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[email protected]. Oil Ground Up is distributed in partnership with the Clear Commandery Network at ClearComodity.net and also the Oil and Gas Global Network, the leading podcast network for oil and gas. Obviously, we are now two weeks into the Iran War and oil markets have arguably never been more volatile in their history. Without any further ado, I'm just going to get right into this episode. With us today, one of my favorite analysts in the mid-east and a favorite analyst of OPEC and Iran, Nader Ittaïm with Argus Media. I hope you enjoyed the show. Nader, welcome to the Oil Ground Up podcast. Before we get started, could you just briefly describe what you do and what your role at Argus Media is? You've been one of my long-time favorite people to cover, Middle East politics, oil flow, and OPEC. So just kind of give a very, very brief background and then we'll jump right into everything that's going on. Sure, Rory. Well, first off, thank you for the invitation. It's been a long time coming, so I'm really happy to be on here. So yeah, I work for Argus Media. I've been with Argus for about 10 years. What I essentially do is follow Middle East news, energy, geopolitics. Focus points are Iran, the Gulf obviously naturally. I'm based here in the Gulf as well. I'm in Dubai. I've been here for about 10 years. My passion is OPEC, which is I think where you and I first connected on. So yeah, I've been covering this stuff for about 15 years, 10 years at Argus and five years before that at Mice. It's kind of in my blood. So my father's something similar. Well, very awesome. Family business is always good. Absolutely. So as you mentioned, we've bonded historically over OPEC. And now we have a lot more going on in the Gulf broadly. And OPEC is really kind of a side story. It's funny. I've been trying to publish my own reports and cover this as I go. And yesterday we actually got the OPEC regular monthly oil market reports. Normally, I publish a report, February data seems completely irrelevant now. It's a completely different world than what would have been reflected in that report. So just as we start here, let's just kind of start with how you're thinking and feeling about what's going on in the Iran War. And if like me, like I never in a million years expected to see this ever in my career, I this was always the boogie man. This was always the the scenario you tell first your analysts like, what would this happen? How would the world economy begin to break down? I never, never, never thought I would see a US president drive so hard with such a clear and obvious risk to global oil prices in the global kind of broader global coming. So tell me even how you're just even processing what is happening right now. Sure. So for me, it's I'm just processing in a very special way because I have a very personal connection to a lot of these countries that are involved at the moment. So it's it'll probably a little bit tougher for me to put that to the side. But I mean, if we're going to try and be professional about it for at least to begin with. Look, what you said, I'm fully on board. I never expected this to happen. I hoped it wouldn't happen. This is not to say that I'm particularly pro. What's happening in Iran at the moment or who's running the country far from it. Surely. Yeah. It's one of those moments. It's one of those events that, as you say, you you you talk about forever and you consider forever and you kind of just dismiss it as a as a non-event non-issue. It's just simply not going to happen because you know, Iraq happened and the U. the U.S. is still paying for it and dealing with it. So you thought they're never going to do Iran. Iran's going to be way more complicated. If you then, obviously 20 25 happens, 24 happens and things start to change. I think when it came to Iran and it's sort of adversaries be it Israel and or others, Iran's been for years engaging its adversaries in a third third country essentially. So it's been dealing with this proxies for years and it's managed to keep all of these quarrels, battles, what everyone would call it outside of its borders. This is a big part of the proxy network that it had built. That was the purpose. Keep the problems away from our border. Obviously the two years prior to this one, everything changed. I mean, this region has been changing in ways that you can never imagine in such a fast, it's just a short period of time. All really triggered by, you know, October 7 and what's happened since then. So I mean, 2024, 2025, we started. That was all new territory as well. That was the first time you saw kind of Iran and Israel actually engage one another. Again, something I never expected we'd see. It was one of those things that you'd keep talking at each other, shouting at each other, you know, but then again, that was a new level of, you know, first for everybody. So and then with time, it just felt like we just keep getting closer and closer to that inevitable point where you have these two countries basically going at it. And obviously June 23, 25 was, it was huge. It was again scary for anyone in this part of the world because you just didn't know what was going to happen next. Okay, it 12 days came and went. There was a lot of death and destruction, but there was an end point. The thing was, from my sense, it always felt like that war ended prematurely. It ended in a way that neither side was particularly content. Neither side was happy, maybe happy is the wrong bird, but you know what I mean, neither side was satisfied with how things ended. It felt particularly in Israel's, on Israel's side, it felt like they went into this with certain ambitions, certain targets. And although, let's say, the nuclear program was the headline, you know, of all the ambitions, I think deep down, many people felt that it was a bit more than that. I think ultimately, the NISNAHO government wants to go in there and essentially, I don't know if you want to call it regime change or at least, you know, defang the regime or, or, you know, degrade them to a point that essentially they are no longer the threat that they have been for so many years, right? So, did they achieve that? Probably not. Even on the nuclear file, did they achieve much there, despite all the bluster and all the, you know, the victory laps that we saw post June 23, 25, about the obliteration of the nuclear program, I think, looking at it from now, what's happening of the last few weeks, it's clear that it wasn't quite as obliterated as people were suggesting. It was still a problem. So, on the Israeli side, I think there was an issue there and they wanted to basically finish the job at some point. On the Iranian side, it's strangely, although the narrative at the point was that, you know, Iran's being pummeled and clearly it was, I think internally, there was a sense that, you know, what, Iraq's doing a quite a lot of damage to Israel. Maybe let's go as far as we can go and let's see how far we can go and see what we can do here. So, I think both sides were a little bit dissatisfied about ended. Iran, not surely being in the position it's being or is in or and the sanctions it's under and the issues that it's dealing with from, you know, the economy, to geopolitical, to social problems. I think they didn't mind at the time to just, you know, take a back seat here, let things just move on, let's get away from the war and actually get things going. But it was really television and let's see how I felt that I felt I wanted to come back from war. I think many people expected to happen before the