Why Oil Still Runs the World — ft. Daniel Yergin

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Now, imagine what your dreams can become when you put imagination to work at Canva.com. Should the U.S. start bringing troops home from Europe? I worry a lot that this is where we were headed. Trump sort of signaled it a lot during his first term. And in my conversations with European friends, I have been telling them, be ready for this, because I do not think we get through four years without the United States reducing its European footprint. I'm Jake Sullivan. And I'm John Feiner. And we're the hosts of The Long Game, a weekly national security podcast. This week, we debate whether the U.S. should draw down its true presence in Europe, and we break down the latest developments in the Iran war. The episode's out now. Search for and follow The Long Game wherever you get your podcasts. Welcome to Prof G Markets. Scott is off today, but we have a big episode for you nonetheless. We will be talking in this episode about oil, specifically the oil markets, which have now endured more than two months of disruption from the Iran war. Given all of this news, we wanted to take a step back and help make sense of oil's role in the world and what this extended disruption means for our global economy, also for global energy and where everything is going next. So we decided to bring in someone who has spent decades studying all of these topics, the intersection of energy, geopolitics, global markets. And we spoke with him earlier this week while I was in Florence. He is essentially the man who wrote the Bible on the history of oil, at least that is what a lot of people have said. He is regarded as one of the world's leading experts on oil. His Pulitzer Prize-winning book, The Prize, is considered the definitive work on how energy shapes global power. So without further ado, here is our conversation with Daniel Juergen, vice chairman of S&P Global and author of The New Map, Energy, Climate, and the Clash of Nations. I would love to start with just a brief history from you on Iran and Iran's place in the world of oil. And then we'll get into what's happened over the past few months. But for those who aren't aware, give us sort of the Iran and oil 101. What is their role in the world of energy? Well, that's a very good question because I've been thinking about the fact that the blockade against the export of Iranian oil demonstrates the degree to which Iran as a country for well over a century has been a country that has been made possible by oil. Iran, like in the 1960s, was competing with Saudi Arabia to be the largest Middle East oil producers, much more oil than it's producing today. And that oil wealth was channeled by the Shah of Iran into trying to turn Iran into an industrial power. He overplayed his hand, was overthrown, and the Islamic Republic came in. And Iran has continued to produce oil, but often under sanctions. which have limited the amount of oil that it can export. And in the last few years, it's been really exporting oil at a discount to countries like China. So it's not a big player in the way that it historically had been. I still think back to when Iran and Saudi Arabia were almost in a battle to see who could produce more oil. But those days are long past. What Iran recognizes by shutting the Strait of Hormuz gives it enormous leverage on the world economy and really shutting off a significant supply of oil in which the world depends. So would you say then that Iran's real power isn't necessarily the actual oil, but the fact that they are situated in a place where a lot of oil goes through? In other words, they're sort of the gatekeeper to global oil? Well, there's certainly the gatekeeper. 20% of world oil normally would go through the Strait of Hormuz. We've also learned, you know, if we had been talking on February 27th and I said to you, oh, the Strait of Hormuz is going to be closed, you would have said, well, that's probably going to affect oil. You might have said it's going to affect natural gas, but you wouldn't have said it's going to affect petrochemicals, helium, fertilizer, metal exports, because really those Gulf Arab countries have become so integrated into the world economy on a much bigger scale than was anticipated. it. But right now, what Iran is doing is by shutting, trying to change the Strait of Hormuz into an Iranian canal for which you pay tolls, what they are trying to do, what they're doing is, if this continues for another month, will create shortages that will be felt all across the world, will affect air travel, will affect agriculture, will affect the production of semiconductors. So they have a lot of leverage as long as they control the strait. Is it the case then that the Strait of Hormuz has become more powerful or more important in recent years? I mean, clearly, it has been a significant passageway for oil. But you mentioned that if we had discussed this a few months ago before the invasion, if we were talking about petrochemicals, we would not have talked about petrochemicals. We would not have talked about helium. And we would not talk about fertilizer, which is really a big impact around the world, is being felt in the United States. Does that suggest then that this is a new development, that the Strait of Hormuz has become increasingly more central to global trade, not just in terms of oil, but in terms of many other materials? Absolutely, because those Arab countries have established themselves as players in many different ways in the world economy, providing