Javier Blas on Why Oil Could Go Much, Much Higher

Thanks for listening to Odd Lots. Follow the show on Amazon Music for more future episodes, or just ask Alexa, play the Odd Lots podcast on Amazon Music. At Tui, we give you more. More outfit choices with 20 kilograms of luggage allowance as standard. More hotels built around what you love, like that swim up suite. More, race you to the bottom, water parks on site. More, oh, that looks good. Food options from poolside snacks to ala cart dining. Book on app, in store or online. You book it, Tui sort it. At all and after protected keys and seas apply, selected hotels only see website for details. Bloomberg Audio Studios, podcasts, radio, news. Hello and welcome to another episode of the Odd Lots podcast. I'm Tracy Allaway. And I'm Joe Wysenthal. Joe, one of the weirdnesses of our current market moment is that you have all these oil analysts who keep talking about how the straight of form moves closure is like the theoretical exercise that the entire market used to have nightmares about. This was like the big risk in the entire oil market. And yet, if you look at the actual price of oil and where it's trading, I mean, it's gone up. It's gone up a lot. But it's not. It doesn't strike me as panic levels. Yeah, I mean, it's gone up a lot. And it started the year, I'm just looking at Brent. It started the year around 60. It had climbed to around 70 before the war started, now at 115. So it's a huge move in some sense. But it's not even at 2022 levels, which were very high. And all that's true. And yet, there's this disconnect that I don't understand. Like, why isn't it at 200 yet? Or whatever, because straight of form moves is closed, et cetera. Why isn't it even higher? But then the other thing is, OK, prices are up a lot. But then you look at what governments around the world are doing. And it's like hair on fire panic, particularly in East Asia. Joe, you get stories about Korean government workers being told to drive to work, depending whether their license plate number ends in even an odd. Like, extreme. Rationing, yeah. And so I'm trying to, like, it still feels like there are some puzzle pieces here that I'm trying to fit together. Absolutely. The other thing I would say is it feels also like there's this disconnect between what's going on in the financial world and what's going on in the physical world. Which I don't get. Yeah. And there was this really interesting note. This wasn't purely related to oil, but you could kind of extrapolate from it. But it was from Bloomberg Green Markets the other day. And they were talking about Urea coming out of the Middle East and the pricing that they've been seeing from it. And one of the analysts says the real issue on pricing is that while sellers and buyers can quote almost any price, nothing is actually getting out of the Gulf, that reality makes most discussion academic rather than representative of actual business. So I wonder how much of that is happening in the oil market as well, where you have all these quotes that are flashing across the screen. But like, for barrels that are essentially not going anywhere for a while. Yeah. And I still don't totally get it. Because right, these things do have to settle at some point. And I don't know. I'm confused. And then there were those headlines early on about how physical oil, coated in Oman, were $50 a barrel above the front month. Many things I don't understand. So we have to talk to someone who can answer all these questions for us. The great thing about an oil crisis, Joe, is that we will learn about all the oil benchmarks throughout the entire world. OK, well, we really do have the perfect guest, someone who's been on the show before, who a lot of people have requested us to bring back to talk about this particular moment in time. So without further ado, we have, of course, Javier Blas, he is the energy and commodities columnist over at Bloomberg, been writing about the stuff for a very long time. Javier, thank you so much for coming back on all thoughts. My pleasure. Seems that every time that you come back, it's because of a crisis. Yep, that's right. OK, well, let's just jump into it. How bad is this one? It's bad. And it could get really bad. But in any energy crisis, there are two elements that are very important. One is the size of the disruption, and the size is huge. And then is the length of that disruption, how long it goes. And so far, the disruption is relatively short-lived. We have been a month. So that's one of the reasons why we are not at crazy high oil prices yet. It's just because it's a bit too early. Give it a few more weeks, and certainly, we will get there. But so far, the crisis is relatively short-lived. How short-lived? Well, look at 2022 with Russia. We are still at it four years later. Or look at how long it took for the resolution of the invasion of Kuwait in 1990. That was about eight months. So at times, we forget how long other crises were. And they were a lot longer than this one. OK. So now connect that to what we're seeing with governments around the world already going into rationing mode. Almost everywhere you look, particularly, you see it a lot in Africa already, a lot in East Asia. If the story is, OK, the price hikes haven't exploded to crazy high levels because this is still short-lived, maybe there's some buffer stocks, why this