Transcription
Phillip, how are you?
Hey, how's it going, Mario?
Good, mate. Good. Um, so we got you back to try to explain to us what the hell's going on with oil. Um, because it it doesn't make sense in the place. It's probably the most important factor in what happens next in the in the Persian Gulf and the in the war with Iran. And also we did you did mention the the interview I did with Jeffrey and he's talking about what he's concerned about and that's refining capacity around the world especially with what's happening in Russia as well and that you know because that was escalating. Um so I'd love to get your thoughts on the price of oil and uh kind of following up on the last conversation.
Yeah. So I I watched your interview with Jeff Curry and um I don't want to diminish Jeff at all. He's a he's a very very knowledgeable guy. He's got more experience in energy markets than I do. I was never an energy trader. Um, but I don't think some of the stuff that people are being fed add up. I don't think it's a case of people's analysis being bad. I think the data, the facts that they're being given are just like they're not true. They're basically like untrue. And that's kind of at the core of this. This kind of speaks to my my theory as we discussed last time that the way that you manipulate uh Brent futures prices is you basically put out headlines um statements and so on and these manipulate trading algorithms. I mean, it's effectively the same thing to manipulate traders in a sense. You just tell them incorrect information.
So one of the things that uh Jeff brought up was the um 100 million barrels of oil being dumped onto the market. Um so I I noticed this at the time. I knew about this at the time. This isn't actually recent. This was on the uh 10th of June. I went back and checked the dates. It was on the 10th of June. So, it was nearly a month ago. Now, where did that claim come from? So, this is a really good concrete example of what I'm talking about about juicing algorithms. The claim came from Trump's truth social, right? And Trump claimed on the truth social that a military operation, a navy operation I suppose US Navy operation had been put in place to release barrels of oil from the straight of moose and it had released 100 million barrels. He claimed uh tankers and commercial ships. So it wasn't purely tankers. Um, now just to give some context on that, before the straight closed, there were about 140 vessels moving in and out every day and there was about 20 million barrels. So Trump was claiming that the US Navy was able to undertake a super secret operation that released 5 days worth of oil uh out of the straight um in a day, I guess. So that must have been a pretty busy straight that day, you know. Um, so just to give some context, 5 days worth of ships is 700 ships. So to believe this claim, and you have to believe those numbers, now I don't believe those numbers. I don't think you can get 700 ships through the straight under cover of darkness while the IRGC doesn't even notice. And that's five times the daily capacity of the straight itself. And so I go and I look if there's any evidence that this happened whatsoever be beyond truths Trump's truth social. None. There's absolutely no evidence. And in fact, um, Al Jazzer put out an article saying, you know, these numbers don't add up. So, this is a classic instance of what we're talking about. Like Jeff is an enormously uh uh experienced alt trader and if you give him a number like 100 million, he knows that that's a big number and he knows that it's going to make a big dent in the energy price. But what if the number itself is fake? This is the problem.
Now, the claim I looked into it more because the New York Times reported on it and the claim was basically you didn't see these ships go through because their tracking signals were off. So, it's but I mean, you can just make this stuff up, you know, like it's just it's La La Land stuff. So, so basically at best, okay, at best experienced oil traders are trading on information that Trump posts on his truth true social account without any evidence. And at worst, it's not even traders doing it. It's algorithms picking it up. So the algorithm will pick up a 100 million barrels of oil dumped into the market. And as your previous as Jeff said on your show, 100 million barrels of oil extra dumped onto the market in a single day is a lot. But what was the evidence this this event ever took place? Trust me, bro.
Was it actually in a single day? Is that what the
I assume so. And I mean, unless I think he was announcing I don't know what happened. Hey. Hey. Can you hear me?
Yeah. Yeah, I can. If it happens, if I cut out, you can just you continue speaking because the audience can still hear you and you're more interesting than I am. But what I was saying is that is Project Freedom. What the claim was is Project Freedom was going on for a while. They announced it at that time that a lot of oil has been coming out. I could be wrong. I haven't checked the actual announcement. But if it would they claim that 100 million barrels of oil came out in one day cuz that that's that's impossible. I think it was over a period of time but it was announced on that day.