end of last year. Personally, I think what was happening kind of tail end of December, early January, which is these demonstrations that we saw in Iran that quickly developed into something much bigger than anyone thought. I think at that point, it might have been thought, those until the end of the day, that it was thought, you know, what, let's see how this goes. Maybe let's see how this organically, you know, it develops. And then things just moved very, very quickly from then. I mean, we seem to have some more diplomacy on between the US and Iran. I think looking back, we can probably say to say that at least on one of one side, diplomacy wasn't a genuine attempt diplomacy was probably more just, you know, let's see, let's let's let's throw spaghetti at the wall and see if it sticks kind of thing. And then, so actually let's let's let's poke on his first second because I think so we've got three participants in this war we have the United States, we have Israel and we have Iran. Each of those has very different goals, very different incentives in this moment. And I quite frankly never expected us to get this far. I pictured another kind of, you know, big bang flashy kind of truck made for TV, victory declared moment after two, three days. Now, obviously that does not, as we have seen, that does not conform to the reality on the ground and the Gulf and the kind of situation that she was getting back involved in. But I think it's important to just even just like even as a base level, like what is Trump after aside from victory and what does victory mean? We've got at the beginning when this all kind of started ramping up when oil prices and we'll talk about oil, we haven't even talked about oil yet. We'll get to oil in a second. But as this is ramping up as oil prices started to rise, it was Trump was
considering intervening on behalf to help the protesters. Then once that seemed to actually kind of pass by the window of opportunity to help, then it moved back to the nuclear program, like the greatest hits. Then it was often on regime change, and that Trump himself has been often on in this ever since. One day it's not regime change the next day, we have to go all the way. And then the State Department of Rubio have been much more kind of focused on destroy the missiles, destroy the Navy and destroy the factories that make the missiles. So on that side there's like a big kind of question mark. It's like what actually is the United States ever? I think the professional bureaucracy, let's say represented by Rubio here, is trying to at least parameterize something achievable and kind of like a useful goal that can kind of be done and then kind of peg. But Trump himself, it just generally, it was like, you know, a rally yesterday, basically, he was like, we're gonna go all the way until this is done. Like what does done meet? Whereas that seems so almost conform more to what I believe to be the Israeli and Benjamin Netanyahu position of like the only way this ends is with a complete removal of whatever we consider currently the regime in Tehran. Whereas, and then we go to the Iranian side and what's Iran's main incentive here, its main goal, just purely survival. That is a much survival is an easier goal than a eradication of a regime that has been thoroughly embedding itself in society for decades and decades and if anything, these attacks have only validated that entire kind of ideology of resistance. Which is just, and we go back to it and this is where we're gonna get to oil. Like the Iranians seem like they have a lot more potential patients here than particularly Trump. And I think the Israelis will keep pushing regardless of the immediate economic pain. They have a much different kind of calculus. But Trump I think is the only member of that threesome if you will that is able, that is likely movable by economic consequences and that's what Iran's trying to push on. So how are you thinking about what the various actors are after and one thing I often say is like, I think Trump's gonna talk. I still think Trump is going to talk because he has to talk. It's the only way the system can heal itself in the entire global economy. It doesn't go full depression. But even I had a lot of pushback. Like if he if he talk goes, that doesn't mean it's over. What stops the Israelis? What stops the Iranians from making an even deeper point of like never touch us again? We can cripple the global economy with or without a new. We don't need a new. So like talk to me about how you're even thinking about the incentive structures here and who is even in control of escalation and dissolution because I think you mentioned some of the prior episodes from you know, 2020 with Sula Mone. You had 2025 with the 12 day war in each of those moments. Well, Iran visibly responded in kind. To me, most of those responses seemed like they had to respond to kind of placate and please and kind of confirm the, you know, the feelings of hardliners. But it never looked like they were after blood. They're always kind of like a deescalatory response. Whereas now like in the opening salvos of two weeks ago or two weekends ago, they went after all those surrounding GCC region, they went after tankers, they went after oil assets, they went after US base, they went after Israel, they went after Azerbaijan, they launched missiles out like all over the place. They're just kind of spraying. So talk to me about how you're thinking about these incentives and what it would take at a person, even at like a personality, a principal level to shift the direction of escalation here. Right. So I mean, like you're saying, through players here, I think these are these as you're saying, the way you laid everything out was pretty nice. So that's why I appreciate that. I think the Israelis are probably the least critical element of this in terms of how this ends. I think the Israelis will go as far as they're allowed to go and as far as they have US support, they will continue to go. I think with the Iranians, if you start with the Iranians, for me, naturally, I think it's a sort of conversation whether they are in a weak position. This is an accepted point that given what they have been through over the years, they are, I don't know about the weakest point in everyone likes to say they're the weakest point since, whenever, look, they are weak. I think let's accept that and move on. Let's forget about the weakest or strongest. But so they are not necessarily in a position where they want to be in a war, an existential war. And I think they themselves have accepted this term. One of hominized top advisors a couple of days ago with to CNN, he very clearly accepted this description of an existential war for Iran right now, because let's be honest, you have two of the strongest armies in the world, two strongest armies coming at you at once. And they clearly want to remove the system in place. That's a given. So Iran doesn't want to be in this position. I think they're very clearly don't want to be. They made that very clear. Now, whereas you hear them continuously say, we're in this for the long run and we are not interested in ceasefire, to an extent that's accurate in the current today. That's accurate, because I think internally, if they are to survive their base right now, I mean, if we're looking at a country of 80, 85, 90 million, I mean, their actual solid base is probably between 15 million at a push, 15, 16 million. That's really the hardcore Islamic Republic's base, right? To maintain them, they need to show a certain level of fight, they need to show that we are defending ourselves and