolitical volatility at the moment, ultimately, it both in policy towards both those countries. Where do we, you know, at the moment, well, let's start with Russia, Ukraine. What's the general expectation out there? Do you think from the market on that conflict and how it plays through into crude markets? You know what I think, what's interesting here is that for crude markets, it's not going to have much impact even if you have a deal tomorrow. And even let's say a ceasefire and let's be ambitious, a total peace sign between Russia and Ukraine. If you look at the crude side of the equation, you know, it hasn't really been impacted by the war. I mean, of course you have had sanctions which kind of decreased indirectly the price of Russian crude for the buyers. You know, Russian crude is still much cheaper than the competition. But I think it's really hard to see the likes of European Union, European Union countries go back into buying Russian crude. I mean, it could happen, right? I'm not a geopolitical analyst, but it's still hard to, you know, be in based in Paris living in close to the center of Europe, I would say that I would be very surprised if this. It seems, I mean, like, yeah, like the sort of, you know, sort of schizophrenic almost in terms of kind of on the one hand, we sort of see various attempts at reprashement. We've seen Putin actually leave Russia, obviously, to come to the United States soil. At the same time, you're seeing the US government be many ways tougher when it comes to energy policy than the Biden administration, right? We've just gone through the sanctioning of blue coil. That puts, I think it was it, three refineries in jeopardy around the world that's going to add to that disparity between crude and products if, you know, something doesn't happen, and then the cascading events at Gumball is me saying it not you. You know, I mean, you know, if anything, if you kind of just look at actions rather than words, we could expect further, you know, as tightening, and actually, you know, we're talking early December, last week you had a tanker hit on the water in the black sea, right? I mean, it would seem that those attacks on Russian infrastructure will continue that actually you might have a tightening of sanctions or in the very least, companies far less willing to move Russian barrels if the US government really starts to get aggressive around even financing some of these trading houses and so on. I mean, it seems quite a, quite a, you know, a perilous picture out there and it doesn't seem like it's going, things are normalizing anytime soon with regards to energy markets. Yeah, I think we're really within a new order that started, you know, in 2022, but that's not going to change. I mean, even if there is a ceasefire and most probably in that one day, you will have some sort of a piece or a, you know, the conflict becoming a bit more frozen, but I think the new order where we are in, which really has Russia a lot closer to kind of emerging powers or thinking about India, Turkey, but obviously also closer to China. I think this is going to stay. And I think, you know, it will take years for, for example, the EU to go back into considering buying Russian crude again or Russian or increasing their imports of Russian LNG or natural gas. And so I think that the new order where we are in every player in the world is trying to get the most out of it. And so whether that's that's Russia, you know, obviously, the key point here is to keep the exports elevated, the maximum and try to sell the highest price possible, but that's not really possible anymore because of the sanctions. I think if you look at it from the US lens and the Trump administration, they're really trying to solve that issue, or at least to have a sort of victory so that Donald Trump can call himself another time peacemaker. And they know that one of the key tools that they have is sanctions, but the sanctions that they have been implementing on Russia's liquid, you know, they are not crazy either, right? Like they have, they have an implemented, for example, second sanctions on Russia. Because if you once you do implement second sanctions, then for sure you have India, for example, totally stopping imports of Russian crude, but for example, the import sanctions on Russia's fluid code have not prevented India from importing Russian crude, even though that has decreased in the short term. Although there have been threats, right? I mean, again, it's sort of, yeah, you know, they have been threats. Yeah, absolutely. It's hard to find them, but I guess we as a, there's a sort of, you know, that's a live topic and well covered. I guess the bit that's sort of the wild card for me and a bit less understood is obviously what's Venezuela, right? And if I can frame it up, we're sort of in this bizarre situation where sort of, you know, a pretty significant battle fleet is surrounding Venezuela. At the same time, you've got Chevron with license to produce from Venezuela. You have this added complication that all of the U.S. refineries demand heavy crudes, which doesn't suit what we've been producing in shale. That's why we continue to import Canadian crude crude from elsewhere. You know, obviously no one, we weren't on this little podcast, figure out what's going to happen there. But in terms of scenarios, how big do you think, does