Well then it wasn't huge right? I mean, it's either it was a big dump of 100 million as you know Jeff said that's a huge dump in one day or it wasn't in one day. Previously 20 million barrels of oil were going through the straight. So if it was over the course of five days, they just restored the straight for five days. You see, all of this stuff is completely murky. And my sense of it is it's just to generate headlines. It's to just generate like memes effectively. Memes that the algos catch on. But like even that that was um that was that was that was a month ago. It doesn't explain what's happened in the market in the last week, week and a half at all. It doesn't. So, like I look into this and I'm like, what is the big event in the last week, week and a half that's led to a drop in the futures price from about nearly $100 a barrel down to 70 or lower, 68? And I can't find an event. Vague, vague um statements that the straight is open, but it's not open. We know it's not. It's it's the traffic's gone back down now in the past day or two. And in fact, today I saw you posted on your Twitter that the um that the uh X I should say that the uh that the IRGC threatened a bunch of ships and they turned around again.
Yeah. So it's not
Yeah, I was going to mention that. I was going to mention that.
Yeah.
Um that the issue is still there. By the way, you might see me cut in and out as the team fixes a connection, but I could still hear you fine. According to maritime traffic, Kepler's verified data directly contradicts Trump's administration's claims that oil flows through the straight homes have surpassed 10 million barrels per day. According, which is not that much, by the way, 10 million, but 10 million barrels itself is not a lot. According to maritime tracking firm Kepler, there were 34, 48, and 38 vessels crossing over the last 3 days, far below the pre-war average of 15 to 140 crossings per day. Kepler estimates approximately 5 million barrels of oil are are exiting the straight daily on average in June. This is half of the US officials 10 million barrels per day claim and just one quarter of the roughly 20 million barrels per day that transited the shrimp before the war. The numbers don't add up. A US official told Bloomberg this week that US military support had driven a shipping surge. Kepler's verified crossing data tells a different story. The straight is moving oil again by a fraction of pre-wall capacity. But that's a that's that's data that's available publicly. Why the market this is not hidden secret data the data I've just mentioned right now. So that would be taken into consideration by traders and algorithms.
Here's what I think's happening that look I I I've been thinking about it a lot since I last came on. I've been trying to dig around and figure out what's going on. I've been listening to people who are making the bare case. And I think Jeff is one of the very reasonable people who's making the bare case. You ever hear a flood the zone? It's like an information strategy where you just flood the zone with garbage like with slot basically and then people don't know what's going on. They just don't have a clue what's going on. And so they just kind of, you know, latch on to whatever meme works or whatever. And I think a lot of that is is is going on at the moment. And so I actually think and what I was going to come on and talk about uh today is just to look at the actual numbers. The numbers that we actually know. None of this did 10 million 20 million come out did super secret hidden operations trust me bro Trump operations happen. Like none of this rubbish. It's just rubbish. Okay. So here's some actual numbers right? This is from the IEA. So it's it's effectively the official US government number. The IEA two and a half weeks ago estimated that 1.3 billion barrels of oil have been taken off the market this year by the the closure of the right 1.3
1.3 billion. Okay, so that's their estimate. Now my guess is that's a low-end estimate because it's the US government and they want to underexaggerate. So just to give a sense, daily consumption is 100 million barrels of oil a day. So 13 days 13 full days uh have been taken off the market. so far, right? The SPR, the the special petroleum reserve in the United States is currently at 326 million barrels. So about a quarter about a quarter of the total lost output. China's is about their strategic reserve is about 1.3 billion, which is about the same as the number lost. And the global uh total inventory is difficult to actually see, but it's probably about 8 billion. Okay, so that gives a kind of sense of the numbers on this. Now, even if even if all this stuff is true and there's secret operations and all this nonsense going on and you know all these ships that are invisible transporting through the straight or whatever, we have to replace 1.3 billion barrels of oil. Now, what do I mean by that? Because I mean that if 1.3 billion barrels of oil have been taken off the market since March, which is the IEA's estimate, which seems to be a reasonable estimate, they had to be replaced by something. And what were they replaced by? Reserve reserve releases, right? From the SPR, from China's reserve. Oil consumption hasn't gone down at all. It's the same as it was before the collapse of the straight. So where are they coming? They're coming from inventories. Okay. So let's say the straits open back up. Let's say I'm totally wrong about this. Let's say Trump's trust me bro operations are taking place. Well, then you have to replace 1.3 billion barrels of oil in your reserves, right? So what's with this oil glot? If there's an oil glot, okay, if there's an oil glot, then why aren't the reserves being rebuilt? Why are the reserves in the United States being run down more and more? I mean, they're at pretty pretty low levels right now. If there's an oil glove and the prices are so cheap, why hasn't the SPR started resto?
