We talked about, this notion of kind of energy price relativism that the president seems perhaps

pleasantly surprised that oil prices haven't climbed as much as maybe he feared they would, raising

the specter of $200 a barrel oil. Oil prices are higher, but we're not at 2,008

prices, for instance. What do you make of what he's talking about there? The fact that

the spike has been sizable, but maybe not as bad as as he and others might

have feared.

I think that's well, that's true. If you go back to the 2008 or 02/2014, prices

were over a $100 a barrel. If you put that in today's dollars, that's like a

$160 a barrel. So we haven't seen that, and there wasn't that same kind of disruption

that we're seeing now. But the question is, is still the relative calm before the storm?

The longer this goes on, the more the risk on the upside grow because the impacts

are being felt. The last cargoes have arrived in Europe, in in Asia, and, and inventories

are being drawn down.

Is that what we're waiting for? Because my question is why isn't it that bad? I'm

confounded as a foreign policy person about the markets and their resilience and how any sign

of life from these negotiations from the White House, they seem to look for any shred

of evidence that things are gonna be okay. Why is that happening?

See a divergence between the financial markets, you say, respond to the news. You know, a

deal is near or they're going to negotiate, and the reality of people in Asia actually

not having enough oil, shortages, rationing, businesses closing down, restaurants not operating because they don't have

energy. So Asia is one area. Europe is starting to feel particularly jet fuel, and we're

seeing it at the gasoline pump, but it's been there before.

Talk a bit more about that, the the pain that many people around the world are

feeling. And, yes, we're fixated on the market price and futures and all of that, but

there's a very real cost that's already taking effect here. And I'm I'm curious sort of

how you assess that level of pain.

I think what was you know, I think one of the things that people didn't think

about before this happened, if they thought about the Strait Of Hormuz, they thought about oil.

Maybe they thought about natural gas and LNG. They didn't think about fertilizer. They didn't think

about helium. They didn't think about aluminum. They didn't think about petrochemicals. And it turned out

that that region is much more integrated into the global economy because of all the economic

development there. So it produces, what is it, about 40% of the world's helium, which you

need to make semiconductors or MRI machines. So this is actually unlike all the other things

we've talked about in the last twenty years, this is a much bigger disruption to the

global economy, but it's Asia because, basically, economically, the Strait Of Hormuz went east. 80% of

the oil, 90% of the LNG went to Asia, and that's where the shortfall is in

ways that people really didn't model.

I saw at the International Energy Agency saying we are facing the biggest energy security threat

in history. And I wonder if you agree with that assessment of the moment that we're

I'm very curious. But, Dan, your perspective is on this moment in the wide the wider

screen.

I think this is this is the biggest energy disruption we've ever seen. But as you

say, it's it's ironic that we're not seeing the full price impact, and so time is

really the key factor here.

When you look at this, is it so bad because geographically, there's just really no alternative

as there have been in some other conflicts? There, you know, obviously, there are pipelines that

go out to the Red Sea, but you just can't get that volume through anywhere else.

And as we've also been talking about, how concerned are you that this could be a

chronic problem? You know, just because Iran agrees to something in the room doesn't mean they're

gonna change their minds if they've shown they have the capacity to shut this down.

Yeah. There was, until this happened, there was a thing called the TSS, the traffic separator

system, where people understood that, okay, in an orderly way, this goes this way. This goes

this way. Now there's gonna be uncertainty over it, and it raises questions not only about

the straight, but it raises the question about freedom of seas on which the world economy,

and world trade really depends. So I think there's we come out of this. There's going

to be an uneasiness about it, and so much will be critical as to what the

outcome will be. Will there be an actual system and understanding of how this operates, or

is this something that will fluctuate?

We last spoke with you eight weeks ago, I think, at the beginning of this conflict.

Yes. And it was on the

eve you. Eight weeks ago. I feel like you were just here.

Okay. Sorry. Continue. You are on the eve of going to run your conference in in

Texas, Sarah Week, and I'm very curious with that in the rearview mirror what those conversations

were like. I I imagine that your agenda had to be, adjusted and and changed as

a result of what was happening in The Middle East. But what were the conversations like

among executives that you had on stage and did have on the sidelines about

this topic? Things. One goes to what we were talking about, which is the sense that

that the market was underpricing risk the longer it goes on. And I think that was

a very strong message. And from the company people, you heard they were focused on constraints,

logistics, how do you get supplies, how do you make up for supplies. So they were

not looking at what the futures markets were doing expectations. They were saying, how do we

deliver oil? The other big thing, of course, the theme of the conference was big tech

meets the energy industry. Where are you gonna get the electricity for all the AI development

and what will be the sources? And so that was the theme that was in place

before the crisis. But you could see really when it was in late January when the

military buildup started, and that prices were already rising before the the war started.

