everyone just the significance we'll come to the sort of the big picture in the ia announcement but the significance then of that that shell number what does that mean in sort of ordinary terms to people listening

Yes, so the refining margin is basically, you know, refinery, you put crude oil in at one end and you get petrol and diesel and jet fuel and other things out at the other end.

And what's the difference that you make in dollars per barrel of crude in and dollars per barrel of products out? And so Shell, as you say, it's forecasting its refining margin for the third quarter at $42 per barrel, up from $24 per barrel in the second quarter.

And just for context, its refining margin last year, which is already a good year, was $10 a barrel.

So that just tells you how much money refining is making right now.

As we're going to start using more energy into the winter, are there any solutions, options for governments, companies here to try and ease some of what seems like it's going to be a massive crunch?

It's very difficult, really.

I mean, prices are high already.

Maybe if you can break that down for folks.

Yeah, sure.

As we were saying, there's a quick and easy operation to remove Maduro.

The Trump administration, I think, got the idea that all such operations will be quick and easy.

And they saw the opportunity, and the Israeli government obviously clearly saw that opportunity too, and encouraged them with regards to Iran.

So they saw an opportunity to kill a big part of the Iranian leadership, including the former supreme leader, Ayatollah Ali Khamenei.

And they hoped that there'd be a similar transition.

But what do you see America doing on that front? And then what is the world doing?

seems to be that

the UK North Sea, the UK continental shelf in general can play a big role in that and touches on a lot of these themes.

Energy security, affordability, more tax revenues, which the economy desperately needs, that all of that can be done and still in an environmentally positive way.

So we know even under net zero scenarios, the UK will still use a significant amount of oil and gas by 2050.

Much better that that's produced domestically as far as possible.

rather than being imported with all the negative consequences for higher carbon footprints and worse balance of payments for the UK, lower energy security and so on.

So I think there is an opportunity there.

Right now, listening to all of that, Robin, that doesn't sound like there's going to be any winners.

How much of a shock is that to the market?

So the Saudi East-West Pipeline has been a crucial part of the response to the blockade of the Strait.

So it avoids the Strait of Hormuz and it was carrying about four and a half million barrels per day for export.

The Saudis had switched most of their oil exports to the Red Sea using this pipeline.

Now, of course, it's been attacked.

It's out of action.

Looks like the Saudis are trying to restart it at kind of partial rates.

Do you see that there'll be a short, interim bump, if you like, in efforts to beef up fossil fuel energy production?

You know, why aren't we seeing oil prices already shoot above 100, given that we've seen this escalation? And also we've had a tight squeeze on products as well, which is pushing everything up.

Yes.

Thanks, Diallo.

Look, I mean, a few points there.

First, this P-TEK says tanker for a tanker policy, right, that the U.S. will sink the Iranian tanker for every one tanker that's damaged of others.

You know, hard to see what the point of that is because the Iranian tankers are blockaded anyway.

So, you know, all that's doing is causing destruction and possible oil spills without actually affecting Iran's position.

And what about the defense position? I mean, how much expenditure are we going to see come out of their budget going forward with the lessons learned in the last six months?

What's the picture that you see with global oil stockpiles at the moment? How uneven is the distribution globally between those areas that have been able to secure supplies and those that are running short?

Well, I think we really want to look at probably China versus everybody else.

And China entered this conflict with very large stockpiles.

It accumulated basically all through last year.

And China has been able to be pretty cautious in drawing those down.

It's managed to cut its imports.

It's managed to cut its domestic use.

What do we know about the current appetite for risk amongst shipping companies and their insurers, Robin?

Yeah.

The, there was, there was a transit right down the middle of the strait, but it wasn't controlled by any country.

There were no tolls and nothing to pay.

Um, so in, you know, in that sense, the, the Iranian objective here is obviously to trying to get, get formal control recognized over the, their ability to, to, uh, of who gets in.

You know, notionally then Oman has the, has, has the, uh, the say of who gets out.

But of course, you know, the really important thing is, is who gets in, since, you know, what goes, [chuckles] what goes in must come out.

So, uh, that's really the Iranian objective.