essential sources. Right now, there is an LNG project in the United States that is worried as to whether it can go forward because it depends upon steel from Abu Dhabi. Who would have thought that? So I guess the question then becomes, did we know this when we invaded? Or more importantly, did Trump and did the administration know this when they decided to invade? Did they understand that by doing this, you would disrupt not only the global supplies of oil, but also the global supplies of everything else? You mentioned fertilizer, which was, of course, necessary to grow crops, which is, of course, necessary to put food on shelves and then feed people. I mean, to what extent were we actually aware of how important the Strait of Hormuz actually was? I think in general, it was not there was not that awareness on a global basis about how the world economy had changed. And also, by the way, those countries export one other thing that's very important, and that's money. They have among the largest sovereign wealth funds in the world. So they play a very important role in that regard as well. So I don't think it was on the agenda. And I don't think it was necessarily envisioned that we'd be in the position that we're in today. When you saw the invasion, when you read the headlines that the U.S. had struck Iran, what did you think and what did you predict would be coming next? I thought Iran is not Venezuela. Venezuela was remarkably successful. You got one guy out and his wife, and it's a whole different game there now. But Iran, you have an IRGC, which is not only a military force, but an ideological movement as well. And that the whole basis of that government has been based on their chant of death to America, that the animosity of the U.S. and that they, in a sense, for many years, the West, the U.S., has war-gamed what would happen in the Strait of Hormuz with Iran. Iran clearly was war-gaming as well and built up very considerable missile capabilities. And indeed, I think it was a shock when they realized that the Iranians could send a missile 2,500 miles so that they have really built themselves as a resistant state. And for them, this war is existential. Did this strike make sense to you in terms of timing, in terms of reasoning? Well, I didn't think about it one way. In those ways, I thought that in a sense that this war had been brewing for 47 years is the way I thought. Was it going to take this form? And this, you know, I think that probably the administration having seen the decimation of the Iranian proxies in the Middle East and so forth, that this seemed timely to do. And there was that congregation of senior leaders all in one place as a target of opportunity. But I do think of this quote from Winston Churchill, say once a war begins, policy and plans go out the window, and it becomes unknowable and unexplicable in terms of what happens. And I think we're in that state today. And I was just talking to some people in the Gulf today. For them, on the Arab Gulf, it's absolutely intolerable to have a situation where Iran remains in control of the Strait of Hormuz. It's their highway. So it sounds like your view is that this has been boiling for a while, and then we kind of reached a boiling point this year. Was that boiling point the conflict that we saw within Iran, the persecution of their own citizens? Was that the moment, or was there something else? I think that certainly contributed to it, to the sense that the regime's hands were really weakening that there was popular uprising opposition, but the notion that they also killed perhaps 30,000 people or more is very sobering because all the guns are with the IRGC, with the militias and with the military. It may have been read that the regime was weak because of the scale of these demonstrations and the degree to which the rulers have ruined the economy. Iran today could have been a great force in the world economy. The basis was there before 1979, and they've ruined it. It's a country where people have been impoverished. They don't have enough water. It's just, you know, it's been very badly ruled. I mean, you know, there were so many talented Iranians who were studying in American universities, getting PhDs in economics and engineering, who would have gone back. And some of them did go back when the Shah fell, but now many of them are in exile again. When you think about how the invasion has gone down so far, it seems as though we keep on semi-claiming victory, or at least the administration continues to semi-claim victory in various ways, but ultimately the result seems to be the same. which is that the Strait of Hormuz is still blockaded. The regime remains somewhat intact, or at least it's now led by the old leader's son. It still seems that the situation is extremely volatile on the ground, extremely radicalized. When you look at how it's unfolded so far, two months into this war, what do you make of it? Do you think that it's going to plan or is it not? Of course, there's been a war, but it was an aerial war. It was air power. So there has not been a land invasion. I think it's thought that any boots on the ground is very precarious. It's the thing that Trump criticized everybody else for. The scale would have to be very large. will there be a more focused military option to sort of regain control of the strait everything is more difficult now of course we're in an age of drones where uh you know an inexpensive drone can do a lot of damage and there are a lot of drones you know the way i think about it uh ukraine was really the test bed or the