the world think that crude is, you know, is part of Venezuela? Obviously, it's a very big part of the story is the crude story here. If there is a conflict of varying shapes, what happens to the market at the moment in terms of those Venezuelan crude stopped flowing? Are they already, you know, a lower, okay, can we help unpack that for me? Yeah, I think the impact is very limited. And again, to me, it seems that, you know, historically, for what's the most, one of the most important energy policies for the U.S. President is to keep gasoline prices low, to keep gas prices low domestically, right, for the U.S. consumer. And that's also a boom, normally, for the U.S. economy. And I think there is the realization within the White House that, you know, even if you go ahead with, let's say, the most extreme scenario which would involve a war between the U.S. and Venezuela, I think you still wouldn't have a huge reaction on in the oil market. And that's simply because, you know, you look at Venezuelan production and exports. And it's really, really limited, like the country has lost about 70% of its production capacity in the past, you know, seven, eight years. And so the average exports so far this year is roughly around, if I'm not mistaken, around 800, 850, a thousand miles per day. And even if there's a war, no one really could be able to predict what's going to happen in the exports. Maybe you would have those flows continuing, just like you had those, the flows continuing, you know, between Iran and Israel. So I think there is the realization that even if in the worst extreme scenario, the oil market is going to react, of course, but you're not going to have the reaction that we had back in 2022, you know, at the beginning of the Russia Ukraine war, when prices jump to, brand jump to as much as close to 140 dollars per barrel. And I think the fact that the White House knows this, they know that they have relatively the upper hand here with Venezuela. And so it allows them to, you know, becoming quite much more demanding, I would say. And same with with Russia, you know, again, the sanctions are not going to be having too much of an impact on prices, you know, whenever you have that deadline on, if there's going to be ceasefire or not, you lose or you gain about two dollars per barrel, which is about, let's say, 3% of an impact. But the oversupply is such, I would say, in the market that even if you lose Venezuela, even if you lose a bit of Russian crude, even I would say if you lose some barrels from Iran, yes, the trend could be reversed. We could have higher prices, but it's not going to be the reaction that we used to see a few years ago. Now that said, the reaction, the oil market structure is going to be changing, and especially, you know, the differentials for those heavy crude, as you mentioned, you know, Canadian, for example, is going probably to gain a lot more the other crude from the the heavy sower from Latin America, other places Latin America are going to gain because if you lose Venezuela and crude, then yes, the heavy crude market is going to get a lot tighter, and especially in the U.S. Gulf Coast and maybe in China. But the actual crude, let's say, front-mounted prices is not going to be reacting too massively. That's, I think, something that the White House knows, and they are playing it at their advantage. Yeah, yeah. So we've covered, obviously, probably the status quo of Russia Ukraine just continuing worsening for everyone involved there. Venezuela, goodness knows, but the short-term impact on oil markets probably is somewhat limited, just given where the state is where they're at. You know, where else, when you look at 2026, we've kind of painted this picture of continuing oversupply into the latter part of this decade when the bet is, and it's certainly a bet that this lack of current investment going on will start to pay off for the, for OPEC and non-OPEC countries alike, where significant money, you know, talked about Guyano and so on has been going in. You know, what else, I guess in 2026, is there anything else that is on that could fit into that surprise category, if you'd like? I know that's the one of the hardest questions. But is there anything out there that, you know, people should just have their eyes on that might have a significant, an outsized impact on crude markets? I think beyond the general geopolitical surprise that you could see, so whatever happens with Venezuela, whatever happens with Russia, Ukraine, and maybe with Iran. Beyond that, I think the one of the key topics is going to be the crude quality imbalances that we are going to have, because most of the new barrels coming from the Atlantic basin are, you know, light sweet or medium sweet type of crude. And that's when the new demand, so the new capacity that's been installed may mean the Middle East and in Asia is actually more inclined to to process in the mediums hour, heavy sour type of barrels. So I think I'm still, I would say it's hard to, obviously, it's impossible to predict the biggest surprise of next year. But I think my expectation is we're still going to stay within a relatively boring market, a volatility, very much limited volatility when it comes to crude. However, within that crude market, if you look at the different grades, there's going to be a lot here to be to play around. Because