rationing reality? Well, you are absolutely right that what is really cashing in the market right now is a number of buffers that we are going through. One is regular inventories that every country, every refinery has to normal functioning. Then it's also the strategic inventories that some countries own, particularly industrialized countries like the United States, Europe, Japan, and also China. Those have been mobilized in most places have been released. And also we enter the crisis with a market that was oversupplied. There was even floating storage. That is when an oil tanker has been loaded, it's on the high seas, but they cannot find a buyer and just basically sits on the high seas looking for someone who will take the oil. And we have quite a lot of that just going into the crisis. So there was quite an element of buffer through the system and probably a larger buffer than in normal circumstances because the market was oversupplied. That is helping to cushion or to mitigate the crisis. Where we are seeing some actions by government is where countries are closer to the crisis, which is the straight up hormones. So the closer that you are to that location, the more action you need to take because you typically depend more of that flow of oil coming from the Middle East and also because you are impacted earlier. If you are moving oil from, say Saudi Arabia into India, that's only a few days at most a week of sailing time. If you are moving that to, say the Philippines, that's about 15 days. It's longer if you are moving that oil into Europe, probably around three weeks. And it's even longer if you are moving that oil into, say the United States where Saudi oil takes about 40 days. So all of that means that the crisis is felt in some places quicker than in other places. Also, it's how the global oil market works. And to put it in quite simple terms, and I'm afraid that I have to go with colonial vocabulary, but the oil market is divided in two large chunks. East of Sweden and West of Sweden. This is like, you know, the British Empire was still around and everything was East or West of the Sweden Canal. Countries that are East of Sweden, mostly Asia, rely a lot on Middle East oil these days, and therefore they are impacted earlier on the crisis. West of Sweden, Europe, Western Europe, and the whole American continent is a bit detached from that market and therefore the crisis will hit them much later. So I know a bunch of EMH bros are gonna get mad at me for even asking this, but like, could you get a situation where you can't get oil at any price in certain countries? I mean, in an absolutely full-blown crisis where we have the state of hormones close for many months, we maybe have a land war in Iran, yes, I think that we can get into a situation that no matter what you are offering for a barrel of oil, no one is willing to sell, because that will be a wall of export bonds where every country is trying to keep the oil for themselves, et cetera, and I think that, yes, I can see a scenario in which no matter how much you are paying for a barrel of oil, you may not find a buyer or you may find enough barrels for whatever you are offering, but that will be in a really extreme, extreme situation. I have a very rudimentary oil 101 class. Actually, I found a free book in my side work called Oil 101 yesterday, and I picked it up. I should have read it. Anyone throw that out right now. I don't know, she's crazy. No, it's really, it's like a full-on book. Do you know this book, Morgan Downey? It's a very thick book, Oil 101. Someone just put it on my sidewalk. Anyway, I have an Oil 101. Wait, are you sure someone's not like laying a trap for you? They're sighing out of it. Trying to lure you out of your house? But I'm gonna ask you an Oil 101 question, because when we see, okay, Brent Crude, 115.25 is at the time, how is the Brent benchmark formed? Oh, gosh. Okay, sorry. No, it's a simple question and a complicated one. Effectively, we are talking about a bunch of crude oil from the North Sea. Okay. So mostly UK and Norway, but also crude oil from Texas that comes across the Atlantic. And through, effectively, buyers and sellers on the physical market, we get a price that then cascades into the financial market. But here is a very important, I guess the reason I'm asking is because I associate Brent with the North Sea and that's west of the Suez. And so when we're talking about east of the Suez oil, why is this the price and how connected is that price to the oil moving that actually affects these markets? I guess that's sort of why the question was on my mind. No, that's a crucial question. There are about 250 different grades of crude oil that we track on a given time. And Brent is just effectively a short hand for the average barrel in the world. And it's not really the average barrel and certainly not the average barrel that comes from the Middle East. So you will have to look at benchmarks like Oman Dubai that they are closer to the quality of the Middle East oil. And those benchmarks are a bit higher that what Brent is trading today. But if I may suggest, forget about the price of a barrel of oil. No one cares about the price of oil unless you are someone producing oil in Texas or Saudi Arabia or you are someone who owns a refinery. Those are the people that care about the price of a barrel of crude. The rest of us, you