Transcription
In recent times, Russia has had problems. Europe is determined to try to destroy Russia, so they gave Ukraine weapons to destroy things—whether it's oil refineries or oil depots—causing Russia's oil exports to have quite a bit of problems as well. Right now, the stockpiles that are being used are depleting steadily. The wells inside the Gulf are closed because there is no storage space for oil. When they open them, there is only water, so they have to abandon the well. The amount of oil that is backed up at this size—some people say 100 million barrels—the global market, 100 million barrels is one day's usage, all of it. [Music] A wide variety of products. [Singing][Music] Suphap Osot for over 70 years and brilliant. [Singing][Music] Caring forever, Suphap Osot.
>> There has been continuous progress, but what is consistent is that in Iran, there are many financial matters tied to oil and also tied to the developments of the G7. The G7 met because Europe has more stakes than America in the Strait of Hormuz. Asia itself also has more stakes. This time, I'd like to ask the professor: actually, the G7 admitted that closing the strait would cause Europe to suffer energy shortages and prolong the war in Ukraine. So I want to ask the professor: Now the United States itself, as the originator, has to solve the problem—they are probably fully retreating. And I think in the future, they will not start a war with Iran in the near term, but in the long term it's uncertain. But I want to ask the professor: in this case, in the professor's view, will the oil situation have a high chance of stability, or will it remain turbulent and chaotic? How long until it calms down and reaches stability? Will oil prices keep falling? Professor, please go ahead.
>> Well, it's like this. In the past, oil prices normally—the production deficit at this scale—prices should have risen a lot. But after the oil crises that happened in the past, going back a long time, over the past 20–30 years, various countries have prepared by building stockpiles. And those stockpiles are not only on the government side; private companies also built their own stockpiles. The countries that built huge stockpiles are America, China, Japan—massive levels. In the past, they relied on drawing oil from stockpiles to fill the gap. Therefore, the deficit did not cause prices to run—prices did rise, but they did not skyrocket past 100 except for a short period. Now, the problem is that the stockpiles being used are depleting steadily, and there will be a tug-of-war between two factors. One factor is the depleting stockpile, because when prices don't rise, usage stays the same—like us, we go about our business and still feel like we can drive as before. The stockpile that is decreasing will continue to drop at the current speed. It will have to fight against—well, as it decreases more, prices will rise. But at the same time, new production is being accelerated now because when a well is closed and then can be reopened, the new output will come in to replace it. These two forces will compete. And another factor we can't predict is whether Iran will open the valve slightly or widely. I guess Iran wouldn't want oil prices to suddenly drop too much—selling less but at a higher price is probably better for them. So I guess prices will remain at a level higher than before this war, definitely. However, sometimes prices will spike sharply, as seen with the demonstrations and the recent events—if they suddenly go into Lebanon and attack periodically, that will increase tension again.
>> So looking ahead, oil won't fall fast for sure. But it will fall a little bit—70, 80, 70, 80—going below 70 might be difficult. But from the US perspective, they want it down to 60 to reduce inflation. So there will be a tug-of-war. I therefore think America probably has a trump card or some move to make Iran open the Strait of Hormuz widely and freely so that oil flows out, and oil might drop to 60 for a while in order to keep the US economy's inflation from being too high, so they can lower interest rates or not raise them. This must be a game where the envoy has a role to negotiate. I think Iran must have negotiation points at this time—like, hey, you have to let the oil flow fully so that the backlogged oil comes out completely, and then oil prices drop to the point they want, which is their target. After that we can talk about the long term. I see that using the 300-billion-dollar move as a bargaining chip is an important calculated move. If there were no 300-billion-dollar chip, they would have nothing to negotiate with Iran, and the one paying wouldn't be them, and the one gaining wouldn't be them either—it would be the Persian Gulf countries. And the Persian Gulf could actually be affected—it's not that they can close it completely; if it were closed so tightly that nothing comes out, they couldn't live. But if it's opened freely like before, oil will definitely go down to 60, which the Gulf countries don't like because oil is too cheap. So I see it as negotiation—they have to negotiate and find a balance point. So I ask the professor further: in this case, Russia, or even China, or even the United States itself—which may not have as much stake as the Gulf countries—might step in to help adjust it to a balanced level. Especially Russia wants oil to be expensive and wants the Gulf to sell less oil; if they sell a lot, Russia can't sell much. How do you view Russia, professor, since Russia itself—what do you call it—can't negotiate well with the G7? The G7 still doesn't agree, nor does the EU much. [Inhale] Sweden sent a letter to Putin asking him to come talk at the G7, but he didn't come—or he made his stance clear that he won't negotiate. In summary, Sweden used the same old approach, asking the G7 or EU to help with money and gold. Looking at this, the Iran war should be able to end, but does the Ukraine war have a tendency to end? Professor?