for instance, if we look at 2020-26 year-on-year supply, we have mediums hour and heavy sour overtake by a lot more medium sweet and light sweet. And especially, it's really medium sour versus light sweet. So for example, we see 700 KBD next year of higher supply globally of mediums hour. And that's mainly coming from OPEC Plus. It's mainly the baseline, actually, effect, because when I say 700 KBD and it doesn't bear us, but I'm not even included, including the potential future hikes from OPEC Plus, even if they don't hike anymore on a yearly average, we should have 700 KBD more mediums hour globally production. On the other side, light sweet, we should see a decrease of about 100 KBD globally. And that means that if you remember what we were talking about earlier, we're saying that in the most of the new demand next year is next year is actually going to be the first year where LPG ethane demand growth is going to overtake that of co-products. And that means that at least in the short term and in H1, we are going to have strong demand for those sweeter barrels, lighter barrels. That's a little China's huge amount of petrochemical energy that they've developed over the last couple of years, right? Absolutely. So that's good news for shale producers, presumably. Yeah, that is as long as they can sustain their production. Indeed, it is. Yeah, and that's sustaining it is the concern about those fields getting more rapidly depleted than thought. Yeah, I mean, again, back to your surprise question. And it's been a surprise for I would say the past 10 years, maybe every year. It's really the behavior of US shale. This year for sure has been one of the biggest surprises. And I think, again, thinking this over again next year, potentially that could once again become one of the biggest surprises. We do actually see US peaking, US shale production peaking right now. So on a yearly average, maybe it's going to remain stable, but on a December to December basis, we do think that US output is going to decline by around 300 KBD. It is continued to surprise to the upside is the fair statement, right? Every year there's sort of the same prediction of its impending doom. And every year, it continues to outperform. And so there's also the argument there's no, no, no, no reason it shouldn't do the same next year, right? It's certainly a live topic that we've discussed on this podcast as well about sort of, you know, where it actually is. But the story of this year is actually outperformance as opposed to to that, that predicted decline. Yeah, for sure. I mean, the efficiencies that we've seen, especially thanks to longer laterals have been massive right now, total US production around 13.8 million miles per day to record high. But I think we're starting to see the cracks though with, like for example, I think the latest two readings from the EIA showed that production from Texas and New Mexico, if I'm not mistaken, have been under decline. I think we're starting to see the cracks. And that's why we believe that the despite the fact that you've had a lot of efficiencies at the end of the day in what really matters remains prices. And with the break-even of new wells in the shale sector, roughly around $60 per barrel, that's more or less where we are right now, right? So if you have a bit of a decrease, then the impact is going to be relatively big. I mean, again, we don't foresee that. We do think that prices will mainly remain range bound. Again, between 1670, we actually do think that the trend will be reversed towards the upside. And that US production is going to remain strong. But again, we still expect a peak. In US output. And that's because of lower upstream activity over the past few years, lower drift, but uncompleted wells, lower recount and so on and so on. Yeah. And that's sort of $60 break-even. Actually, underneath that is a bell curve. And there are some barrels of production that's break-even at $30, right? And it's actually where how that proportion lays over that 60 mark. So it's worth doing the deep dive there, as we've just discussed previously. And the consolidation also plays into that. So yeah, so exactly, with these large producers owning it, is a very different picture to how it looked 10 years ago. Yeah. So I mean, fascinating. So there's hope in life there for the crude traders in this imbalance of grades. There's continues to be significant political risk out there, which many argue is underpriced, and the world is becoming ever more fragile as some of its structures for dealing with conflict and risk are being eroded. And I guess the look is towards 2017. And that plays into a conversation we've got coming up around, actually, are the super cycles, or the psycho-motic cycles shortening in a more volatile world. But, well, I mean, it's been absolutely fantastic to have you on. I really enjoyed the discussion. There we were worried that we would run out of things to say in 30 minutes, but we were approaching the hour. And I hope to have you back on this time next year, and we can see where we're at. And luckily, both of us being quite wise and avoided any kind of predictions. So no one can prove us wrong. Yeah, it would be my pleasure, Paul. It's been a pleasure to be on the show, on the podcast. Thanks a lot. Thank you for listening. 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