beta test for 21st century warfare in terms of both traditional warfare but also drone warfare And that is you know in terms of securing the Strait of Hormuz unless you can also take out the drone problem it going to be harder But I guess I find it hard to believe that the situation we see now with Iran in control of the Strait of Hormuz will continue. that it just but you know how that gets resolved we're still going to see and it may be in surprising ways why do you find that hard to believe is it because they are too weak in comparison to american military forces i mean just as an observer i look at it and i'm like well they still i i wouldn't have thought that they could last this long in control but they seem to be somewhat having the upper hand. They've prepared for this, you know, and it looks like, you know, in companies, they always talk about succession planning. It sure looks like the Iranians did succession planning in terms of who would step in. And maybe they'd seen this pattern of assassinations. They saw what happened in Lebanon. And, you know, so they seem to have devolved authority to new leaders. some people talk about moderates but I think people who know Iran well don't think there are any moderates there I mean there may be pragmatists but they're not the same as moderates they're all for them this regime is who they are and what they're defending and what they believe in and martyrdom is part of the ideology actually but to say I just think that at the end of the day all those Gulf countries cannot, you know, cannot abide this control so that there will have to be something, something worked out. You're not going to just be able to fix it with new pipelines. So in other words, we're still in the middle of it. And it is the classic situation where, you know, people will make decisions, you know, one decision or another. but Trump does always go back to his favorite word, a deal. But then the question is, who are you negotiating the deal with? And we can see that there were clear tensions between, it appears, between the negotiators and the people of the IRGC, which is the real power in the country now. This is, I mean, the big question, and this is a markets show, We're interested in the price of oil, but we're also interested in other things. But the big question for investors, it seems that there is a consensus among investors that the prices of oil is going to come down at some point. That seems to be a given. But the question is when? For how long will oil prices remain elevated? And will they remain elevated for such a long time that it starts to have a real impact on the economy? You've got to say which economy, because in economic terms, the Strait of Hormuz flows east, 80% of the oil, 90%. So Asia's already feeling it. Restaurants shut down in India because they can't get the fuels they need. Rationing, gasoline stations closed, business is not operating, air flights being canceled, European canceling air flights. You can see European inflation going up. The U.S. is insulated because of the shale revolution in the United States has put us in such a different position. So there's already a big market effect. But I think the other part, the heart of your question, is at our CERWIC conference, again and again, I heard the CEOs of major companies saying the risk is not being reflected in the price of oil. And the market price of oil, as you know, has sort of fluctuated up and down with pieces at hand. No, there's no deal. But if you look at the price for prompt delivery of oil, you see there that that's a higher price. So our own view is at this point and, you know, change if circumstances change is we're going to see, you know, high prices at least for quite a number of months to come. Because even if this miraculously ended tomorrow, it's going to take months and months to, you know, unwind what's happened. I mean, and some production will come back. Most, you know, some of the countries, a lot of the production will come back. Some that won't come back at the same extent. So there'll be still shortfalls. So I would think that for the people following this podcast, what's really critical is to watch what unfolds in the next month and to watch not only crude oil, but watch jet fuel, watch diesel and watch LPG, those prices, because those are the prices, you know, of products that people that people use. Yeah, the point that which economy are we measuring is an important one. I was referring to the US, but yes, the impacts are far greater abroad. And that's something that I think both US investors seem to forget a little bit and also just US consumers of news. could you tell us more about how impactful this has been to other economies Asia being an example I mean to what extent will this have long-term impacts on Europe or Asia or any other market outside of the US well I think for Asia this is a it is a real very painful shock what's happening and for you know it's really almost a desperate situation for those countries because they were so dependent on those supplies. I think for Europe, this accentuates what is this chronic problem of the weakness in the European economy because of the policies it's pursued, it's throttled investment, it's burdened businesses with so many regulations. We had the German economic and energy minister at CERWIC at our conference this year, and she was complaining about the European Union. She says they manufacture a new regulation every day, and it's so hard to do business there, which is why you see the deindustrialization of Europe going on. This