Maybe there isn't maybe there isn't enough oil to be able to fill up the SPRs, but it's enough to meet demand. And the SPRs don't need to be refilled immediately. that could be refilled over 3, four years time. They would take time to refill anyway. But they're claiming there's a glut. They're claiming there's so much crude oil slopping around that like people don't know what to do with it. Well, if they don't know what to do with it, why don't they re refill the reserves? The price is low, so you can refill the reserves. So, I don't look here's what's actually here's what's going on. So, I looked into the reserve dumps, right? The actual numbers behind it. So, the SPR uh ann the the Trump administration announced in May, I think that the SPR was going to dump 172 million barrels onto the market. Right? It's currently already dumped 89 million of them and the rest will be dumped by the end of July. That's the estimate, right? So 172 barrels will be dumped onto the US markets and going into the export markets too, which some people have noticed they're subsidizing other people's oil prices. Um now when that happens by the end of July the SPR will be down to 243 million barrels. Right? So that is exactly in line with what's called the congressionally approved minimum. Okay. So the congressionally approved minimum is what Congress has basically dictated is the absolute minimum that the SPR should contain in case of a major emergency, a hurricane, uh, you know, World War II, something like that. So by the end of July, the SPR will be at the level that Congress has deemed just about safe. Now, here's the interesting thing. If I'm correct and there isn't glotss of oil and the straight is closed, which is what the shipping data that you just cited shows, then if the Trump administration wants to continue releasing reserves between now and the midterms, which I presume they will because they'll want to hold the oil price down. By the midterms, the um the the they'll need another 120 to 160 million barrels of oil. So by the midterms, if this trend continues, the SPR will be down to 83 to 123 million barrels of oil. Now that's impossible because the SPR if it goes below 150 million, this is what's called the uh the the um operational uh minimum. And if it goes below 150 million, the SPR stops working. There's not enough pressure in the C caverns where it's kept. You could have major um uh infrastructure collapses. I mean, you can't you I mean, you can't safely do this. This is like driving with your eyes closed or something like that. So, if the Trump administration is is talking nonsense, frankly, and that these there is no oil blot, and we can talk about that in a minute because I think I figured out what they mean by an oil blot. But if if they're wrong about this or if they're lying about it, if they want to continue past July SPR releases until the election to hold the oil price down, by the election, the SPR could be on the verge of physical collapse. In fact, it won't even be by November because it's it it'll probably be by about midepptember or um midepptember or so. And I think this is when Trump came out and blurted out that they only had four weeks left. I think that's what he meant. I think somebody told him if we keep releasing SPR releases after this release like the SPR will collapse. So I think there's going to be a real test here actually. And actually I had a I wanted to show you guys the the graph that I was talking about about the crack spread. I don't know if you can actually show a a presentation or something.
You could click on that screen at the bottom right corner on your bottom. You can click on that screen with the plus in it and click on share screen and it should allow you to share your screen.
But that's something that can can they cover up what the S.
So at the bottom of your screen, you could let me send you a photo on WhatsApp.
Um can they uh just a question while I send you that photo of where it is. Can they um cover up the SPR numbers or that's publicly available data that would be a crime to cover up? I think it might be a crime, but even if they did, even if they did, it doesn't make any difference to the to the physical issue, right? Oh, it's this thing. Yeah. Yeah. Yeah. Show screen.
Yeah. I've seen your foot on WhatsApp of it.