Is, is that your take on it as well?

Maybe you can just explain to us where the particular strait in question, the Bab el-Mandeb Strait, is and why it's so significant to trade.

Sure.

Well, the Bab el-Mandeb is the southern end exit of the Red Sea, and so any ship traffic that's coming, let's say, through the Suez Canal in, in Egypt and going south, uh, has to go through the Bab el-Mandeb to get then out of the Red Sea into the Indian Ocean, and, and the same way anything coming from the Indian Ocean, let's say from China to Europe, it has to sail through the Bab el-Mandeb g- going north.

And so this has always been a key ch- choke point for traffic of all kinds, but, uh, but indeed very much oil.

Oil, let's say in the, in the, the pre-war situation that we had oil coming from the Gulf going to Europe, um, or indeed, let's say, oil coming from the US, somewhere like that sa- sailing to India or, or even China through that route.

Uh, has the workaround worked thus far? And is there another alternative to them with regards to rerouting if we were to see an escalation in, in the Bab el-Mandeb?

Yeah.

So the, the workaround was very successful.

Why is that?

Yeah.

It's kind of astonishing really, and we've said this, uh, since quite early in the war, you know, why is the oil price not higher? Uh, and I think there were a bunch of temporary factors, and a big one there is the, is China, um, really reducing its imports.

Um, and a lot of speculation about why that was, but I, I think China can't keep up, that, that up forever.

If China returns to buying in a big way, then suddenly oil prices will shoot up.

But a big part is also the so-called jawboning.

You know, the US president, every time that the oil price rises, he will say, "Oh, we have great peace negotiations.

So to that end, and whilst we wait for that new port to bypass the Hormuz, how exposed is UAE output if this continues to hold?

Is that accurate?

Well, they've concentrated on the tankers, right? Because that's kind of the critical thing.

So the numbers are very up and down, day by day.

And also, of course, there's the trying to distinguish all the dark transits that are still happening is tricky.

So every ship tracker will have a different estimate.

But I think you could say round figures, okay, so pre-war, we had 20 million barrels per day of oil going out of the strait.

Now, some of that's been diverted through the alternative pipelines.

you

do we actually know so far? What are we aware of that might be agreed in this deal? Or do we have to wait now to see the small print?

Yeah, more than small print, I think.

It's pretty crucial terms on both sides of leaking the agreement and some differences on what's actually agreed.

I mean, look, there's a whole bunch of terms, obviously, that will be negotiated later, particularly around Iran's nuclear program.

and what constraints are on that, on sanctions relief, on releasing Iran's frozen funds, all these kind of details, very important details.

But I think the key thing for all prices is obviously the Strait is supposed to be open.

Donald Trump has said so, completely open.

We are finally arriving somewhere where the conflict of the last three and a half months might be concluded.

Uh, Robin, same question to you, a- and add the extra layer that, um, it seems Saudi Aramco are getting on board with the same idea as they've reduced their OSP prices for July.

Yeah, no, it is, it's still remarkable.

Um, and I look at it this way, okay, you know, we say that we've lost 20 million barrels a day through the Strait, but there are all these offsets.

You know, there, there, the, the other pipelines, there, there are some tankers getting out.

There are, there's the SPR releases, all this kind of stuff.

Okay, so, you know, we've lost net, uh, let, you know, including all the, the te- rather temporary withdrawals from storage, let's say we've lost, uh, 5 million.

If you'd said before the war we're gonna lose a producer of, of 5 million barrels per day for an indefinite period, you would expect prices to gone crazy, right? You would expect it to $120, $130 per barrel if you say we're, you know, we're, we're gonna kn- we're gonna knock out, let's say, you know, C- Kuwait and Iraq together.

Uh, what do you think we're looking at here?

So given this now will effectively allow imports of, say, jet fuel from India, which as you say was a, is a, has been a key supplier to UK and to Europe, uh, for, for some time previously, how much, um, benefit is Russia seeing from the, the, this overall loosening of these various sanctions in time? Because the point of them was to lean on Russia economically.

Well, it was.

And, and to be honest, I'm not sure this has a huge impact either on the UK or, or on Russia.