will affect travel. Even here, I'm talking to people. Before I left the United States, they were saying, oh, I'm buying my air tickets for the summer now because they're going to be 20% more expensive. We will see flights canceled, And the U.S. will not be as insulated as those other markets. Very bad news for Africa, which basically East Africa got all of its jet fuel, came from the Gulf. So, you know, and for farmers in Africa, in Asia, the fertilizer issue is a huge issue. I wonder what this means for those economies' relationship with the U.S. Because if you think about it from Europe's perspective, Asia's perspective, East Africa's perspective, they weren't doing anything. They were minding their own business, doing their thing. Maybe they got their regulatory processes wrong. But ultimately, it was the U.S. that caused what is now their pain and potentially very serious and long-term pain. I just wonder what you make of what that will do to the US's relationship with those regions. This adds to pressure in the relationship. They know where this came from. You see polls showing that the US is not seen in the same light as it was a few years ago. And it's also to follow from what you've said. this crisis in the Gulf has also really become a crisis for NATO, for U.S. relations with Europe. We've seen President Trump announcing U.S. troops being pulled out of Germany because Chancellor Mertz said that the Iranians are humiliating the United States and humiliating President Trump. And he got really mad about that. And so with very little notice there. So there's already tensions on NATO, but this is really highlighted. And the NATO countries are saying what the Gulf countries are saying, too, you didn't tell us you're going to do this. And now we're left with the consequences of it. I mean, we're more dependent. A lot, a very significant part of Europe's jet fuel was coming from one refinery, this big modern refinery called Zur in Kuwait. And they're not getting that jet fuel. So Lufthansa is canceling flights. We really have two energy shocks. We have the energy shock of what's happened in the Gulf. Then we have the other energy shock, which is electricity in the United States and the data center and the AL build-out and the $700 billion that is going into it. And so you look at the U.S. economy, and when you see, is it more than half or 75% of U.S. economic growth is coming from from the data center from ai that's the huge offset in the united states to the economic costs of uh pains that's come from a disrupt this biggest disruption in the history of world energy but no other country has uh has the hyperscalers spending money on that on that scale so you know you know one energy shock is a negative the other energy shock you know about electricity and data centers is a positive, a big positive for the economy. We'll be right back after the break. And if you're enjoying the show, come join us on tour. We will be going live at the end of May. You can get your tickets at ProfGMarketsTour.com. The link is in the description. and it gets wasted on the wrong audience. Like, imagine running an ad for cataract surgery on Saturday morning cartoons or running a promo for this show on a video about Roblox or something. 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Tank is breaking down what the meme economy really is, how much a single sponsored post pays, why major brands are throwing serious money at jokes, and how meme culture, think Preparation H, starter packs and a perfectly timed screenshot is actually reshaping how we think about money and value. Get ready for a conversation that'll change the way you scroll, make you rethink what going viral is really worth, and prove that sometimes the most serious money moves are wrapped in the silliest of jokes. Listen wherever you get your podcasts or watch on youtube.com slash yourrichbff. We're back with Prof G Markets. Just to go back to our relationships with other nations and other regions. Another interesting one is the Gulf, because it seems as though this administration had developed quite a close relationship with the Gulf regions, especially Saudi Arabia. There was, of course, the announcements of these multi-trillion dollar investments that were supposed to come into the pipeline at some point for the US, between the US and Saudi Arabia. But at the same time, it does seem as though we have massively destabilized that region. And there were the issues with desalination plants in Saudi Arabia, and just the fact that we've basically created a huge amount of instability in their backyard. Now, you mentioned earlier that there's also, at the same time, the fact that a lot of these Gulf regions don't want Iran, or at least the current regime in place. So I guess the question becomes, are they grateful for what has happened? Are they angry about what's happened? What does this do to America's relationship with the Gulf states? Well, I was in Saudi Arabia just a year ago when President Trump was there at this big investment conference where I think they pledged $600 billion of investment in the United States. And then I think that number was raised to a trillion and the UAE came in at a trillion and Qatar came in. So it was quite an investment haul that was brought in. I think there's mixed feelings. and I talk to different people from the region and I get different views. I mean, one senior person said the U hit the hornet nest and they never told us they were going to do it We have to figure out a different defense system And we as the GCC at the Gulf