and I, we care about the price of a refined product because that's what we consume. We consume gasoline, we consume diesel, or we consume other refined products that they're embed into a service that we are buying. Think about an airfare ticket where inside that ticket, there's a big proportion of it that is jet fuel. Or you are buying, I don't know, a cup made of plastic. Well, that is, you are buying effectively some kind of transformed NAFTA and obviously, you know, the transformation and the retail margin and so on. But what matters really is the price of refined products. And there, actually, we are beginning to see, particularly in the East, in the Southeast Asian markets, some very extreme prices. So, well, if you look at the price of crude or brand or WTI or Oman, things look relatively contained. You know, we are trading around $100, $110 a barrel. That is well below the all-time high. If you look at the cost of diesel in Singapore, which is a benchmark for the Southeast Asian market, the price there is approaching $200 a barrel, which is something that we have never seen. So, the refined product is where really we are seeing the real tension. This is exactly what I wanted to ask you. So, if you look at the benchmark prices for crude oil, we've seen higher prices before, right? And relatively recently, in 2022. But if you look at the refined products, we're getting to places, again, that we haven't seen. What explains that disconnect? Like, back in 2022, why didn't we see the higher cost of crude feed into refined products the way that we seem to be seeing now? For two reasons. One is because we have lost not only a lot of crude oil production, but we have lost a significant chunk of refined production. The Middle East also has a lot of refineries which are export refineries. They are just devoted to the export market. And the global trade of refined products is a lot smaller than the global trade of crude oil. So, even a small reduction on supply could have a much larger impact. You think about the global market for crude oil, which is 100 million barrels, around 60 million are traded globally. But if you look at the market for, say, jet fuel, that market is a lot smaller, and we have lost a significant proportion of the refineries who are serving that international market for jet fuel. And therefore, prices are reacting much more stronger than we saw in previous crisis. There is also the way that the wall of refining works. Some refineries are slowing down intake of crude oil because there is not enough crude oil in the market. But we have not really seen yet the consumers reacting the same way. So, what is happening is the refining wall is acting as a buffer in between crude oil that is not there and consumers that have not yet realized that the crude oil is not there. So, the refined market is trying to basically get that two together. And the way that it can only do it is by extreme pricing and indicated to the consumers, hey, I don't have enough crude to make these refined products, so please, can you stop demanding the refined products? And the please is basically $200 a barrel diesel. I should just say, we're recording this on March 31st and a headline just hit related to this. Trump tells allies to buy US jet fuel or take it from Hormuz. I have no idea if we have spare jet fuel. I do know that speaking of refined products though in East Asia, one of the charts that's probably gone the most viral is that Singapore jet fuel chart. And that more than any other chart, price shows that gap that Javier is talking about between the underlying quoted price of barrels, which is high, but that jet fuel price is way above now the 2022 highs. So, that speaks to it. Javier, you're just down in Houston. Are any Americans, from your perspective, are we gonna pick up this slack? Do you see American oil entrepreneurs doing more drilling and exploration to take advantage of these high prices? I mean, for sure that the $100 oil, everyone is gonna try to do more. It just basically because it makes a lot of money. I mean, a US oil producer in Texas was looking to sell his oil about six weeks ago for $60 a barrel and it can sell the oil at 100 today. So, everyone who can increase production a bit is gonna try, but do I see a massive amount of extra drilling coming in the US over the next three months, which is what really we needed? No, that's not gonna happen over the next three months. And also, we are losing so much oil that, you know, it doesn't matter what the US shale producers do. I mean, it will help on the margins, but the gap is big. And, you know, I have been discussing with some of the colleagues on the newsroom and with analysts and traders, how big is the gap? Is it a million? Is it nine million? Is it 10? Is it 12? I mean, at the end of the day, it almost doesn't matter because we are talking about that about 10% of the global oil supply. I mean, whether it's 8% or 11%, it really doesn't really matter. We are losing so much oil that either the conflict ends soon or prices need to move much, much higher. I mean, I am surprised that we are not much higher. And in some ways, it really speaks at how good the White House has been at job-burning the market, make verbal intervention, make threats, make promises. A lot of them falls, but it has worked in preventing a lot of the panic buying that we have seen in