What specific developments over the last few weeks have driven this rapid repricing in energy and trade markets, and how does your team map out the potential timelines from here?

Sure.

Yes.

After the memorandum of understanding broke down, President Trump has moved to a, a full economic blockade of Iran, or a- as full as possible from the US's perspective.

Sanctions have been put on.

There's a blockade of oil exports, and this is resulting in Iran feeling, well, the economy has been hit by this.

The currency's depreciated significantly.

How much real buffer does the market actually have before physical tightness begins to bite more?

Can we just start with physical? How tight are things still? What kind of prices are people paying out for physical barrels?

Sure.

Yeah.

So the physical barrel price isn't, isn't too much higher than the, the futures price actually.

Um, we had a lot of questions about that particular subject over the last couple of weeks and, you know, it reminded me of what happened back in 2020 when oil went negative, uh, at WTI.

Actually, across the USA, uh, physical barrels went negative and priced negative that day and the next day across the US even though they didn't fill up on storage.

And the point I'm trying to make here is, is that actually there's a lot of information in the futures price.

But that's despite, Max, that's despite, Max, the Strait still being closed.

W- what do you think ultimately gets them over the finish line, especially given, as you mentioned, the necessity of the world's oil supply and the ability to, uh, traffic through the strait?

Yeah, I mean, in, in some ways they seem pretty far apart still.

Um, but it's possible, you know, President Trump talked about it today, it's possible ...

And, and the fact that they met, both sides, US and Iran, the r- or the regime met, um, with the US delegates over the weekend, it suggests that after facing the kind of worst possible, um, escalation, which was mutual energy infrastructure destruction, that both sides didn't wanna go there.

That, that, that meeting itself kinda suggests that, I wouldn't say the worst case is off the table, 'cause we could certainly still go there, but, you know, with facing that, both sides meeting, this, this suggests that we're heading towards, um, a deal of some sort.

Having said that, it hasn't happened yet.

Both sides weren't ready to make the deal over the weekend, and now we have kind of like a mini escalation at the moment, a testing of the ceasefire.

Um, given that talks did take place, um, you know, do you still think a potential escalation is a, a tail risk at this point?

What do you mean that there are parts of the energy complex, though, that will still remain under pressure?

Yeah, sure.

So I think what we're referring to there is in particular jet fuel.

Jet fuel is a standout.

So in Europe, and in Asia, t- jet fuel prices are trading around the Russia-Ukraine highs.

It's the only part of the product.

The world doesn't consume the, uh, crude oil.

So I'm curious, uh, if you can elaborate on those, uh, issues.

It sounds like you're describing what I thought we already saw take place, but you're saying there's a whole layer of this that could potentially be still to come, and, and, and, and, you know, I don't wanna say worse, but more impactful from an energy point of view?

Yeah, I think the assumption over the last few days is that the reduction in missile use, uh, and drone use by Iran means that there's m- uh, you know...

Well, a reduced probability of a further escalation, uh, you know, because of some kind of military, uh, dominance to the point where, you know, they, they've kind of, um, the US and Israel have kind of reduced the threat of Iran.

Uh, and, and that, look, that appears to be true, but that doesn't mean there's no threat at all, [laughs] and the, the, the threat, I think, still exists and, uh, you know, can, as things progress in terms of, um, the US and Israel being, um, successful in their, in their goals, Iran may see that as, you know, increasingly likely leading to regime change, and this obviously then leads to them to respond in an asymmetric or in a, in an escalatory way, and that's, you know, we...

You know.

So I think the...

You know, we're certainly not out of the woods yet.

Um, just talk about that.

So with that in the background, what do you think is going to be in the foreground as it relates to the conflict in Iran?

I think this could potentially all happen very quickly, right? Very quickly.

I mean, that's certainly in the president's interest with respect to his desire for lower oil prices.

He will want the geopolitical risk premium, which has been rising, risen by around $5 over the last few days, we think can rise at least another $5 over the next few days, especially if there's military action or these protests continue.

Also, I mean, Russia-Ukraine is not just the Iran risk.

Russia-Ukraine risks are elevated and we're having a lot of supply disruptions in terms of exports from a number of different countries.

So there's a few bullish factors now, but it's quite plausible that a lot of these things pass by with the winter passing and with some kind of resolution in Iran.

Could you give me your take on what you think the supply situation is both right now and for the remainder of the year?