doing enough so that if and when there is an actual de-escalation, I don't want to say ceasefire, maybe they'll be ceasefire or not, but at least a de-escalation, Iran can take something back and say, you see, as you said, survival is their primary goal, resistance is their primary goal. Them winning, as they said in June, is simply too survive, but they cannot do that. They cannot accept this stopping yet. It's still too early. Two weeks is still early. This is pretty much where we were with the 12-day war. I think we're on the 12th day now, 12th, 13th. I think they need to be showing more and showing more. They're going to stand up to the US and not let this happen. Essentially, from their rhetoric, Iran wants this to be the war that ends all wars. That's really it. When you're talking about previous episodes where the Iranians would. I think I don't know if you said it, but symbolic. All of their responses were primarily symbolic responses. Purely, and it was very clearly they had no intention of actually extending this or trying to inflame anything else. They wanted it to end and draw the line. They would do some symbolic retaliation. Tell everyone, please leave your base. We don't want to hurt anyone. This was not a show of force. They wanted it to be. It was never a show of force. Everyone could see them. I think over time, this idea of. I don't know if you've heard this before, this strategic patience idea that you'll hear a lot of Iranian analysts talk about. This is the way that the Islamic Republic has dealt with threats over the last few years. This has clearly changed. It's 2024, this changed. It's here. And gradually, they've been getting more and more. Moving more and more away from this. And now, they've literally reached a point where, you know what? Our existence is an existential war. We need to end this. We need to stop allowing people to think, or these countries think they're going to attack us as and when. So this is the whole purpose of this, this basically lashing out that you're now seeing across the entire region. They just want to create as much pain as possible. Economic pain, obviously, but obviously, if there's any more than that, great. That's a bonus for them. So with the Iranians, I think it's a matter of time before they'll be open to the idea. Diplomacy, I think. Diplomacy is never dead, but if we've been in a position that they're looking at a president where twice now, they feel. I can say twice, but I think this is actually strike three, because strike one was pulling out of the JCPOA in 2018. And then strike two, sorry, was last year. This is strike three, as far as I'm concerned. They've now been burned three times by the same president. So it would shock me if there's any genuine diplomacy beyond this point. Obviously, we have to assume that the Islamic Republic does actually be survived, which, at this point, you never know. So that's where they stand. With the US again, you painted it quite nicely. Nobody knows what on earth the objectives are here, even in the administration. It feels like everyone who ever you speak to will come up with something different. And that depends on who they're talking to, what they they're talking on. And it's just the context of the day. And this is frustrating for most people, and it seems even more frustrating for those in actual administration itself. And it's worrying to me every time I can hear senators coming out of these closed-door meetings talking about when they listen to Trump administration officials talking about what's happening. A lot of them come out with really concerned faces. I appreciate some of that might be this whole bipartisan stuff, and they're down across, and they want to, I get that. But it's still, I can sense some genuine concern there. And as a layman sitting in the Gulf, it concerns me. So I think Trump has already lasted longer than I ever thought he would. I think many people would have assumed he would have gotten bored by now. Never in a million years, they think he'd ever get this far. Yeah, exactly. So this is the thing. So I think he's already kind of impressed most of us in this front. I think he'll go on a bit more, but the fact is, at some point, as you say, the global economy, the situation is not good. It's pretty dire. I mean, if this goes on any longer, their amplifications are huge. We can already see it happening. It's just going to get worse with every passing day. So I think at some point he'll try and walk talk his way out of this.
for another couple of weeks and maybe, and just continues to say we've won the war, which is, I mean, I'm sitting here, this is clearly not the case. You can keep talking it into existence, okay? But ultimately, it's not going to happen. So, I think ultimately what will happen is, Trump will decide that his goals or his objectives were, let's say, X and Y, when initially they were A and B. He will claim that these are his goals. Let's say he'll say that my goal was to basically wipe out the ballistic missile threat. That's been done. It was to wipe out maybe, I think he's talking about that. Exactly. He's going to go and see precisely. So, that's the thing. He's going to go and see what he's already done. Claim, that was my objective. He can go away claiming he's done what he's needed to do. And Iran can turn around and say, you know what we survived. So, that's, I mean, that's, that's, I think the clearest way that we move away from this. But, obviously, does this end the problem? No. You're going to have a neuron, which is incredibly, you know, angry about what's been going on. You're going to have a gulf, which is already, I think, publicly or privately, really upset with the way this thing's been going on. I mean, you're hearing some really harsh rhetoric again, publicly and privately towards what's happening in Iran. Iranians are trying to claim that, oh, there are brothers and we're not intending on doing this. I mean, we have moved way beyond, you know, military targets. We're seeing all kinds of things being hit. The energy industry is being hit. And these are not small installations or facilities that are being hit. Saudi Arabia, the biggest refinery in Rustlanura is being targeted. Bahrain, the only refineries being targeted. I mean, Adnaq Ruayz. These are enormous. These are very important pieces of heart, you know, of infrastructure. And they're being hit. So, I mean, whatever Iran claim is claiming, I don't know, the one interesting thing is, and I'm sitting in Oman at the moment, there's, although, although the Iranians have not really hit Oman much, still the fact that they've I mean, Dukham and Salala, the tag forms twice now in the space in two weeks, that still surprises me because I thought Oman was the last, you know, the GCC country standing to actually back Iran or be close to them. There's generally a sense here that even those hits, they don't, they don't blame the Iranians, which is a very fascinating phenomenon to me. I talk to many, you know, I've talked to a few of my audiences who have been here and the average Oman here is not necessarily pinning the blame on Iran, which, you know, take that as you will. We'll be back after this short break. Hey everyone, Trevor Hall here, host of the Mining Stock Daily podcast, and CEO of Clear Community Network. 