>> Well, let me start with what you, Thanee, said—that the US side might try to negotiate behind the scenes to get Iran to release oil. You have to ask: how much oil is backed up at this size? The oil that is backed up—it's on ships. No one has a clear number—some say 60 million barrels, some say 100 million barrels. These are ships that have been loaded with oil because onshore tanks are full. The ships are waiting, and it's up to Iran whether to let them out quickly or slowly. But suppose there are 100 million barrels—the global market, 100 million barrels is one day's usage. Then after that's gone, where is the remaining oil? There are two other places. First, it's in onshore storage tanks. To get that oil out, you need ships to come in. And ships are trying to come now. But don't forget, originally there were many ships outside the Strait of Hormuz. After being idle for 2–3 months, they left to carry oil from America to Europe, from Brazil to elsewhere—simply put. So now you have to find these ships. They are empty ships, not ships with oil; they are ships that delivered oil and then came back empty. Suppose those 100 million barrels go out. Then the ships go to Asia—the trip there takes 1 month, and the return trip takes another month. So there will be a gap of about 2 months for those ships. Other ships that come in to take the oil from onshore stockpiles—if they can get in, it still takes a while. Another thing: if the ships belong to Western companies, I'm not sure if they will dare to come in because they fear that if Israel attacks and the strait closes temporarily for a week or two, it will cause problems. Iran will also have to find a way to make the insurance system work. As said, if it's a Western ship, I'm not sure if Iran will consider it as being on America's side. But empty ships coming in—they can still take oil out, that's the second factor. Now, the wells—at this time, the wells inside the Gulf are closed because there is no storage. From now on, they have to be reopened. Currently, they are preparing to open them. The wells that can be opened fastest are Saudi Arabia and UAE because they are new wells—meaning investment within maybe 10–20 years, new technology—so opening could be quick, maybe within a month. But the old wells inside, like those of Iraq, Kuwait, and Bahrain, are old wells. So if these wells were closed and then reopened, I'm not sure they can return to the same output. Many say that very old wells, when reopened, produce a lot of water—when you pump, you get mostly water, and you have to abandon the well. So, from three sources: first, the oil that is ready to come out immediately—about just over a day's worth. Second, the oil that is currently in onshore tanks waiting to go out—it has to wait for empty ships to come and take it. Third, the oil underground that needs to be produced—if it has been closed, it takes time to reopen. So there will be a gap, which could make oil prices fluctuate. But it depends on each country. If the US—right now, the US strategic petroleum reserve; if Trump decides to lower oil prices, he might release more. But how much can he release? That has to be debated because the US tanks are in old salt mines—the walls are salt. The method to extract oil is to pump fresh water in to push the oil up. As you pump fresh water in continuously, the walls erode because fresh water dissolves salt. In conclusion, the chance for oil prices to go down exists, but the chance for them to go up also exists. It's hard to say. But from what I see, there are many factors that need to be considered from many sides. On Russia's side, we see that in recent times, Russia has had problems because Europe—especially I think the UK—is determined to try to destroy Russia. So they give weapons to Ukraine that can reach far. You'll notice news that they have gone and destroyed oil refineries, oil depots, and export pipeline systems, causing Russia's oil exports to have quite a bit of problems as well. Therefore, looking at this, when supply from Russia is less, it also causes upward pressure on oil prices. Another thing, we must not forget that everyone originally had stockpiles. As stockpiles deplete more and more, some people may be close to the point where they become worried and may start to hoard, because the situation is still uncertain. This will be another factor preventing oil prices from falling much. So even though Trump himself wants retail oil prices in America to be low, there are many other factors that might be uncontrollable. Overall, I think Iran is willing to cooperate to a certain extent. Now, regarding the war in Europe—the Russia-Ukraine war—I think it has been deadlocked for many years. At present, there is no sign of it easing, because of the stances and the concerns of European leaders. I'm not sure if it's due to history—past wars with Russia—they are still afraid. That has caused ongoing tension. Most recently in the UK, you see that the current prime minister may have to resign soon precisely because of his stance on the war. I think there are many who disagree. So looking at it, in terms of tension and the possibility of the war escalating to a large scale, I think right now it is still more in Europe, in Ukraine, than in the Middle East. The Middle East may see conflicts, but they will be limited, tit-for-tat between Israel and Iran. [Inhale]
>> So looking at the big picture, the United States is pulling out of Iran and Ukraine quite clearly. We see that the big brother, the top dog, is not involved anymore, so both Ukraine and Iran situations will calm down because Europe itself doesn't have much power.
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