Look, everybody's desperate for, for jet fuel right now, and I'm sure those Indian refiners would've easily found a market in, in, probably in Asia for the fuel a- anyway.

So whether any of this fuel actually comes to the UK, who, who knows? So economically, does it have a big impact? Probably not.

But, uh, there's obviously a key signal here, which, which, uh, that, that would be my concern with it, sending a, a signal to Russia about a, about a lack of resolve on keeping up the sanctions on Russia in the face of the Gulf crisis.

And why is that a concern? Where do you think that could go next?

Well, as the crisis in the Gulf gets worse and, and the, uh, oil, oil and other fuel produ- uh, prices rise, I think there'll be a hope in Russia that more sanctions will, will be eased and, uh, you know, perhaps Europe, uh, other European countries will join this and perhaps will, uh, will ease some of the other sanctions on direct imports of Russian oil, on imports of Russian gas.

I mean, just to sort of caveat, I'd- I'd sort of put devil's advocate on it before you even start, the energy industry, oil and gas, have always been famous for happy to be second, right? They're risk-averse.

Yeah.

A- and that, I think, is where the question of, you know, how, how risky, uh, is this, right? So the adoption so far has, I think, been in terms of largely in terms of o- optimization, um, and going through the, the industry's very large data sets and, and searching for, you know, where, where are the things that can, that can be gained from that.

You have, of course, huge data sets in terms of operations, um, of, uh, uh, processing plants, refineries, all this kind of stuff.

You have huge logistic data sets.

You have huge, uh, data sets of seismic data which you can search for, for new prospects.

So there, there's a lot of data be- to be worked through.

How do you see that intersecting with this challenge of scalability and energy consumption?

Your thoughts on the thesis, how can national AI infrastructure and compute capacity enable scalable adoption?

Thanks, Sean.

So, you know, the three things I really want to point to in that regard.

So, you know, firstly, we're seeing, obviously, enormous AI build-out around the world.

hundreds of billions, if not trillions of dollars ultimately being invested and so on.

Certainly being committed to.

Being committed, yes.

They're always high, and now

He's a former Shell executive and a former strategist at the Emirates National Oil Company.

In normal times, the refining business is, is a margin business.

It buys crude at whatever the price is, and let's say pre-war, you know, that was $60 per barrel or so.

It processes it into various products, and it takes a margin, which is enough to cover the cost of refining, and that's a few dollars per barrel.

So perhaps it, it buys crude at 60 and sells the mix of products at $65 and takes a $5 margin, which represents its costs and profit.

That's in normal times.

Now because there's a shortage of refining capacity and a shortage of, of fuel, the price becomes whatever people can pay.

Diesel, jet fuel, the fuel that goes into your tank and in the plane you're about to board, that is where the real crisis is.

Talk us through that, would you? Is that inevitable now? Even if the straight opens tomorrow, are we still going to hit this energy crunch at the end of the month?

Yes, absolutely, Frank.

Look, even if the straight reopens tomorrow, which I think there's not much prospect of, then we're looking at June really as the low for the market.

I mean, in terms of buy low of stocks.

And that's, of course, yeah, if the straight reopens, if the straight doesn't reopen for longer, then we add more and more weeks to that.

So we've never been in a crisis like this before.

We don't even know how the system is going to react.

right.

W-where and how is the country storing that oil that it can no longer export?

Yeah.

Well, firstly, you know, some, some, uh, exports are still managing to get out, although, you know, obviously greatly reduced levels.

But, uh, for what, uh, Iran can't, can't export right now, uh, a lot is used domestically, right? So out, out of that, um, t-as you say, th-three million, somewhat more than three, including the other hydrocarbons, um, that they were producing, they were...

that they use one point seven, one point eight million domestically, so that'll presumably continue.

Uh, and for the surplus, yeah, they were st-they're storing it in onshore tanks, uh, and in floating storage, I mean, in, in tankers floating in, in the Gulf, and those obviously will fill up and, and you can argue about exactly how long it will take, and people have different estimates, but we're talking weeks probably, you know, weeks rather than months.

What will that mean for OPEC?

Yeah, you know, huge news.