A Crude Interest: Greg Sharenow on Structural Changes in the Commodity Complex

Maybe we start there, Greg, if that's all right.

I think that's what's on most advisors' minds right now, which is how do we interpret the MOU, what do we think the implications are in the near term for the normalization of oil traffic through the Straits of Hormuz.

And then maybe we'll get into some longer term impacts of what this is going to mean three, five, ten years down the road, you know, for energy traffic and energy trade.

Yeah, so I think it's a great question and a great place to start because we are talking about the largest energy producing region and not just energy.

Big export of aluminum, big export of helium.

There's a variety of fertilizers.

This is a very important topic to discuss in part because of the relevance to the global supply chain.

When I look at where we are today, I describe it best as we are at the beginning of the end of this phase.

We are in a point where there's a MOU in place that is focused primarily initially on normalizing oil flows and energy flows out of the Strait of Hormuz.

Now, a 60-day window by itself is not enough time to normalize.

Even if you just talk about repositioning the global tanker fleet, it's going to take 60 days.

And that's if everything goes smoothly.

restarting production.

We're probably going to be able to get 70, 80, 70, 75, 80% restarted in that period of time.

But as we saw with Qatar Energy, as recently as two days ago, where a massive explosion unfortunately claimed the lives of 13 employees in Qatar, it wasn't a LNG-focused problem.

It was actually a gas plant that served the domestic market.

You could see it highlights some of the challenges in restarting and getting all the production back onto normal.

And if that had happened to an LNG train instead of a domestic train, you would have seen a meaningful rally in global gas prices.

So we are really susceptible to how this unfolds.

So why is this the beginning of the end of this phase? Is that the next phase is what happens at the negotiating tables? And the negotiating table is one that would be challenged.

Historical precedent shows that JCPOA has another moment in time, took two years to negotiate.

We have a lot we're trying to accomplish in 60 days.

With extensions, we'll probably be able to punt this back past the midterms.

But the challenges in getting to an agreement are always going to be very hard.

There's a lot of economic inducements on the table right now to try to help facilitate it.

Maybe we start there, Greg, if that's all right.

I think that's what's on most advisors' minds right now, which is how do we interpret the MOU, what do we think the implications are in the near term for the normalization of oil traffic through the Straits of Hormuz.

And then maybe we'll get into some longer term impacts of what this is going to mean three, five, ten years down the road, you know, for energy traffic and energy trade.

Yeah, so I think it's a great question and a great place to start because we are talking about the largest energy producing region and not just energy.

Big export of aluminum, big export of helium.

There's a variety of fertilizers.

This is a very important topic to discuss in part because of the relevance to the global supply chain.

When I look at where we are today, I describe it best as we are at the beginning of the end of this phase.

We are in a point where there's a MOU in place that is focused primarily initially on normalizing oil flows and energy flows out of the Strait of Hormuz.

Now, a 60-day window by itself is not enough time to normalize.

Even if you just talk about repositioning the global tanker fleet, it's going to take 60 days.

And that's if everything goes smoothly.

restarting production.

We're probably going to be able to get 70, 80, 70, 75, 80% restarted in that period of time.

But as we saw with Qatar Energy, as recently as two days ago, where a massive explosion unfortunately claimed the lives of 13 employees in Qatar, it wasn't a LNG-focused problem.

It was actually a gas plant that served the domestic market.

You could see it highlights some of the challenges in restarting and getting all the production back onto normal.

And if that had happened to an LNG train instead of a domestic train, you would have seen a meaningful rally in global gas prices.

So we are really susceptible to how this unfolds.

So why is this the beginning of the end of this phase? Is that the next phase is what happens at the negotiating tables? And the negotiating table is one that would be challenged.

Historical precedent shows that JCPOA has another moment in time, took two years to negotiate.

We have a lot we're trying to accomplish in 60 days.

With extensions, we'll probably be able to punt this back past the midterms.

But the challenges in getting to an agreement are always going to be very hard.

There's a lot of economic inducements on the table right now to try to help facilitate it.