previous crisis. What's going on with U.S. natural gas? Because if you look there, I mean, we're talking about like muted market moves in the oil market, even though those have risen. If you look at NAC gas, NAC gas has actually come down. Yeah, NAC gas in the United States is trading almost as a six-month low, which considering what is happening on the global energy market, almost incredible. I mean, the reason there is U.S. shale and the reason is that you cannot export gas easily. For exporting gas, you first need to cool it down, liquefy. That basically means having an enormous fridge that cools gas from room temperature to minus 160 Celsius. Then it liquefies and then you can put it on a tanker and send it to the rest of the market. Because we have limited liquefaction capacity, even it does increase quite quickly, that creates a bottleneck that means that the U.S. and Canadian gas effectively strap inside North America and that's keeping prices completely detached from the global market. And that is a huge difference from previous episodes of high energy prices. Even in 2022, the price of U.S. natural gas went from around $3.5, $4 to almost $10 per British thermal unit. This time, it's staying at around $3, actually, below $3 at MBTU. And that is incredible because it means that the heavy U.S. industry, electricity generators, chemical companies, fertilizer companies, it's like there is no crisis. While everyone else in the world is suffering, the U.S. is completely insulated. There is something odd and perverse about some of the disparate impacts here in terms of who is behind and who has catalyzed this war and which side of the Suez you're on there and who is feeling the brunt of it. But that actually, you mentioned fertilizer. We've talked about fertilizer on the podcast. These are the type of things in a food insecurity that creates serious political instability, potentially, around the world. How worried are you? We all know you as the oil and the oil guy, but you've written a lot about food over the years. And I remember you wrote a great piece in 2022 about how rice is going to come to the rescue and people couldn't get as much wheat. So I know you know the food world, too. How concerned are you about food? And yeah, the sort of fallout from that. Today, I'm not very concerned. This could all change if the war just goes on for months, if President Trump decides that he wants to invade Iran with ground troops, et cetera, et cetera. But now, I'm not very concerned for a number of reasons. 2022 was a huge shock to the global food market because it affected a bread basket region of the world. If you look at Russia and Ukraine at the time combined, they accounted for around a quarter of global exports of wheat and barley, around 15% of global exports of corn, and even much higher percentage for some vegetable oil like rapeseed and sunflower. The Russian invasion of Ukraine, the battleground, was some of the most, some of the richest, fertile farmland in the planet. The battleground of the crisis in the Middle East is deserts and a piece of sea that we call the Strait of Hormuz. It doesn't have the same impact in terms of global supply. It does have an impact on fertilizer prices. So it did also the 2022 war between Russia and Ukraine, which is still ongoing. But fertilizer prices require time to have an impact on food production. And also, while, yes, the numbers are very scary, and you look at the global fertilizer market, you're focusing on Urea, you look at that market and say, oh, boy, it's going up a lot. We are approaching the 2022 record high. But that is a problem in many markets. It's a problem that is not a food problem. It will be a fiscal problem. And the reason is that Urea fertilizer, in particular, is massively subsidized in the developing world, particularly in places like India and Pakistan. So the problem there is going to be for the Indian government, can it afford and spend billions of dollars extra subsidizing fertilizer? Less so, is it going to be a food crisis in India? Because the fertilizer, I think, is going to be there. It's used that if you are the finance minister in India, you have a big problem there. That's how I'm seeing the problem. And also, the global food market is in a better position that almost any time in the last two or three decades. Inventories of wheat are very high. Inventories of rice, in particular, are at an all-time high. And while you mentioned rice, while we are worried about fertilizer prices, et cetera, et cetera, if you look at the most important benchmark for rice prices in Asia, it's about to hit a 19-year low. Well, not if you're a farmer. No, not if you're the vast majority of people who need to eat, who most people aren't farmers. Sure. But look, as I said, this all depends on how long it stays because you have fertilizer prices for several months high, diesel prices very high, then you start eroding the flexibility on the system and you don't want to go... The weather can be very funny and it just... We get bad weather when we just really need good weather. So my main concern right now will be what I'm going to be looking at. If this lasts a couple of more months, then my main focus is going to be how good is the monsoon? Are we going to have a good monsoon season in India or is it going to be a bad one? Because if we have a bad one, then we have a