Cooperation Council we need to work more on our defense So I think there is that one sense that they didn't tell us and we're being hit. And no country was hit as much as the UAE, 2,800 missiles and drones, because I think the UA's economic model is the antithesis to what's happened in Iran because it shows you how you become a global economy. But I think the message you also get from them, and I saw others I've talked to the last few days say, well, we can't survive with Iran. This Iran, it's too dangerous for us. And now they will go for nuclear weapons, whatever happens. and saying, you know, the U.S. started it, it needs to finish it. Now, I don't know what finish it means. So it's an ambivalent message. But, you know, they count on the U.S. for security. But then it's interesting that you see that it's Israeli military technicians who are in some of those countries helping them defend against drones. And the U.S. had a big military presence there. I think the UAE they shot down like 95% of the drones but 5% and missiles did get through so I think they're shaken and it raises the question of what will be the role of the Gulf in the future and that will very much depend upon what the outcome is here is there stabilization so there's a sense of security I think one consequence is too is that it's going to accelerate which was already process building up a new drive exploration to discover new resources in other parts of the world, because it sends that at some point the U.S. shale, the consensus view, you know, which has made the U.S. the world's largest oil producer by far, is going to flatten out. And therefore, people are starting to think, again, we've got to discover new resources. It seems that one of the learnings from this, if you are anyone other than the U.S., I guess, is that it's a lot better to be energy independent. You don't want to rely on anyone else, really, because you don't know what's going to happen. And it seems as though this is sort of reflective of the disintegration of globalism and the previous world order that we had all gotten used to, that this is the next step in that. If oil is representative of power, as you have written about before, then what we're starting to see here is that everyone needs to sort of create their own powers on their own, every man for himself. It seems as though that is the trajectory where we are headed. Do you believe that that is one of the learnings from this oil crisis? Yes. In other words, you're saying energy security, which already went up. Energy security was forgotten about during COVID. Prices went down. It went up after Russia invaded Ukraine. And then you suddenly had Germany going around the world asking people for liquefied natural gas or asking them for oil. This, I think, takes it to another level. Most countries don't have the advantage that you does of this incredible shale resource, which has, you know, been transformative for the U.S. position in the world. So the first step is, yes, try to be independent. And secondly, is you diversify your sources, which has been the premise of the Japanese energy policy ever since the 1973 crisis. And you want, as Churchill said, safety lies in variety and variety alone when it comes to oil. I think it gives a boost in many places to renewables, which will be seen not about climate, not about sustainability, but about energy security. So I think there will be a boost there. I've heard of projects in Vietnam that were going to be based upon LNG that are now looking to be based on solar panels from China instead of LNG from the United States. So I think that will be, you know, for countries, you realize that adequate energy supplies are the foundation of your economy. And without it, you don't have economic growth, you have social disorder and you have pain and people suffering. So I think out of this much bigger focus on energy security, and I think it means when companies will certainly be looking also to go where Namibia, where can you go? Guyana, Suriname, where are the places you can go and develop new oil resources? I think Africa could well be a beneficiary of this if governments get organized because they have the resources there. And, you know, it doesn't depend upon the Persian Gulf, doesn't depend upon the Strait of Hormuz. The eastern Mediterranean gas in the eastern Mediterranean, I think, takes on new salience because it's close to Europe. something that that has struck me about the invasion and and the straight of homos being closed is how much it has emphasized and shown us just how dependent on oil and gas we really are uh even today in in 2026 and you you wrote what is known as sort of the bible of oil your book the prize which you wrote in 1990 and it was really a demonstration or an illustration of how oil is the backbone of modern industry. And I guess when you look back, comparing when you wrote that book to now, are you surprised at all at the extent to which we are still dependent on oil, the extent to which that statement, that thesis is still true? Am I surprised? I mean, since I live it on an ongoing basis and I've written And these other books, I wouldn't say surprise, but it is noteworthy that if you include coal, hydrocarbons are still about 80, depending on what you measure you use, either 80 or 86 percent of total world energy. So, I mean, that will change. We see a renaissance of nuclear. We see, although that will take time to unfold. But it does bring home the fact that the world is still dependent, highly dependent. But the huge change is the change in the position