Yeah. Let me show you. Let me show you this. Right. So, remember last time we were talking about how the the crack spread was showing a completely different oil.
The crack spread just for the audience as well. the crack spread which you explained in our last interview that I really enjoyed is the price per barrel that refineries are paying out of the oil coming out of the straight home the actual oil coming out to get it physically right now um versus the price that is in the futures market.
Okay, so here's the here's do can you see that?
We'll be able to see it in a second. Lisa's can I show it now? There you go. Yeah, I can see it now. If you can expand it as much as possible so you can make our faces. Can you remove me and Philip even or make us much smaller so we can see the screen fully?
Perfect. Beautiful.
All right. Tell me.
Okay. So you can see this now. Yeah.
Yes. Perfectly fine. So this is what I'm talking about. This looks a bit confusing. Okay. And I'm going to walk people through it specifically because again I thought your conversation with Jeff Jeff was very illuminating because it allows me to be a bit a little bit clearer in my argument. the do you see the the so first of all I should describe what this is on the bottom of this right you see the price of Brent this is the price of oil being quoted at the dated Brent the spot price and on the side you see what's what's called the crack spread right now I'll be very specific about what the crack spread is the crack spread is basically the cost of two barrels of gasoline of petrol one barrel of diesel minus three barrels of crude oil. And basically what that means is a refinery can turn three barrels of crude oil into roughly two barrels of gasoline and one barrel of diesel. And anything above that is what the refiners are making. It's like their profit. It's their overall profit. It's their gross margin. They have to take cost out or whatever. So it's basically when you transform crude into the products, what's the gap right between the two? And that's what the
that gap that gap would allow you to know the cost they're paying for the crude oil cuz you know what they're selling it for. But that's how you could determine what these refineries are paying right now for the for the crude they're importing out of home. Is that correct? Sort of. And this is my argument and I think maybe it's a little bit controversial but I think it makes a lot of sense. It could be showing that the refineries are making massive untold profits, right? or it could mean that they're not getting the crude at the price we're being told they're getting the crude at. And I think the ladder is actually quite likely. So have a look at this. Right? This is from HFI research, but I've done a little modification to it. If you see the the line that's going up there, right, the line is basically the relationship the the linear relationship between the crack spread and WTI. You see it kind of in the center of those recent dots. Okay, those dots are all observations or whatever. So things should fall roughly along that line and when they're off the line they'll revert back and so on. Now the one with the circle here is the crack spread versus the oil price today. Do you see that it's just so far off the line?
Yeah.
And that means something we're
that's Yeah. Last or mid last week since the oil price has gone down. In fact, it's gone further down since then. But if you look if you you can kind of estimate if you run a line up to the up to the line that I've put here and then down you can see that it's associated with as I said about a 110 $115 a barrel. Right? So that's that's what I'm arguing. Maybe the crack spread isn't showing us that the refineries are making this gigantic profit. Maybe it's showing us that their costs are higher than is currently being quoted on the on the Brent price. So, it's a theory. It's not it's not evidence, but like it's either the refineries have decided to start price gauging people like for some reason or their input costs are higher than we've been told. Now, I'd say if this crack spread stays high for another week or two, the likelihood is we're not being told um the truth about
Exactly. So, just to understand that dot is so far off because they're charging so much more for the end product. And there's two reasons why they're charging interrupt me if I get something wrong, Philip. And there's two reasons why they would be charging so much more for the end product. One of them is they're just squeezing the consumer out of so much money, which I doubt as well cuz why would they? And number two is their cost has increased so significantly. And then the way you've drawn that line, that line allows you to know what their cost is for the crude oil they they're actually refining, which is the cost of the input, the product that is being used to to to to produce the end product. And if it's if they're not price gouging, which I doubt they are, Trump has warned them not to very clearly. If they're not price gouging, um, then the only other explanation would be a much higher cost that they're paying per barrel. Did I get it right? That's exactly it. Now, why that extra cost is there, I have some ideas. Maybe maybe Brent is only a single benchmark. Maybe the blends that they're getting are higher. Maybe transport costs aren't being factored in. I don't know. There's all sorts of reasons for it. But there's only two alternatives. Unless that crack spread comes down to about I mean, they wants to come down to it's now at about 50 50 55 or something like that. it wants to come down to about 30 or something like that. Unless it comes down to about 30 in the next two weeks or so, my guess is their their input costs are higher. And when Trump says, "Hey, you guys have to stop price gauging and bring your price down." The refiners look at it and go, "Yeah, I we can't do that actually because we don't have the physical capacity."