problem. Yeah. I've been reading about the fertilizer urea tenders that the Indian government does periodically. It's just really interesting. This big exercise to purchase subsidized urea and so far, from what I understand, they've been putting it off because of the uncertainty in prices. So who knows what's going to happen. But, okay, Ukraine and Russia have come up a couple times in this conversation. What's going on with Russian oil right now? Listeners can't see, but Havyae is smiling. Tell us, Havyae. Well, it's almost like, oh boy, if we didn't have enough with the Middle East, here is Ukraine. And you cannot blame Ukraine is fighting for survival. So they are hitting Russia as hard as they can, wherever they can. And that means hitting their oil terminals. In the past, they were hitting the terminals in the south of the country. That's the Black Sea, but they have found a corridor to send drones, long distance drones, into the North, into the Baltic. And I think that the Russians were caught completely off guard. They didn't think that Ukraine will be able to hit the terminals in the far North of Russian territory. So they were not very well protected, or usually Ukrainians were extremely good at it. But the terminals have been damaged significantly. We don't know for sure the extent of the damage, but looking at the satellite pictures, it looks bad enough. So we may be also losing potentially one million bottles a day of Russian oil. And it's not really the time. Again, you cannot blame Ukraine, but it's not really the time when you want to be losing more oil. Yeah, it's pretty wild. Right, so in some sense, there have been the stories about, okay, Russia benefiting because of relaxed sanctions and surging prices. But on the other hand, just from the global perspective, here is more supply that's being taken off the market. So I mentioned, or it's been, Tracy mentioned recording this, March 31st in the morning. Last night, we got the Wall Street Journal headline that maybe Trump will be comfortable ending this war, even if the Strait of Hormuz is not back to normal. And Iran passed a law that codified that said the Strait of Hormuz won't go back to normal. And it's gonna collect a toll, it says, and so forth. Let's say, okay, the war ends. Let's say Trump decides to unilaterally end the war without resolution here. And like, how big of a fundamental change is this to the Middle East? If it's sort of accepted that Iran has a Strait of Hormuz toll booth, could this be a tolerable situation for the region? Like, what is the significance of that? I would be surprised if the region was to be happy with Iran having a toll booth on the Strait. I don't think that any countries will be happy that an international Strait just becomes, you know, a toll booth for passing ships. I mean, like, what it stops Morocco or Gibraltar or Spain to impose the similar situation in the Mediterranean or Denmark in the Danish streets in the Baltic, I mean, or Singapore, on the Singaporean Strait, you create a very, very bad precedent for international peace and free shipping. I would be surprised if countries in the Middle East were happy to it. Would they need to accept it? I mean, at current prices of $100, say that you, you know, you are an export country and you have to pay half a dollar per barrel as a fee. I think that that's something that everyone will say, well, you know, I mean, we are still selling the oil at $100, so instead of $100, we are selling that $99.50. That's pretty good to me. So I suppose that some of the oil will flow, but you let Iran basically to dictate terms and dictate terms forever. And that will mean also that Iran has a very tight grip on policy and economic decisions that his neighbors have been doing independently before. So I cannot see that on the long term. I don't see also countries like China being particularly happy with that arrangement. But if anything over the last five years or so, we have seen things on international diplomacy and international security that I said before now, that's not going to happen. And then I have to eat my hat. Sorry, I just got a visual of Javier eating his hat. Okay. With, with, with, I sprinkle some olive oil on top of the hat and then I eat. Olive oil and tomatoes. Yeah. Okay. One thing that people have talked about for, I'm pretty sure the duration of all of our careers are attempts to move away from pricing oil in dollars. And if you think about the current situation, there's something very perverse about seeing the dollar go up because there's a scramble for barrels of oil because of an action taken by the United States. From your context in the oil market, is anyone talking about like actual currency pricing for barrels at the moment? Is this something that is going to get renewed traction? No, I don't hear anyone. I mean, certainly Iran may be happy to take other currencies has been relatively happy to take Chinese yuan. And also other currencies which has problems on on compatibility. Everyone else will still want the dollar. And the way that it was put to me to a leading, producing country in the Middle East, and I was talking to, to the head of the central bank, I'm gonna not name the country, but they said to me, so if I switch from the dollar to say the yuan, I move from a relatively high interest rate to a low interest rate, I move from full convertibility