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So now we're at this kind of any tanker sitting laden with fuel in the golf is kind of like a sitting duck kind of a floating target for pot shots should take on want to kind of further escalate the situation any moment or or strict fear at any moment. So let's talk through a couple of the different ways this is already manifesting. And because I think I I'm curious to see what you think as well with the current price reaction because every analyst I spoken with is like how the hack are we not just past 100 but like climbing climbing climbing climbing climbing you saw obviously the explosive open in Asian markets this past Monday where we had about a $25 barrel bump on open and then we crack you've got one point we crashed $35 in today like the largest at least nominal dollar range that oil has ever traded. There's a bunch of different ways that this could that this could and is hitting the market. So I want to talk through a couple of them and I'm curious to get your thoughts on how each of these pieces moves together both in your mind and how our guest media is tracking this as well. So one of the things that I've been really focused on is this idea of an air pocket that's kind of opened up in Asian trade that at this stage were about two weeks into no flow coming out of out of the straighter at least very negligible flow coming out of the straight. But two weeks ago we still had fully liant anchors leaving with crude for Asia they take a month maybe a little bit more to get to their destinations. Now you have basically a two week quarter billion barrel air pocket in normal trade out of the golf that is kind of just empty and kind of floating along on the water when that hits any of this expectation game any of this jawbone and ceases to become useful because well then you're drawing 10 15 million barrels a day from Asian stockpiles which is obviously just an untenable volume. So one I'm just curious on like how you're thinking about the price reaction and whether or not there is this I'm curious what you think about this air pocket you know theory that I'm working with. And then also we've already seen so there's the the closures to the straight from those what I've been like kind of like a kitch garden hose theoretically you can open that kink and it we can resume lots of logistical issues obviously way too many tankers on both sides they're already clamoring for the same morings after this. But we've also seen upwards of seven million barrels a day of production shut in in the golf already between a rock quaint some in Saudi and Emirates although they're a little cage here with the exact numbers they're releasing as you well know I think both Saudis and the Emirates are very very wary to kind of share any kind of evidence of weakness on this file in particular so a little bit undeniable on the Iraqi and Kuwaiti side but you've got a little bit more flex in the Emirates and and Saudi systems. And then also I think you mentioned the refinery is getting hit but so far at least as far as I'm aware most of the actual upstream losses have been shut in we haven't seen any major hits to upstream infrastructure yet so talk me through kind of how you're thinking about the physical oil market disruption the time-ons you're looking at and your differentiation between these different types of upstream assets or kind of physical assets in the region relative to how all this is working. Sure I mean we're talking about the oil price I think the thing is I think we've moved away very quickly from any kind of I mean basically what I'm getting at is the oil price is clearly not moving based on fundamentals anymore I think the way we've seen the volatility that we've seen over the last week in particular it is off the charts you mentioned it earlier yeah it's just headline after headline and we're dealing right now with a crisis that's evolving so quickly the headlines are coming out so quickly and on top of everything you have individuals who are so willing to talk all the time and obviously the contradictions are just throwing people off entirely I think the traders are trying desperately to try and price to smart and I think they're up to a point they're failing and then we're struggling we're basically struggling in this really complicated situation. When it comes to the facilities and what we're seeing what we're not seeing look you're right yes when it comes to the upstream everything so far we're talking predominantly about shut-ins some major fields have been attempted they're having attempted hits on these fields luckily from what we can see that hasn't happened great I don't know if there was actually intention to hit these fields or not but whatever the case thank God they haven't been. But the thing is if we talk yeah if we talk about the the figures right now you mentioned about seven so we came out with figures with about 6.2 to 6.9 earlier this month this week that was Monday I think as of now the change I think the only change that we've really seen since then to now would be Kuwait's going down a little bit further so I think personally as far as Argus is concerned I think we'd look at the about closer to maybe closer to eight at this point in time man that's been taken off yeah that's been that's been taken off at least from those five countries so Saudi Arabia UAE Kuwait Iraq. Can I ask one quick question on these shut-ins before we move on?
Because one thing that often comes up and I'm asked and I don't have a great answer forever because I think this is one of those things that no one ever knows is given the pace and the kind of intensity with which these fields were shut in, which is rivaling the largest OPEC cuts in history, larger even even the large OPEC cuts, you know, a rock didn't shut in all of Basra. Is this, is there going to be damage in what you're hearing? Is there going to be damage to reservoirs, ultimate recoverability? How long are these fields in a take to get back up and running? These are the answers that I feel like there's always a debate around like do shut-ins caused permanent damage. Obviously, OPEC has managed to do this historically. Obviously, they did the COVID cut and they brought the production back, the sum troubles, but not mostly from the golf producers. So is there a turn of damage and like are we talking weeks a month or more to get any of this production back up and running? So what I'm going to do is talk about what I know. If I don't know, if I don't know things about certain countries, I'm not going to even get to go there. So, I can talk about Saudi Arabia, I can talk about Kuwait because I've spoken to people here. We actually, Aramco, they had their results called a couple of days ago and I got to ask this question to Amin Asso to say, look, this is clearly an issue. We're seeing shut-ins. Aramco is still being supercagey about the fact that they're having to curtail some production. We're seeing some kind of, I think the terminology is being contested a little bit, but I think we have it on good authority that yes, the Saudis have caught in the region of between 2.2 to 2.5 in production. That's from four major fields, all offshore. So that would be Safani, the big one, Marjan, Zaluf and Abusafo. So their decision was to go for the offshore field partly as well because of frankly danger, because I think those fields and the Gulf are probably also sitting ducks in case someone does want to hit them probably, that would be an issue. So I think they've done that for safety reasons. Now that's Saudi Arabia. I did put this to him to say, look, are we, I kept it general, are we going to have an issue when it comes to bringing this production back once, if and when, hopefully not if, but when, this episode is behind us. I mean, the point that he was trying to make was pretty straightforward. Look, you tend to have issues in returning and actually