So what happens what happens in the next week will determine. So just sorry. So just to understand, the next week will determine whether they're actually price gouging because that would go down pretty quickly. the price will go down. That dot will go back down to the line or their cost is actually much higher than is being advertised and that means and the price won't be won't go down. The price will that that version away from the mean or whatever you call it um would still be there. That dot will still be far away from that line and that would the only explanation that I can think of and I think that you're alluding to is the cost being a lot higher than what is being told.
Their input cost must be higher. Exactly. And so it must be that they're paying in some way they're paying more than whatever it is 68 bucks for a barrel of oil. So that's my argument. I know it's a slightly controversial argument.
Why is it controversial?
What's the What's Why is it controversial? For me, I'm just listening to you and it just makes sense. What am I missing that makes it controversial? I think I think energy market analysts a lot of them won't view the graph in that way and they'll just say oh hedging because energy market analysts are kind of taught like many people in financial markets to sort of worship financial prices in a way. So the financial price can never be wrong. That's kind of what you're taught in in finance uh school. And how would they explain how would they explain it if it's if it's not price gouging and if it's not higher cost and what other explanation could there be?
I I don't see any. And if you can get somebody on and get give me another explanation, I'd be really fascinated. But I saw you also put up I'm going to just take this chart down. I think we've we've had enough of that's no longer share screen, is it? So I I think I think another thing that again you put on your ex account and you're doing good work. Nice one. uh up today is that the CEO of Total Energy said that um prices will continue to behave for some months as if we're at 100 $15 a barrel oil. So that's what he said today. A French guy, I can't remember his name. Okay. Isn't that exactly what said the other day? So why would they why would gasoline and diesel prices remain at as if prices at uh 100 105 for another few months if crude has come down like somebody explain this to me. So here's my here's what I think this oil glut is about. I was talking to some energy guys on X after the show. It got it got some great attention actually the other day. Basically here's what I think is happening. There's t So different types of oil go into different products. Okay. So like Venezuelan uh uh I think it's sour sour heavy sour crude I think it's called goes into a certain type of product. I think it's good for diesel or something like that. And then light sweet oil I think that's more the American variant is better for kind of gasoline. Right? So different refineries need different blends of crude. Right? So what I think's happening is there's probably a surplus of some types of crude if you see what I mean. I think that there's probably a surplus of some types of crude because c refineries have been knocked off and I think this is what Jeff was saying to you and I think this is the element of truth in this. So some some refineries let's say were doing light sweet crude American blend crude right now there's plenty of American blend nobody no the supply of American crude hasn't diminished right you can still drill down to the ground it doesn't go through the straight of hormuz but what if some of the refineries that were processing that were in the Gulf well what would happen you'd have an overupp of that type of crude do you see what I mean that doesn't mean you have an overs supplied oil market but it could look like a glut because you have all this crude that you can't process because certain refineries have been knocked offline. So what I call this is it's not a glut. It's like pools of certain types of crude that are building up because they don't have access to the refineries.
Oh, okay. So you're saying um so I was just looking at the news so I might have missed the first part but from what I understand is that there's crude that is stuck in the Gulf that cannot be refined in the Gulf but that cannot be sent out of the Gulf because of the straight homes being closed and there's a lot of that crude that is not being refined. There's a glut of that particular crude but that's not really that useful because it's not being refined.