of the United States, you know, because in a sense, oil prices now are partly formed in the United States in a way that wasn't the case before. And that that has given the U.S. flexibility. I mean, if we were importing lots of oil, would we be in the have carried out the kind of attacks in Iran that we are? Or maybe, you know, you wouldn't have done it with the same confidence. When you think about the future of energy, where does this go? I mean, there have been all of these debates as to whether we should be investing more in nuclear, whether we should be investing more in solar and wind. Obviously, the administration has been generally against solar and wind. What is the future of energy at this point? First, I want to just go back to something that you said before. Ever since about 2019, there's been this focus on supply chains. And what we've seen, if we can think about it, this is a very huge supply chain that's been disrupted with many ramifications that we've been talking about. And one of the other books I wrote was The Commanding Heights, which was about how the age of globalization came about and how it was playing out. And this goes back to your remarks, basically, which was if we look back on those years that were not so long ago at all, it was sort of this easy globalization. Goods moved easily. Services moved easily. People moved easily. Visas were not a problem at all. All of that has changed. So we really are in a more fractured world to begin with. And I think oil was a global commodity until Russia invaded Ukraine. And then you've got a fragmented, a divided partitioned world market in oil. So that whole trend, as you were suggesting, is to a more divided world. And that does make countries put more emphasis on security and resilience rather than just lowest cost. And to the degree that they can diversify their energy supplies, they will. if we're living in a world you know you said a more fractured world from an energy perspective um and if you know we saw this the invasion of russia into ukraine and now we've seen this invasion from america into iran and a lot of this does have to do with oil and it has to do with the flows of power and energy it's hard to imagine a world in which energy prices just aren't more elevated for the long term. If this is an inherently more risky world from an energy perspective, if there is a greater concern about invasions, about the supplies and flows of oil and gas, I don't really see how this couldn't mean that oil prices and gas prices and energy prices in general will not just be higher for longer. I think that's right. I mean, I've learned that, you know, markets do change. If we were in the first three weeks of this year, the whole focus was we're going to have such a surplus of oil, we're having so much LNG, prices are going down. And, you know, and I think our base for thinking about how much oil prices have gone up should not be from the date of when the war started, but from January, early January before the buildup. So we were like $60 a barrel. But I think if there is a concern about security, people will you know people will pay up the cost of energy will be higher as people try and build security uh into into their systems obviously the global energy markets will be dynamic and they will ebb and flow i what you know as you mentioned the prize came out a long time ago not a couple decades ago let's put it that way but i recently wrote a um a new epilogue to bring the book back, and I said, what are the enduring lessons of the prize? And one of them is that there are hundreds of characters in that book, but the two most important characters are supply and demand. And as that balance changes, it will affect prices. But I think people will, as you say, after this, will say, how do we build greater resilience into our oil and gas supply system? Just as in the United States, the question is, how do we build greater resilience into our electric power system so we don't have blackouts. We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com. We're back with Prof G Markets. When you look at the US as an energy power, On the one hand, my understanding is that the US is very energy independent. The US is a net oil exporter. But for consumers, I think the experience is, well, my gas prices just went up 30%. percent. And I'm being told that we have an abundance of oil. But from my perspective, we seem to have a scarcity of oil as reflected in how much I'm paying per gallon. To what extent is the U.S. actually independent? Is it overstated, understated, or is it correct? Somewhere in between, we'd say relatively independent. And we can see that, you know, Our gasoline prices have gone up, we should say 30%, but our gas stations are not empty of fuel. But we are part of a global market, and global prices do get radiated back, and inventories are coming down in the United States. And jet fuel prices go up, and flows back into the economy. So the sort of global prices flow back, and still at the end of the day, there is just one price. one price. I mean, we need to, we export some qualities of oil and import others because it runs more efficiently in our refineries. But so we are, you know, we still are part of a global market and we're not, it's not like we have a Berlin wall all around our economy. And the concern is that, you know, if this continues a month from now, we'll feel those pressures more. and of course that becomes a huge political issue you know there's no price in the united states that matters more politically than the price of gasoline