to a lot of problems to convert. And I move from maximum liquidity to non-liquidity whatsoever. And then the central bank over knows like, why I would like to do that? Why I would like to really take a step back on my currency? And I think that the yuan is not there yet for oil producers. And everyone that is using other currencies that the dollar to price their oil or to invoice their oil, they are doing it because they are under American sanctions. They are not doing it because they want to do it. They are doing it because they have no other option that to do it just because they are on the naughty corner of the US Treasury. So I feel like the 2022, 2023 inflation crisis, commodities crisis really delivered a near death blow to a lot of the decarbonization dreams of the 2010s and so forth. And we saw, you know, we know a bunch of companies and countries sort of quietly ditched their goals of net zero and all that. It seems like this is going to have a further effect on this. But especially because in some Asian economies, I imagine it sounds like coal is going to be ramped back up, et cetera. But there's an interesting dynamic. And I forget who talked about it. You know, we did this episode about how this could even further accelerate the Chinese EV exports, et cetera, and efforts to reduce oil consumption. Could we see this situation in which we essentially have electrification without decarbonization that basically we see this boom for electrification? Maybe you were the one who used this term. Someone was talking about it. It might have just been you. But more electric cars and more coal at the same time? I think that we can. I think that that's a very good way to put it because I think that we can have a simultaneous push to try to get, to reduce your dependence on oil and to reduce your dependence on Middle East oil. In particular, it's going to be unsafe. Particularly if Iran somehow still has some control, whether it's a tool booth or some kind of de facto control over the straight-up hormones, who would like to be dependent of Middle Eastern oil in that situation. Because you think that there's going to be a crisis six months down the road. And the solution for that is going to be more generation with coal. And we are seeing that just across the whole of Asia, whether it's poor countries like Pakistan or India or the most developed countries in the region like Japan, all of them are going for more coal right now. But I think that we are going to see also over the medium and longer term, we are going to see a movement for more solar alongside batteries. So I can see the role of LNG liquefying natural gas squeeze out of the electricity system with a push for more coal as the immediate future and more down the road with more solar and more batteries. Effectively, at least for a few years means perhaps more electrification, but with more carbon-intensive production of that electricity, which is not exactly what the doctor recommended. No. Javier, one of the reasons we wanted to talk to you, other than a bunch of our listeners have been clamoring for us to have you on, but you, of course, wrote an excellent book called The World for Sale, Money, Power, and the Traders Who Barter the Earth's Resources. You're very plugged in to the commodities scene. What's been the most surprising reaction or thing that you've heard from that space over the past month or so? I mean, I think that there are a couple of things that they are very interesting. One is how little relative the price of natural gas in Europe, which was the epicenter of the 2022 crisis, has moved. Yes, sure. The price of natural gas, we refer to the benchmark as TTF. It's a Dutch benchmark for Europe. Has gone up a lot, about 70% since the crisis started. But it's around the same level as it was 14 months ago. And actually, today, or the last time I checked, the price this morning was lower than four weeks ago. So it went up a lot at the beginning of the war, and since then has kind of flattened or come down. That is an indication of how much LNG supplies coming into the market. A lot of it is coming from North America, the US, and Canada. And that really is something that a lot of traders, physical traders knew was coming, but I think it still has surprise on hedge funds. And alongside is the price of electricity. Because at times, we focus on oil, and we see energy crisis through the lens still of 1973, 1979, the first and second oil crisis. But the global economy has changed a lot since then. And just, of course, gasoline and diesel are very important. But electricity is really what powers today, the global economy. You go to your bakery downstairs or your coffee shop, that's all electricity. And the price of electricity increased a lot in 2022, particularly here in Europe. We saw prices. We look at German prices as a benchmark for the whole of Europe. And I typically look at the one year forward, because they kind of smooth out a lot of the month and day-to-day volatility. The one year forward for electricity prices in Germany went up to nearly 1,000 euros per megawatt hour. It's now around 90. So when people talk about, are we seeing an energy crisis like 2022? I said, look, if you look at refined products or even crude oil, yes, it's bad. If you look at gas in Europe, it's getting uncomfortable, but it's not bad. In the US, they have not even noticed