Yeah. Or a glut of um of for example American. I mean, I don't I haven't looked into it that deeply, but there's probably there's probably pools of crude oil around the world that were actually sent to be refined in the Gulf. The Gulf is full of refineries. It's not just full of um uh energy extraction, it's full of refineries as well. It's a big refining uh region. So if you have for example American crude or Canadian crude or for somewhere else Nigeria something like that and they they don't have good refineries in that region well you ship it to be refined in the Gulf but you can't get it in anymore and so there'll be a buildup what I call it's not a glut it's like a pool of this crude and I think that might be what's happening and then people can point to that and say oh look at this it's a bunch of crude that can't be refined we must have a glut of crude no you I think you have a glut of of crude.
Exactly. And that glut is not really that useful because it needs to be refined to become useful. And because of the logistical disruption we faced because of this war that is ongoing, the crude is not reaching the right refinery and that a glut is not necessarily a good thing.
Yes. And that's another reason why if you follow those I know you do because you put it on your ex those shipping uh um uh trackers, right? You always see like when you see ships come out of the straight via the Omani route. I go, "Yeah, I understand that. You're trapped in the straight for months, like you haven't had a shower, you know what I mean? You want to get out. So, you're going to take a big risk by going out, right? I I get it. Like, if I was a sailor, I'd probably consider taking that risk." When I see ships going in, going into the straight via the Omani route, like, you're risking getting trapped in there. So, why would anyone
Oh, yeah. You saw some ships going through with the American escort on the Omani route which was a that was the odd one
going in going into the straight and risking. Why would
that's a really good that's a really good indicator. The reason it's a really good indicator if it's true is because ships going in means they trust they can go back out. So that's an very important indicator and what you're saying is that all right but that doesn't make sense. Why would they go in considering the risk involved? That's a a very valid point that even shippers uh maritime experts talk about. You should watch my interview with Sal I did yesterday. He's a maritime historian, a researcher. I speak to him on a regular day basis. Salaniano. Yeah. Yeah. We did a discussion. I think I brought up your argument to him as well, but he's not an an energy market expert. He's more of a shipping guy. He watches the tanker traffic.com vers over the World Cup. That's the type of person he is. But um that's interesting. I I I'm going to talk to Jeffrey and see maybe we could do a sit down together us three because the audience is loving it. try to understand really what is going on because that is the that is the indicator that everyone's watching to see what happens next. And um yeah,
the big one's going to be the big one's going to be when this SB release finishes up according to reports at the end of July. They're going to be faced with a problem. If the straight isn't fully open by then, and by the way, it doesn't just have to be fully opened. All the refineries have to be brought up to capacity, etc., etc. I think it's completely impossible, even if everything changed tomorrow. But um and we should talk about the Iranian funeral because I think that's a big piece to the puzzle as well. But the Ayatollah's funeral um we'll talk about that in a minute. But the but the um but even if even if they get the whole thing open, okay, at the end of July, according to reports, the rest of this 172 barrels is going to have been released. There's a midterm coming up in November. Trump will want to keep the price low. If he announces another release of like 100, 120, 160 barrels of oil, that's a red flag.
They are they are pushing it to the limit. They are risking the collapse of the SPR. And at that point, if that announcement is made, I think we're in crazy crazy territory. But on the on the Ayatollah's funeral, so this has been really interesting. I I'm not the only one that's been wondering why have the Iranians been allowing the Omani route to continue. So sometimes they haven't. They fired a few missiles at it about a week ago, right? So they and all their statements say we want control over the straight. So a lot of people, myself included, have been wondering why are the Iranians allowing this? Trust me, they are allowing it. The the escorts and stuff can't stop a ballistic missile. They just can't. Like they couldn't before, they can't now. The Iranians haven't run out of anti-shipping missiles. They have plenty of them and drones. So why have they been going easy on the straight? There were two missiles. There were two ships hit I think by the IRGC which were look to me like kind of semi-rogue IRGC activity which they do sometimes because it's unusual place and it's run in an unusual way. I think the I think the key is the Ayatollah's funeral, right? It starts yesterday. It goes on for a week. Now, if you're Iranian and you're an Iranian Shiite, that's your religious leader. So, like that's not just a funeral of a head of state. That's like a big thing. And so, yes, of course, it currently looks like from from the global perspective, people would say the Iranian leadership are losing face by allow allowing the Ammani route to op semioperate. And it's true. They are kind of losing face, right? Whatever whatever side you pick in the fight, I don't care. They're losing face from a geopolitical negotiation perspective. So why would they do that? Well, because they have a funeral for the religious leader. I mean, that's a big deal. And it looks increasingly like at the end of this funeral, the kind of official coming out of the new Ayatollah will be kind of announced. Whether he appears or not, we don't know. But it looks like the changing the formal changing of power is probably after the previous Ayatella's funeral.