do you think that that would be enough that political pressure would be enough to have an influence on the way that this administration handles this war i mean on the one hand they might want to see it through but on the other hand if gas is sort of the most important price i think i would agree with you then perhaps they'd give up their aims in order to make the voters happy. Well, that's why I think it's so volatile and not really predictable about what's going to happen, because you know there are many factors from Iran nuclear capabilities to the Strait of Hormuz to drone warfare shipping But also in that mix is what happens in gasoline prices And you know we moving into an electoral season and you know you're going to hear from a lot of congresspeople about the price of gasoline. So I think this is a very difficult sort of vector in which to make decisions. And at the end of the day, it's really going to be one guy who decides here. And we don't really know whether he has what interlocutors there are on the other side in Iran who have the credibility to make a deal. But the president has carved out that this is about the nuclear program. And so I think it's hard for him, would be hard to then say all over and we haven't resolved that in some way or gotten some kind of deal. Do you think that a deal would ever occur? A deal, it takes two to tango. And it would depend upon whether either Iran's the notion that the blockade has put such pressure on the Iranian economy that it starts to disintegrate and they really do have to do something. That could be one thing that leads to a deal. And I think the notion has been articulated for the blockade is if Iran is trying to wage war in the global economy, this is a way to wage war in the Iranian economy without using military weapons. Will we see there's been some instance that maybe there will be a restart of the military campaign to move things along? but then there's the risk of how iran would respond this is really a real quandary of how how to bring this to a conclusion you mentioned earlier that there is a discrepancy between how wall street is pricing oil how people who are trading from trading floors in new york pricing oil versus actual physical traders of oil the people who actually work in the oil industry that their views don't necessarily line up. Do you think that Wall Street and markets in general are mispricing oil? Are they not understanding something? Well, I think they are responding to narratives to what is said, to a notion that rationality will prevail and this will come to an end sooner. I think the industry is looking at the logistical disruption at the constraints of where the shortages are and is looking down the road at the supply situation. And I would say that right now, and in our own work at S&P, we see if this prevails, we see a situation for a global supply position that's much more difficult a month from now than it is today. You also said earlier that it's all dependent on one person. I guess in your time studying oil, studying the history of energy, have you ever seen the future of the market so dependent on such a small handful of people? The decisions that were made to put the embargo on half a century ago were made by a small number of people. And then one person really got on planes and got it solved, and that was Henry Kissinger. But I think at that point, probably the people doing the embargo actually wanted to get out of it because it was a precarious position for them as well to be doing it. But I think I can't think of any situation since then where, I mean, you've actually phrased a very good question in which so much of what happens in the world rests on such a narrow base of decision makers. You know, we're talking, you know, one person in the United States and, you know, a couple of his, a few of his advisors on one side and kind of a handful of leaders in Iran on the other side who have a very different vision of the world. They have no desire to see international hotels built in Tehran. They want to maintain their system of power, even if 80% of the population wants them to go. They've imposed a huge cost. And right from the beginning, I write about that in the prize, when they took power, they did mass executions of people. So they've never hesitated in the name of their revolution to kill people almost indiscriminately. We mentioned earlier that this is partly about the possibility of a nuclear proliferation event. But at the same time, we had been told by the administration that their nuclear capabilities had been ruined or had been destroyed, which brings up the question of what is this all about really? And it seems that this is, to your point, this seems to be the most critical lever of power that exists in the world, which is who controls the supply of oil, who's really in control of energy. I guess, what could we learn from this about how power works and who really dominates our society today? Power comes in many different forms. We could also say, look, we've never had companies of the scale of the hyperscalers and the amount of money. And indeed, what are they, 40% of the stock market? So that's a form of concentration too. but but you know I think this did start off being about Iran's nuclear weapons but now it's about the Strait of Hormuz which has turned out to be an incredible piece of leverage at least for the short term for Iran to try and control the world economy we don't see it so much in the United States but you certainly see it in Asia and increasingly in Europe and in Africa and in the