bring the production back when you're dealing with fields that are, maybe this enhanced all recovery, or they're just difficult fields, or there's high water cut, things like this. When a field is not a straightforward, I guess they keep talking about easier on the Middle East, most of these countries are still enjoying large chunks of their production is considered easy oil. So these, those projects should, by and large, be okay when they come back. And this is actually part of the planning that many of these countries are going through to shut in or to decide which fields do they shut in. So as far as around coast concerned, at least those that so far that they have taken off line, they doesn't expect to be, they don't expect it to be massive damage. In terms of timelines, they were talking about, you know, matter of days to a couple of weeks at most, okay. That was his own timeline. I'm happy to sort of work with that. The Kuwaitis, again, similar. The Kuwaitis have no offshore oil. So in a sense, that's a good thing because from my experience of looking how Iran used to do this back in the day, not back in the day, but even, you know, when production is much lower because the sanctions, you know, they suffered most at the fields that they took off line offshore. That's where they actually were not able to return production back to those levels. They struggled. So when a, based on that same logic, I mean, I speak to Kuwaitis and I said, the fact that they're all onshore, good or bad, good. So that's definitely good. I think what I was told is, first of all, I think Kuwaiti production from about 2.6 is currently at about, let's say, 1.1, 1.2. So that's where they are currently. I think from the way they've planned this, it is such that maybe about 75, 75% of the fields that have been shut in should be able to come back within a matter of days. And then maybe about 20 to 25% of those fields will take a bit longer, possibly a month, maybe a bit more. And Kuwait has in the north, they have some more, so it's quote unquote, difficult oil up in the north. So I can see where this is happening. But a lot of their fields are mature as well. So they're having to do a bit of extra work at those. So in terms of the time frames, I think this is what we're looking at. Generally, at least in these two countries, there doesn't seem to be much worry about, you know, long term damage or, you know, loss of production, which is a good thing. No one should ever say it's not going to happen. But at least, I mean, we're in a part of the world who has dealt with this kind of thing before multiple times. And you know, they have the best technology available to them. So I wouldn't expect too much. I think the one area where they've had issues in the past has been the neutral zone offshore. They struggled to bring that back, you know, after it was shut in for several years. If you remember, there was a long, long going dispute between the Saudis and Kuwaitis, so it was on shut in. I think generally they've struggled to bring that back to other levels that it was producing up before anyway. But from my understanding is the Kluftu is also already offline. That's one of the fields that they've taken offline as well. All right. Yeah, I was just going to pick on obviously your conversation and I think it's very, very obvious, very cool. You were, you got to ask questions to set your MCO CEO. They I think have been, obviously, I think the most impressive and nimble and prepared for this crisis. And obviously, I think the East West pipeline itself was built during the 80s specifically for this kind of crisis contingency in mind. So could you talk through for those that people, for those listeners that aren't aware of what the East West pipeline or the petroline is, what the port of Yandu is, what type of flow that set your MCO is expecting to be able to transition that direction and kind of what we're seeing so far there. Sure. So under normal circumstances, we have a situation where Saudi, Saudi, uncle, Saudi Arabia in general just exports the majority of its crew through the straight-of-form laws as to most of the countries in that kind of surrounding that body of the water. Now the East West pipeline under normal circumstances, this is a pipeline which it's, I think the nameplate capacity here has been, for years, it was discussed as 5 million browse per day. We're talking 7 million browse per day capacity. Under normal circumstances, you have about 2 million browse per day that will travel from the East to the country across the country to the West where you have several refining and pet plants and you have Yandu where terminal where they do already exports sun under normal circumstances. But also a lot of the crew that is used to refine for domestic consumption also goes down and goes along this pipeline. That's a normal situation. Now obviously, with what's happening in the straight-of-form laws, again, this line has come into the spotlight because this is essentially their big, not the solution but at least there's something to counteract what's going on at the moment because they're able not to send everything that they would send from the straight-of-form laws out, it's simply you cannot replace that volume of crew. Right now, the 2 million browse per day that's already going, let's assume that needs to stay. This is for domestic consumption. There's about, let's say, 4.5 to 5 million browse per day of extra capacity, that the Saudis are now able to use and utilize to actually move a big chunk of the crew that they would typically send out normally from the straight-of-form laws across the country to Yandu where they have, admittedly, this is incredibly more, this is a lot more crew than they have ever typically had to shift out of fashion. Yeah, like this is all new. By my numbers, I don't think Yandu has ever exported sustainably more than 2.5 million barrels a day, total liquids on the part. And now we're talking about how we're just 6 plus million, right? Precisely. Yeah, so exactly. So this is a new territory, okay? But essentially, the Saudis, similar to what the Emirats are doing this term, I heard this term, they're sweating the assets. I think they're basically pushing these assets to their maximum capacity to make sure that they can at least, and this was, I mean, not so-so-one words, basically meet the majority of their commitments to their customers. There's no way they're going to actually replace everything, but they're doing their best to do that. And then we've been seeing in the last couple of days, you know, the fact that the Saudis have chartered all kinds of tankers to come and help them move this crew. Obviously, that crew can go north towards the Suez Canal or it can go south rather by the Menda. But again, this is another, you know, critical, potential flashpoint here, potential obstacle that some are, some are not talking about. People have questioned, okay, where are the Houthis and all this? They've been quite quiet. Very quiet so far. So what we saw for the last- Yeah, so what we've seen over the last couple of years essentially has been the Houthis causing all kinds of trouble around the Bavond Menda of Strait, you know, as part of this, you know, fight against Israel and the US and so forth. Yet, so far, we've seen none of that. I mean, they've been incredibly quiet, even in rhetoric. Very quiet. But one thing that all this lingering risk here is there that even if the Saudis do manage to actually move all this crew and get it off the other side to the Houthis now get it, you know, jump into action and go actually, we're here.