There's reports he won't be coming out. By the way, there's reports that Mushtaba would not be appearing according to reports today for security purposes.
Even if he doesn't appear, I expect that some sort of formal handover of power or something because the the current governance structure in Iran is incredibly opaque. It's not clear who's making uh who's making the decisions actually. And the the reports I don't know how much stock to put in those western reports like how would they know? But uh the reports at least are saying that the that the uh Ayatollah, the new Ayatollah is actually a very hardliner and he's not actually happy with ending the war and so on. So the um uh which is probably true. I mean his family were killed, right? So that's going to kind of make you a little bit angry. Um so basically um I I think the the the limited amount of ships that have been getting in and out, which are not what people are saying, they're not 100 million barrels. Like that's makes no sense. the limited number of ships that are going in and out via the Armani route. I think basically the Iranians are are going easy on that um so that there's no um conflict during the funeral.
Yeah, that's 30 to 40.
Very very valid point between 30 and 50 ships a day according to Kepler. I read it earlier in the last three days. 34 48 and 38.
That's an estimate by
which is well that's including the Iranian route too.
The Iranian route's been operating throughout. So they're they're Iranian ships going mainly to China. No one disputes that. They're allowed because they're just
that's about that's about a third of what it is usually.
Yeah. And my guess is the Omani route's facilitating about a third of that again. So if there's 38 ships, I think the Omani route's probably facilitating 12 or something like that.
But total total ships is about a third.
Um
yeah. Are you are you watching what's happening in Russia as well and what impact this is having the the argument Jeffrey was making and the strikes on the on the uh Russian refineries the fact that Russians are importing refined crude oil from India among other countries um is that something that concerns you are you watching that closely as well because that would put a lot of strain on the market as well
yeah I mean I don't know what to you know there's a lot you got to take the kind of propaganda value of this as well like there's a very conser concerted effort to say that Ukraine are gaining the upper hand in the war. Um, I don't believe that for what it's worth. I think the front line is is going very poorly for the for the Ukrainian army and they're using these longrange strikes into Russia which are very provocative and quite dangerous in my opinion. But they're using them as kind of a like look, we're still we're still going, you know, we're still able to do something. But the the reality is that it's very very hard to put refineries out of action. Like really really hard. I mean, even the Russians have a hard time putting Ukrainian refineries out of action. They're huge. Um, like I I think I think um if you've been following the Ukraine war or the Middle Eastern wars as well, you know, you can start to see how difficult it is to damage infrastructure. Like the the Ukrainians have been hitting the bridge in Crimea over and over again, and it gets repaired in like a week or something like that. It's a lot it's actually a lot easier to build a bridge than to destroy a bridge. And I think the same is basically true of the refineries. I doubt it's helping the situation very much, but the it's very much so. The Ukrainians are a little desperate in the at the moment in my opinion. And so to put out these narratives that you're creating oil shortages and so on in Russia um is is in their interest. And I pointed out to a friend of mine who was saying this to me the other day, go back and look at summer 2025. We were told the same thing that there were oil shortages and so on. I think some of it's just due to Yeah, go back and have a look. There's even a Wikipedia page on the 2025 energy crisis in Russia. And I think a lot of it's just due to holiday driving. Russ Russia Russians um drive to their holidays. It's kind of a it's kind of a thing. They they like take getting in the car and driving. They're they're not as inclined to get into airplanes and fly probably because the country is not as well connected as as for example America or Europe or something like that. It's also very big. So there's a lot of summer driving. A lot of people go to their dacas, their their summer residences. Um and uh so I I I mean, it's not helping the situation, but um knocking out refineries is tough, man. It's real tough. And uh and that's why
not tough on the markets. You mean t the ability to knock them down is very tough. It's very hard to knock down in refineries. Very easy to repair. That's the point you're making. Yeah.