developing world As we start to wrap up here, who's winning? Well, I still think that I think China's a winner because it stayed out of it. And we'll see when Trump goes to China in less in about two weeks now, even though China has benefited from cheap oil from Iran, it's built up reserves. But I think it sends a message that, you know, we don't do things like this. But of course, we don't know what they're going to do about Taiwan. And I think Vladimir Putin is a big winner because the sanctions have been relieved on his oil. He's replenishing his war chest with higher prices. And attention has shifted away from the Ukraine war. It's funny in a way, Ukraine has benefited from this because they're the country that knows how to fight against drones. And they've showed up in the Gulf countries now and have done deals with them to help them in their defense against drones. And so it turned out that Ukraine has some cards here to play. At one point it was said it had no cards, but it's building coalitions. coalitions. Europe is a kind of as a loser to going back to what we said about the fight over NATO, that this is really accentuated it. Iran is not really a winner because their economy is in such bad shape. I guess we could say they're a tactical winner right now with their control over the most critical maritime choke point in the world, which has been recognized to be such for decades. I mean, the seizure of the Strait of Hormuz has been the nightmare scenario for decades. And now we're living, you know, now the nightmare has come into the daylight. And what about America? Well, we said that the American economy right now is being driven more than anything else by AI data centers and just this unprecedented level of investment that's unfolding far greater in just adjusting for inflation than any other infrastructure built in the history of the country. So that's kind of balancing out. But gasoline prices, what this is doing to farmers in terms of fertilizer prices, because again, it's global markets, they're being felt. But we'll truly only know who the real winners are when this is over. It seems that you're being diplomatic to America because I look at what's happened and some of the things you said there. I don't see how we have come out on top in any way, shape or form on this, especially to your point, if this has empowered both Vladimir Putin and the CCP in China. What I meant is that we have a lot else going on in our economy that gives us a kind of ballast that others don't have. That's what I meant. And that we've been, despite the prices ticking up at the gas station, we've been much more insulated from it than anybody else. So that's what I meant in that sense, that our stock market is not expressing concern about an oil crisis. What does this mean for the future of energy? The fact that this has happened, the fact that we are living in a more unstable oil world, how does the future of energy unfold from here? I think it means increasing drive from diversification. Even if wind is not popular in the United States right now, from the administration point of view, renewables will get a boost. I can see right now solar is the quickest thing that can be done to meet electricity. I think other countries will look more at renewables. I think Europe has really deep problems that they are having great difficulty dealing with. We won't see the impact of this nuclear renaissance for five years or so, but there's sure a lot of money that's going into it. One small modular reactor company just went public with, I think, a $9 billion valuation. So there's a lot of optimism. And we see nuclear power plants that were shut down that are now being brought back. Germany is now saying we made a mistake shutting down nuclear. So I think all of that, you know, there's not an endless possibility of things you can do. hydrogen which was very big a few years ago has really faded away but um but i think uh you know like your portfolio you want a diversified portfolio of your investments you want a diversified portfolio of your energy investments as well and i don't mean that as in in companies but uh in terms of where you get your supplies and and where you get them from and i think it's not it's not like there's any people always want a miracle solution there's not a miracle solution to providing the energy for $120 trillion world economy, but diversification and not cutting the budgets for research and development in technology, because we do need new answers as we go into the lookout beyond, out into the century. But for now, it turns out oil and gas are still pretty darn important. Daniel Yogan is a highly respected authority on energy, international politics, and economics. He is the vice chairman of S&P Global and the Pulitzer Prize winning author of both the prize, the epic quest for oil, money, and power, and the new map, energy climate, and the clash of nations. He has served on the U.S. Secretary of Energy Advisory Board under the last four presidents. He holds a BA from Yale University, where he founded the New Journal and a PhD from Cambridge University, where he was a Marshall scholar. Daniel, this was fascinating. We really appreciate your time. Well, thank you. Great to be on and a wide ranging discussion. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carty. Our research team is Dan Chalan, Isabella Kinsel, Chris O'Donoghue and Mia Silverio. Jake McPherson is our social producer. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from Prof G Media. 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