Um, so before we dive into what's actually been happening in the region and some of the reasons for it, Simon, what do we know about what is happening to the oil supply from Saudi to Europe over the next few months?

Well, we o- we obviously know that the Strait of Hormuz is operating at extremely limited capacity.

We already knew that, although some vessels are getting through.

The plan B was basically a pipeline which goes from the east of Saudi Arabia across to the west towards the Red Sea part of, uh, the coast of that, and that can go either north through the Suez Canal or out past Aden, Yemen, off to Asia.

Now that, of course, as we will be discussing, has also been constricted.

That pipeline has come under attack, and at the moment that could c- uh, means that four million barrels of oil that were getting across Saudi Arabia and onto the Red Sea are no longer getting there, so further constricting global supply, which is why in recent days you've seen very volatile oil price.

Went up from 100 to 110 when this pipeline was hit, and it's fluctuating, mainly driven by rumors on how long it's gonna fix.

... where actually it's quite predictable that if the situation deteriorates, there'll be a knock-on effect to the price of oil.

[chuckles]

... and four different chairman of the football club in that period.

You know, you, you, you want a bit of stability, and that's pretty unusual in a company of this size and stature.

Now, some of this was sort of self-inflicted own goals.

Bernard Looney h-had relationships with his staff, which he wasn't honest with the board about.

Mr. Auchincloss w-was promoted from CFO, did a, well, reasonably safe pair of hands, but d-didn't have that kind of leadership magic and was seen as being too close to Looney.

And now you've got Meg O'Neill coming in, who is generally considered a former Exxon American, um, thought of as a tough operator, cut her teeth at Exxon and then work-worked in Australia, and she's been brought in to steady the ship.

Hmm.

But just listening to Faisal's overview of the John Healey speech, do you have an overview of the John Healey speech?

Well, it was, it was a bit different, and I thought, thought that he...

Uh, this whole thing about not...

What businesses hated about the last administration with Reeves and Starmer is that they talked a big game about being pro-growth, pro-business before the election, and then came in and whacked up taxes and told everyone it was all gonna be much worse before it got any better, and he was clearly very keen not to do that, so very much trading on the kind of Andy Burnham vibe control kind of, uh, theme.

But vibes only get you so far, and as Faisal's pointing out, there's been a very big rise in government borrowing costs, which is chewing into his headroom, so he's got some tough things to, to get at.

But what was interesting, I think, is that businesses feel that there's not enough urgency.

Uh, things still take too long.

so that they can produce more, more cheap-

What was today's 6:00 AM government press release drop?

It was a further 20% cut in business rates for pubs, live music venues, uh, and other venues, but not the very biggest live music venues.

And this was meant to spread some good vibes on the High Street because Andy Burnham made it very clear in some of his early speeches that he sees the High Street as a kind of barometer for how people are feeling in the places that they live.

... which has had an effect on the oil price.

Yeah.

We're up to $98 a barrel in, uh, Brent crude.

Now, if you remember at the height of the conflict, it was nearly 120, so we're not quite at that.

But when it looked like there was this memorandum of understanding and it, you know, was gonna be peace, what have you, it went down to just above $70.

At some point, they're gonna reach the end, aren't they? And i- it-- there's gonna be a crisis.

Well, it's very interesting this because if we go back to sort of April, May, you had the International Energy Agency saying that this crisis was going to be worse than all the other oil crises we'd seen before back in the early '70s and the '80s and the tanker war of 2008, and, uh, it was gonna cause a global economic crisis.

It didn't happen.

Now, what's very interesting about that, it turns out that the US, the, the, the world energy supply network proved itself to be more resilient than thought, and that one-- another big factor, which is perhaps underreported, is the role of China in all of this.

Now, China, obviously a massive consumer of energy, it managed to draw down on its reserves, as you say, but also moderate demand in China, um, in a way that hasn't damaged its economy.

So I think, uh, if you want to read what's gonna happen next, I think that seeing what China does next with its own demand, what's happening its w-- with its reserves, is actually crucial to seeing whether we re-escalate to, um, oil prices, which actually create an economic crisis.

It's not just oil, remember, that goes through the Strait of Hormuz.

Is his strategy working? And, and, and what do we think he actually wants? Because it depends what his objective is as to whether his strategy is working.

And Simon, as we've learned, the appetite for risk amongst the international shipping world is very low, um, so they do not want to be transiting to the Strait of Hormuz if there's drones and ammunition going in both directions.

No, I mean, on a number of levels.

One is the, obviously the safety and well-being of their crews, which, uh, most of the, uh, um, shipping lines are not prepared to compromise, and secondly, there's the business of insurance premiums as well.

Obviously, the, the more the activity, the more hostility you've got in those straits, the higher those insurance premiums get.

So it is cost-laid, a laden on cost.

And, and as we said, it's pervasive, and what we've seen is government borrowing costs have been going up around the world as a result of this, including the US, particularly in the UK, which has seemed more reliant on the price of oil, more sensitive to oil and gas movements, and that's pushed, um, for example, the benchmark 10-year borrowing cost to what the b- UK government can borrow for 10 years above 5% for a bit today.

That, of course, is an extra headache for our incoming prime minister because the more expensive borrowing is, the more it adds to the debt interest bill, which is already at 100 billion pounds plus a year.

Mm.

... um, what's actually, what's actually happening here?

So up to now, um, only a few individuals, including Elon Musk and some very deep-pocketed institutions, have had the ability to own shares in SpaceX.