I think the relationship between the Hothi and Riyadh has over the years at least settled a bit. So who knows, hopefully that would be enough to maybe stop them from thinking about doing such a thing. But you never know. I mean, one more thing is also that I think I've been asked about kind of the different proxy groups that made up Iran's proxy network. I think when someone thinks about it too suplicitly everyone assumes, okay, these are Iran's proxy groups. They look to Tehran for all kind for for any and all instruction. They're all the same. They're just waiting for the Supreme Leader to say what to do. Look, to an extent, yes, all of these groups have relations. But I think at least from where I'm standing, there are degrees of relationship. And I think of all of those groups to me at least. It feels like the Hothis are the most autonomous of all of them. In the sense that yes, they will look to Tehran and they will absolutely get support and funding and they might get instruction. But I think as well as that, Hothis clearly also have their own intentions, their own ambitions, their own interests that they will follow. And if at times they are aligned with Iran, wonderful. But if they aren't, I think sometimes they'll go around direction. Some may disagree with me. That's fine. But I'm just saying this is the way I view this relationship. So I think this is where the Saudis are. Yes, it's very impressive the way they're actually managing to do this. And yeah, let's just hope that the biggest problems that we have going forward are the Hothis and nothing more. The other obvious, so there's the two. Obviously, the West pipeline is the single greatest diverting pathway for the street farmers. I think just using nice road numbers. So I think actually, I've tried to be very specific at various points. But we're talking big round, kind of gargantuan numbers. I think it's best to use rough numbers here. Let's say we had 20 million barrels a day running to the straight before, give or take total liquids. Let's say you could put, let's say you had five million barrels going east, west pipeline before, get a five million more barrels. Again, we've never seen it done. There's questions about whether a Yanbu can actually manage that kind of flow itself. But let's say it happens. Let's take St. Raymond co-enteral it its word. And that reduces it from a 20 million barrel a day existential crisis to a 15 million barrel a day, existential crisis. At that stage, it's still the same, it's obviously slightly better, but it's still the same existential crisis. There's no degree really of price response. It's going to fill that hole. There's one other path here that the Emirates have that kind of transits and kind of bypasses the straight out through the port of Fuzera. But at least in my estimates, in my tracking, well, I've heard that people were ramping. I have not yet seen. I've seen the the tanker tracking pop in Yanbu, I think from two million, already four million and on route higher. But I'm not yet seeing the same increase in flow coming through Fuzera. Is this because of the attacks or what are you hearing about what the Emirates are doing? I mean, from what we're hearing, again, this term sweating the acids is something I heard from the Emirates side as well. Essentially, they're trying to push, I think if I'm not mistaken, capacity this pipeline is 1.5, is that right? I think they're trying to push this to about 1.6, 1.7. So they're really just like pushing it as hard as it can. I mean, my simple mind, I always think when you're really pushing infrastructure this hard, I mean, you're asking for something to go wrong. I mean, I hope I'm wrong, but then I guess in this industry, name plate capacity is nothing but a number because you always push past it. You don't refine anything else. So at the moment, at the moment, what we're hearing is that they're actually doing this and they're, they are sending more through. But if we're not seeing it, then I'm, who am I to tell you you're wrong? But I'm just saying at the moment, yeah, that the suggestion is that certainly they are doing this and they're trying to bypass at least some of the problem that they're facing in the state of our needs. So yeah, you have the Saudis, you have the Emirates, and you have them much, much lesser known, earringing out that, but they're obviously the problem with the moment. So no need to talk about the just. Well, that's actually, I mean, let's let's dwell on Iran for a second and everyone's, you know, everyone's like, oh, while the war, surely they're going to bomb Cargai'l and first, surely. But if anything, the only country that is actually continued to export it nearly full tilt of this crisis has been Iran itself. So like, talk me through how you're viewing that. I think it's, I think for a lot of observers, it's very hard to be like, why? Why? Why is the United States letting Iran's targeting all these ships? If anything, the whole framework here was that Trump was going to basically take over Iran's oil, Allah, Venezuela. So what the heck's going on with with Cargai'l? Can you talk me through a little bit about your hearing about why? Why do you run into the public so much oil and why Trump's letting them get away with it? Sure. And I'm going to tell you so long as you tell me as well you think, because I think this is interesting. I've been asked this before. So I'm trying to get as much as I can as well back. But look, I think this ultimately boils down to either side's goals here, right? Iran's goal right now is to cause, and as much chaos as they can, and cause as much pain as they can, to deter its quote unquote enemies from basically even thinking about things again. Do they care about, you know, I don't know, basically getting sky sky sky high oil prices? Not particularly. Do they particularly care about targeting tanker X and Y? No, they have what their mission right now is chaos. Whereas on the other side, I think if if the US is going to play an exact same game, they're going to, I mean, rightly or wrongly, it's, excuse me, it sounds weird to say this in war, but like they're being held to a higher standard here. In the sense that the US does not want to go and whereas Iran wants to disrupt oil, the flow of oil around the world and disrupt markets, obviously the US is not trying to do that. The US least so far, the majority of their hits, at least in what they've been saying they've been doing because you can claim anything in war and hopefully the person's telling the truth. But I think the intention here has seems to have been target Iran's military target, Iran's navy target any kind of assets that are related to the Islamic Republic target any assets that were or areas that were linked to the oppressive forces in Iran that are pressing the people. This has been the goal, at least stated goal. And although we're seeing a lot of a huge amount of damage to in the country, the intention seems to be that. The intention does not mean does not has not appeared to be go after anything that will impact global flows, right? Even the energy targets that you've seen within Iran have been, I mean, local. In the same thing that we saw on June, they've been, they've been hits that will hurt internally. It'll basically hurt, you know, the supply of fuel to people. They're trying to make people's lives more difficult. I suppose in the intention of getting them angry and actually help them basically topple the government or topple the regime or topple the leadership. The idea is to make life difficult internally rather than impact on what's happening in the global markets. Iran right now doesn't care about impacting the markets. It will do whatever it needs to do. And you even heard today from from, you know, the new Supreme Leader that, you know, we're going to continue to do this as long as we feel necessary. We're not going to stop now. So I don't know. I mean, and this is, that's what, to me, I put it down to just the fact that there's different goals here. And I feel like if the US were to go and start sinking tankers with crews on them, with actual people on these ships and start basically, you know, going after them without any care in the world for the impact on people, people's lives, environment, they could create all kinds of