Yeah. They're they're giant like
they're giant pieces of concrete, you know, and so like even if like the I I don't know if you recall the the big um the big impressive strike uh that the Ukrainians were advertising was when that um that storage unit blew up and the lid the lid flipped. I'm sure you remember that. Like that looks really impressive, but it's actually just an oil storage tank. Like all they did was hit a flammable a tank that can go on fire and then the fire creates pressure and blows the lid off. Like that's
that doesn't matter. And and that to me says you're going for theatrics, you know? You're going for the theatrics of the of the explosion rather than actually trying to damage the the underwin a lot of our refineries underground as well. I mean, lots of the components of it, you know.
Yeah. Yeah, still
my team would likely tell you that the my team want to be smart and say that was a Russian anti-air missile that struck the oil tanker where the lid flew off. So just in case anyone doesn't know, my one of my producers wants you guys to know that it was a Russian air defense anti-air missile. Um that's on the by the way it is true. So that that lid that blew up because you're talking about it being theatrics. It was not actually Ukrainians targeting. I don't know if they were targeting that that tanker that the storage tank because it was an anti-air um missile a Russian one that struck it the malfunction and struck it. But anyway, I think you make a valid point that these refineries are much harder to um and much easier to repair, much harder to damage or um turn in or or um make him in inoperable. Um I I'll talk to Jeffrey. I really enjoyed the conversation, really enjoyed the analysis and I really want to get to the bottom of it, see what's happening in the markets and I also agree with the the point you made a few minutes ago is that I think what happens with the SPRS if we have another draw down I think that would that there's some indicators you cannot fake you know you can fake numbers you can manipulate markets but you can't can't fake the the price that refineries pay per barrel that they receive we don't have access to that information but also cannot be faked another thing that cannot be faked is um the SPR is being drawn down unless they want to commit a criminal offense and um and
also the other thing about lying about the SPR is part of the awe of releasing SPR reserves is to is to convince the markets right so like if you don't tell people you're doing a giant SPR draw down the markets won't know and they won't know to respond you know so you have to actually communicate it it's part of the entire strategy but look what look SPR is being being dumped into the market right now and like a lot some of it's just going abroad as well. I mean, it's crazy that like you're using your strategic energy reserve to subsidize foreign energy prices. It's such a loony thing to do in my opinion. But there's no it's what we said last time. There's no long-term thinking going on here. It's all short-term thinking, the the midterms, the midterms, the midterms, the negotiations that haven't been taking place for two weeks. Like everything's just a complete mess. And we're we're getting hit with this like wall of slop. It's like a wall of slop and you don't know what's going on and you're like, "Oh, is 100 million barrels dumped on the market?" It's like, "Yeah, according to like Truth Social or something." So, I think we should just if people are following this, try and get as objective measures as possible. The crack spread thing, we have to see if that comes down. Now, if the crack spread comes down, I want to be clear about this. It doesn't mean the entire situation's resolved, but it at least tells us that something normal is going on in the refineries. What's going on right now is highly abnormal. And as you say, I don't think they're price gauging either. And the prices at the pump aren't coming down. They're reflecting the the high crack spread and the and the high refining costs or the high refining prices at least. And then SPR releases. Look, if these guys are serious that there's a that there's a supply glut, then then stop releasing the SPR. Why are you still releasing the SPR? Refill it with your glut of oil. agree, Phillip. Really enjoyed this
as always.
We'll do it again very soon to continue to get to the bottom of it.
We're going to get the answer.
Yeah. If if if somebody wants to have a debate on this, like a real civilized debate to try and get to the truth, not slinging mud at each other. I'd be really
not a debate. I think more of an analysis together to kind of just do do a live analysis um with the audience listening in as as well. Um I enjoyed it. We'll do this again. Thank you, Philip. Appreciate it.
Thanks a lot. Thanks, Mario. See you.
All right, guys. We'll be live in four minutes with Brandon Wer to continue the conversation. See you soon.