There comes a time in a company's life when it decides it wants to have some public currency, if you like, to find out what it's worth in the real world.

And so you offer a chunk, a little bit, about five percent of the company to the general public, the likes of you and me and people watching, saying, "Would you like to come and own a piece of this?" And so they're only selling a bit of the company, but based on the price of that bit of the company, you can get an-- y-you can extrapolate what the whole company is worth.

And what we know is that they're trying to get a price of one point seven five trillion dollars.

That's the biggest IPO in history.

So they're only raising between seventy-five and eighty-five billion, but that makes the whole company worth one point seven five trillion, which comfortably-

Which just proves that-- Yeah, which proves that that's basically what you, you're buying a bit of him.

And also, there are more young people who have maybe mental health conditions that mean they're on-- in the benefits system rather than the employment system.

I hate to boil this down to supply and demand, but there are two factors going on here.

One is that the number of entry-level jobs is actually markedly fewer than it was a few years ago, one point six million fewer jobs.

And then on the supply side, there are more people who don't feel up to, uh, getting into work for, you know, a variety of reasons.

So all-- You know, it is complex, and there's lots of factors here.

Mainly, you know, three-quarters of the million-plus we're talking about is youth unemployment, people who are looking for a job and can't get one.

And a lot of that, if you talk to any of the business groups around, will say that, in effect, government policies-- It's been a problem for a long time, but it's accelerated over the last couple of years, and some of that is down to the fact that government policies have made young people, in particular, more expensive.

[laughs] 1980s TV show.

Mm

... of this where it's been effectively shut.

And as Catriona was saying, you got r- big jet fuel shortages, particularly in Asia, and it's beginning to fe- the thing that worries a lot of people are things like fertilizer.

One third of fertilizer, seaborne fertilizer goes through that strait, and that's gonna show up in billions of meals, one, uh, uh, fertilizer manufacturer told me last week, are going to be lost.

Uh, and so, you know, uh, w- there's no credible way of getting this sorted now, and the longer this goes on, the more acute those get, uh, those things become.

Having said that, oil prices are sort of hovering in the middle.

Now w- what, what I'm hearing is that nobody thinks that 110 to $115 for a barrel of oil is the right price.

Um, tell me why that's a sigh-able thing at the moment.

Yes, yes

... for example, um, which was in September two thousand and seven.

And then you had also some stretch valuations.

You had, you know, the stock market at or near all-time highs.

Now, you look at the financial headlines now, they look a bit like that.

You've got surging energy prices, you've got distress in some of the financial system, and you've got what, what some people ca-stre- call stretch valuations in terms of particularly the amount of money that's going into AI.

Now, if you add all of those things together, do you have the ingredients for another financial crisis and how might it resemble the one in two thousand and eight? And I've been speaking to the Deputy Governor of the Bank of England, other people, um, Mohamed El-Erian, you know, v- esteemed economist, and they say they do see some echoes-

So she must be thinking about this a [chuckles] a lot.

And I need you please to tell me, first of all, what is the organization that I find hard to say, the IEA, the IEA.

IEA, the International Energy Agency.

It's got about a hundred and fifty members, and it is sort of the collective body to sort of coordinate, um, responses to the kind of crisis we've got right now.

And so what has been emerging over the last couple of days is that the countries who are members, all of them are obliged to hold ninety days of oil supply in reserve earmarked especially for crises like these.

Uh, the UK does it, and many other countries do it as well.

And in, uh, certain circumstances, they can release this into the market in order to try and combat, um, price spikes, shortages, et cetera.

And that's what we've seen.

... level of supply last? You know, what kind of practical difference is it gonna make?

Right

... and have become job seekers again.

So there's, if you like, the num- the denominator for that percentage has gone up a bit.

Um, but I think the really, um, you know, horrifying, the sort of standout stat in all of this is that the unemployment ra-rate among sixteen to twenty-four-year-olds is over sixteen percent, and that's the highest in roughly a decade.

And that is the c- the, the thing that a lot of people are focusing on, saying that if we can't get people into work by the age of twenty-four, Alan Milburn, the former health secretary, is doing a report on this, saying if you can't get a job by twenty-four, you r- you run the risk of losing a lost generation because forty-five percent of people who don't get a job by twenty-four don't get a job for many, many years after.

Th-the clock is ticking.

Yeah, and there's a couple of things going on.

There's a lot of reticence on the part of employers to hire, and that's for a number of reasons.

Please can we go back to business rates school again before we dive into today's news?

So business rates, the best way to think about them, I think, is like council tax for businesses.

It's the rates they pay to make use of the amenities, the water, the parking, the blah, blah, blah from which they benefit.

And for that, they pay an annual charge, and it's made up of two things.

There's a, a percentage of, of the value, the rateable value of the property.

So you apply that percentage or the multiplier as it's known to the rateable value of the property, and you get your business rate bill for the year.

Now, what happened in the last budget is Rachel Reeves, with some fanfare, announced that she was going to lower business, the multiplier bit, the percentage bit, and said this is gonna be the lowest rates in a generation.

What, what's it actually amounted to now that it's official?

Before we do the news, can you take me to business school? How do business rates for pubs actually work originally? I'm so glad you

asked this.

So there is something called the multiplier.

And this is a percentage which is applied... to the estimated value of the pub, which is how you calculate the business rates you pay every year.

And what happened during the budget was Rachel Reeves made some big promises to the hospitality sector.

She said she was going to reduce the multiplier, the percentage that you apply to the value of the pub.

Which sounds good.

You gave the percentage there, but that's like tens, tens of thousands,