enormous, you know, they could be casualties, but also just enormous mess in this part of the world, right? And I think people will come after them and say, what on earth are you doing? This is what I come, this is what I mean by they're being held to a different standard. So I don't know. I feel like this is part of the calculus here because, yes, naturally they can go and start bombing Iranian tankers in order, but does that really, you know, solve the problem that they claim to be trying to fix? Not really. No, I'd agree. And I think that the so far at least it seems like the Trump administration, if their main pressure point is oil, the last thing that they're going to do is try to further constrain the supply of oil. That's the only oil getting out, that's still oil getting out. And then their mind that's actually maybe a good thing. But it is interesting though to juxtapose this against Venezuela only two two months ago, basically when you had like a full bore blockade of Venezuela and tankers, you chased down captured tankers. And again, even thus far in this war, there was always those already the deeply notorious case of the US Navy, the US Naval submarine sinking and Iranian frigate coming back from India in international waters, not even in the fight, which is again, by all intents and purposes, potentially a war crime. So I think all of this together, like it's funny, funny is a terrible word. It is conflicted with the fact that they agree more eyes are on them, but they're doing lots of things already, that they probably shouldn't be doing if all the eyes are on them. And they very recently have the exact
of Venezuela and blockading, capturing tankers, et cetera. So it is just interesting. And again, it makes me wonder, so much of this from me comes back to the fact. And I think you mentioned this earlier, that it's just so clear to me that the Trump administration does not, did not plan to be this far into this already. They do not have a plan. They're kind of making this up as they go along. And yeah. And then yesterday as well, the IRGC, I think, had a statement outer. I think everyone's just like speaking by proclamation right now. So the IRGC proclaimed that if anyone takes Carg Island, if they bomb Carg Island, well, then all of a sudden, they view all other regional port infrastructure as a viable target. So it's interesting even in some of these statements that in your mind, does the IRGC view some of those, like are there things that they are purposely not targeting yet that should someone take Carg Island? Would they materially ramp against Ross to nor the loadings or like anything else? This is the issue. I think-- I used this term before. But I think right now you have a situation where you have-- I think these earlys are being on the quieter side. You sort of hear more of the US and you're on right now. They're just talking at each other. They're barking at each other. They're trying to posture at each other. And if you really dig into what each other is saying, you're going to find so many holes. You have this IRGC spokesman who's now become this deface that you're seeing every other day coming on. Talking about the fact that if you start to target energy, we're going to target energy. Well, brother, you've been targeting energy for us. We're going to have. 100%. 100%. Yeah, you start to question your own sanity because you're seeing this stuff. So I think it's about basically-- it's just an escalation game, right? So Iran is constantly threatening that we're already doing this, but we could be doing this. And we could be doing this. So this is the issue. And I mean, this is what I struggle with. And also, unfortunately, when it comes to IRGC, you have a lot of commanders and generals who are very willing to talk. And I don't know if it's necessarily right to mention this to give this parallel here, but in the same way that there have been some targets that a lot of people, particularly the Iranian government, have not been able to explain over the last week and a half, which naturally makes people go, OK, so that was the IRGC and not necessarily the government. This is the complex nature of the Iranian leadership. You have so many different power centers. Each who think they have full control or full right to do what they want, and ultimately, in a time of war, all is fair, right? So in the same way that you'll have different pockets of the IRGC attacking different places at different times, I think you're also having a lot of different IRGC officials coming on and saying all kinds of things, which aren't necessarily mesh with others you're saying. And just the Iranian system right now, that's how it's confusing at the most normal of times. Now it's even a next level. And you saw it perfectly last weekend when you had the Iranian president come out with this big apology to the Gulf states about, we're so sorry, we're not going to do this again. Look, his apology had a caveat, which was worrying for everyone, which is basically, if an attack originates near soil, we have the right. That in itself was concerning because you could claim all kinds of things under the sun and claim it came from here and there we are in an attack. But the fact is, within hours of him making that statement, you had at least one more member of this triumvirate who was supposed to be leading the country before the new supreme leader was brought in, turned around saying, no, no, he misspoke. You had the RG saying, he's missingpoke. And then you had the judiciary chief saying he misspoke. I mean, this is next level. So people had respite for maybe an hour? Yeah, because I think the other thing I was curious about in this exact same vein, this idea of this fractured leadership of Iran in a time of four, which is a deeply concerning thing in normal moments, let alone like literally in a hot war that is now holding the global energy sector and global economy hostage. Obviously, I think one of the big questions here is, is there any way to get even partial flow through the straight resumed? And on that level, there had been rumors or there had been statements that maybe, well, maybe they had agreed to a deal with the Chinese, Chinese tankers who passed through, and then yesterday, yesterday, they were before I'm losing track of time, maybe it was the Indians that they could have something go through. Yesterday, there was a tank, I think it was a container ship, a Chinese container ship that tried to get through the straight, basically got attacked, and then completely did a U-turn and basically went back into the Gulf. So I think this is also a question. Then I think our, in some ways, it almost seems like like the Houthis had a more linear chain of command because they did this. They allowed the, you know, Chinese ships to pass through, is only Western or US and Israel allied ships that they were going after, but they actually seemed more capable at differentiating those ships than Iran seems to be able to, talk to me even a little bit about what you're carrying on that and like, has there been any kind of like, we'll make a grand bargain with China or India in order to get ships flowing to them again, but then is it just other members of the regime like Nernar that defeats the entire purpose of this pressure point we have in the global economy? Like, what does that look like? - Yeah, so I mean, I was looking at this earlier today. Look, when I come to Houthis, the Houthis, I mean, their MO here was basically, we're gonna attack any US linked, Israeli linked vessels full stop. I mean, this was it. So the assumption was that anyone else was free. However, I mean, we also wouldn't even be able to see who was being targeted. I mean, some of the links to Israel and the US were so, so miniscule and threadberry was surprising. And many of them people, as much as you would dig, you couldn't find the link. So, I mean, yes, definitely there was the clear or chain of command and there was one person calling the shots and it was clear. Right now, as far as regarding this idea about allowing certain ones, not allowing others, I continue to see people talking about such statements and I genuinely, pandon heart have not seen an actual formal statement clearly saying, this is policy. And this is the issue because it's what I said