that there is a crisis. If you look at the electricity market, it's like someone said the war crisis, because we are at normal prices here. I mean, I have not seen anything moving. And I think that that has been quite at the center of conversations. And it's also one of the reasons, when I talk to central banks, which they are a bit more at ease that they were in 2022. Because in 2022, the four major energy commodities, electricity, natural gas, coal, and oil, all of them went up simultaneously. And they went to extreme prices. So far on this crisis, we have seen a movement in oil and a bit of natural gas in Europe and Asia, not everywhere else. Coal has barely moved. Electricity is just basically relaxing and having a very Spanish siesta. All right, Javier, thank you so much for coming back and all thoughts really appreciate it. My pleasure. Joe, great to talk to Javier as always. A couple things stood out to me from that conversation. So it seems like everything is very relative in commodities at the moment. Like the relative price moves really seem to matter and be quite different to each other. So the idea that maybe we shouldn't be focusing on the crude price so much, it's more the refined products where we're releasing the impact, which is what matters for, you know, everyday consumption and economic growth. And then secondly, the idea that we still don't have that much movement in natural gas, which is kind of weird, but also relevant if you're worried about inflation because that would be, I think, like the primary channel, electricity prices through which you would see higher prices rippled through the economy. Yeah. I mean, look also, I mean, gasoline prices are going to go to $5, very plausibly, diesel prices in the US are up. So there's going to be a strain, but I do think that is, as you say, the really key thing. It is like, that, you know, what really helped me understand this was just this idea of distance between the straight and where you're an end consumer. Right. And you have to figure too that, like, if the distance is fairly narrow and short and you're getting your oil from your next door neighbor, you're going to have less, you know, less reason to hold a lot of stocks and so forth. And so when you see these headlines in East Asia, like they're already in rationing mode, like I sort of get it. Whereas in other parts, you know, there's not a ton of imports west of Suez from Saudi Arabia, Saudi Arabia, but there is some. So in some of these areas or some of these longer distances, like the Philippines, etc., the sort of drop dead date or whatever, maybe that's a little too extreme, but the sort of the true moment the crisis hits hasn't hit yet. Everything's relative, Joe, especially geography. Well, the other thing I was thinking, though, is, you know, these buffer stocks have helped the market weather this crisis so far. But I just like, I have to imagine that if things were to get resolved in the next, I don't know, week or two or even month, that everyone around the world is going to be scrambling to rebuild some of their stockpiles of oil. So I just don't see, like, that immediate pressure on price necessarily dissipating that fast. But there still seem to be a lot of people in the oil market who think it is. It's a pretty weird time. And, you know, one of the things I think, like, in the very early days of the war, one thing that perhaps kept oil prices somewhat contained was like, oh, Trump is going to taco, right? He does it. There's not much appetite for any pain. And then I think the next step, which we're in right now is, and this next leg up that we've seen, we have seen Brent futures trade close yesterday at the highest prices yet in this crisis. The next leg is probably, well, Trump couldn't chicken out even if he wanted to because Iran gets a say. And then the next stage may be, well, maybe Trump laterally decides to end the war. Iran still controls the Strait of Hormuz to some extent. How does the world live with a toll booth, etc., which is not great for anyone, not thrilled, but also perhaps, I don't know, maybe, like, the market could live with that for a while. So we seem to be maybe moving, I don't know, it'll be interesting to see if this latest headline, how long that stays with us. And if that becomes the new meta or the new narrative that'll just be, yes, this is not great, but this is not great is better than no movement at all. It's very seven stages of career facing it. Yeah, it does feel like that. We move from denial to, like, depression and then reconstruction. And acceptance. Finally, acceptance. Yeah. All right. Shall we leave it there? Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Allaway. You can follow me at Tracy Allaway. And I'm Joe Weisenthal. You can follow me at the Stullwork. Follow our guest, Javier Bloss at Javier Bloss. And of course, check out all of his Bloomberg opinion columns. Follow our producers, Carmen Rodriguez at Carmen Arman, Dash O'Benet at Dash Bot and Kale Brooks and Kale Brooks. And for more OddLots content, go to bloomburg.com slash OddLots, where we have a daily newsletter on all of our episodes. And you can chat about all of these topics 24 seven in our Discord, discord.gg slash OddLots. And if you enjoy OddLots, if you like it, when we talk to Javier about global oil markets, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.