before. I think you're in a place where there are certain people who are saying certain things to try and placate certain countries and certain groups. But I don't think this is actual formal policy that is clear to all. And I think you'll have a situation where, I think obviously what is targeting the ships in the state of Hormuz, I don't believe are all from one launch pad in one area. Iran's a vast country. There's different launching pads across the country. So different groups are dealing with different ambitions, different targets. So I feel like there is not a clarity. There is not an inter-twining of these, all of these, the expectation is not one across all of these. And that's obviously showing itself because there is not co-herent policy amongst these different groups. And this is problematic, but at the same time, possibly it's a good thing because showing, I say keep saying chaos, this is maximum chaos. So I think they're basically trying to make things as difficult for anyone. And if people are not aware of what's going to happen next, hey, they're achieving their goal. So I wouldn't be surprised if this continues. We do actually see something a bit more formal with respect to some them agreement between the Chinese and the Indians or some others, probably Chinese first. But I think probably just not yet. I think it's more of a measure to take going forward if we see that this could be extending into weeks and months, certainly, because something absolutely has to get. And already, I think the Chinese are still getting some crude, clear-less, straight-up or moves, not as much as they did in the normal times. But there is still some there. But so I think they're in and given also all those stocks that they've been building over the last year and a half. They're not in a terrible spot at the moment. But then, yeah, at some point, they too will say, look, we have to find some kind of a solution. Yeah, I mean, obviously, Chinese strategic stock building has been like the topic du jour for a lot of the past year. And it's seeming extraordinarily prescient right now. So obviously, I think, Natter, we could talk about this forever. And I think we will probably be talking about this forever after this podcast ends. But to kind of cap this off, I'm going to ask you a deeply, deeply unfair question, just because I get asked the same question all the time. Two weeks, four weeks, six weeks forward. What does this look like? Where are we going to be in a month's time? Is this over? Are we in a worse state? Are we in some kind of quasi-hybrid? Like, what are we looking like? I will not hold you personally accountable for any of this comment. I'm just, this is using your best, using your expertise to even kind of like spitball into the fog of war here. - Look, if I'm going to be spitballing, if I had to make a guess, I think we, this does continue from the couple of weeks minimum. I think I don't see it clean away. My worry is I don't see a clean way in which this ends. I think the second option you gave me, what did you say? You said quasi, what was it? - Quasi-hybrid, kind of, this is a scenario where like, you would have Indian and Chinese tankers that could pass through maybe. You could have some kind of offset. - I feel like there's like a partial closure. - Yeah, I feel like that's more likely, I think we're going to get to a point where things may cool down, but not completely stop. But there's a point where at least the world economy can function again in a lower level. I cannot see a world in which Trump is going to be as engaged in this several weeks down the line. I just simply cannot see it. It may.
happen and I will be just as surprised as everyone else. But at some point, I feel like there's going to be have to be some kind of reassessment, particularly on the US side of what are we doing here and how long can this continue for? Because this is a very, very costly war, not only for the global economy, but for the US. And this has been going on for weeks, well before the strikes even happen. Everyone kept talking about how much it's costing the US just to have all this hardware sitting in the region, which fairly fair enough, a lot of analysts said something has to happen because it would be crazy for it not to happen after moving on this hardware over. So fair enough. So this is a thing I think at some point they have to take the decision because Iran is there, Iran's not going anywhere. I think at some point they have to see something from the US to say, okay, fine, if you guys want to stop, we want to stop, but these are our terms and then where we go from here. But my real concern is, you know, if this does end in a way that is not clean, I do fear slightly for what Iran looks like after this because already it was a country just, you know, with a whole basket of issues everywhere you look, there was some kind of structural problem from the economy, from the social power fabric, everything is just there. Anyone who lives there can tell you can sit and talk for hours on this. And this has not made things any better. I mean, right now the so-called new supreme leader who I still find very fascinating nobody has seen. And I still, this is something that I'm constantly just trying to look at for. And today came out with his first, you know, announcement, which was read by a presenter. I mean, geez, you can give us, give us a glimpse of this individual because apparently a lot of bad things happen to those people who are around him at the time. So I don't know what shape he's in. But, yeah, all the initial signs are slightly worrying, not only for Iran, but all even the Gulf. I mean, they're going to, if this does end in the end in a clean way, the Gulf are going to have a neighbor who is, I mean, frankly, a little bit has shown a willingness and the capability to be rather unstable and destabilizing rather, which is not going to do them any favors, particularly considering their own grand designs on the future. I mean, you have Gulf countries which are a fantastic plans for the future and unfortunately, it makes you sad to say this is someone who lives in the UAE. It's this is, it's going to take a hit unfortunately. This is done, this is already done a lot of damage and it's it's very, very unfortunate for these countries. And I hope, I hope that whatever happens. You're particularly for the brand of a, of a jurisdiction like Dubai, right? Yeah. I mean, they have been working so hard to, to, to build this image and, and to their credit. I mean, they've been doing a wonderful job with it. But the thing is, for this to work, you have to have a somewhat safe neighborhood and, and they're wrong could prove problematic. So, whatever happens, I think, for the greater good or for the good of the region, I hope this is this ends in a way that that their can actually be, you know, relationships going forward. Whoever is leading your own to the point. Yeah. And again, I like, again, I never thought I'd see this and my worry going forward is that if a run scene how effective it can be at throttling this way ever mose, it seems like it's just more like, now that that mouses the exercise, it's going to be that much easier to do in the future. We're going to have to leave it there. I think you so much for joining us, Natter. I think you've obviously had an exceptionally volatile week yourself. So we appreciate you joining us on the podcast. And it's great to finally chat with you always saying earlier that we've chatted on WhatsApp for years. And this is actually the first like phone conversation we've ever really had. So, thank you for joining us. And maybe we'll have you back on in a month if things haven't, if, if, if the worst has, has still yet come to pass. Sure, let's hope that's not the case, but thank you, Roy. It's been great to actually do this. It's a really long time coming, so thank you, as long as I'm fine. The information presented should not be considered investment advice. The clear-comer network and its affiliates are not responsible for any loss arising from any investment decision in connection with material presented herein. Please do your own research and speak with a licensed financial representative before making any investment decisions.
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