So what is the solution for that? I mean, as we talk about big tech data

centers, this sudden spike in requirement coming at the same time there is an energy crunch.

Green energy is not very popular right now. Alternatives are not very popular right now. Is

that something that needs to be reevaluated? Do they need to reevaluate how they move this

oil through the region? Is anyone talking about an alternative long term plan so that we're

not dealing with this every few years if this happens again

and Well, I think they're out of this is gonna come a bigger focus on energy

security, and The Gulf countries themselves are gonna say, what do we do to protect ourselves?

What do we do in terms of investment within The Gulf and outside The Gulf? But

I think that, you know, this is the first you know, we're in the China EV

era. 20% of the cars built in the world this year will be EVs, and that's

gonna get a tick up from this, certainly.

In our last block, we talked about the the blockade, the utility of it, the degree

it's weighing on negotiations that are unfolding. And I know that there's been some debate about

what that, the presence of that blockade, the strait being effectively closed, is going to mean

for oil prices going forward. We have the president of The United States saying I'm gonna

paraphrase him here. He's got all the time in the world. If if that blockade persists,

if we see the kind of stalemate that we have been seeing for three months or

six months or whatever, what is the effect that's going to have here?

Well, you know, of course, sitting here, it's hard to believe that it will last for

another three months or six months, but a lot's happened that we already this was all

war was gonna be over in five days. I think there are two things. One is

a question and the leverage point about how bad is the Iranian economy, how much strain

can it take without the resources, and that's the bet of the of The US blockade.

I think the Iranian blockade, it basically is is that they can wage war on the

world economy and the pressure will be so great that they'll come out in a better

position. And in a sense, it's a clash between these two blockades that's unfolding now.

Haven't talked about sorry.

No. No. Go ahead.

On this point, we haven't talked about Carg Island in many weeks now, but that was

something that was kind of looming as something The US might do, try to take Carg

Island or destroy Carg Island. Play out that scenario for us here too. If things really

go south in Islamabad, if there isn't any advancement in these talks, and president Trump, he

says he will pursue his military action once again targeting power plants, infrastructure, and perhaps the

the refining capabilities of Carg Island. What what does

that Winston Churchill said once that once the war starts, what happens, whatever your plan is,

what happens is unforeseeable and uncontrollable, and we're sort of in that state right now. I

think Carg Island, as I understand, it's doable, but it's also very vulnerable from the shore

because it's fairly close in and Iranian artillery and drones and so forth. I think one

of the factors here that is new is that really the new form of warfare that

was really beta tested in Ukraine is now being played out in the Gulf Region, and

that would affect decisions about Karg Island. These are

the cheap drones and other yeah.

Yeah. Cheap drones.

And we were talking about it's been fascinating to see this pivot for Volodymyr Zelensky. He's

had a good run of luck with Orban being ousted in Hungary and getting new allies

in The Gulf as he's in Saudi and visiting the region and then

trying to paraphrase. He has some cards now.

He he does indeed. I wanna go back to something you were saying earlier. When you

look at these two economies, talked about the Iranian economy and how long they can last.

But there's another issue here, and that's The US economy. And then we were just talking

against the about wars of attrition. When you look at who can outlast if this becomes

a waiting game, you've got the very serious straits the Iranian economy is in. But you've

also got some not happy American consumers and a midterm coming up and a president and

a party who wants to get reelected. If this lingers into the fall, who blinks first?

Well, we certainly know that there's one thing. We see it every two years, every four

years, that gasoline prices really matter, and they really matter at the polls. And clearly, that's

in in in everybody's calculations right now. But you look at the position of The US

economy, we're gonna grow at 2% or more this year that the and I think this

is one of things that the financial markets are so driven by what's happened with AI

data centers that vast. Is it gonna be 800,000,000,000 or trillion dollars of investment this year?

That that's bolstering the overall economy. Obviously, gasoline prices remain. It's the most sensitive political price

in this country, but, our economy overall is, you know, is the envy of many other

people, and Iran's economy is actually in shambles.

Let me put an unfair question to you as the last one. I know you're not

next for a monetary policy, but we have a Fed that's adamant they can kind of

see through this conflict, or they said that at the beginning of it. How difficult does

that become if this conflict persists? I mean, what's the effect gonna be inflation that you're

coming from?

The question is, were we in an inflationary period beforehand for a lot of reasons, including

the amount of expenditure and so forth? What's happened to supply chains. Once you build energy

security, resilience in that as cost, and then simply all the inflationary impacts that come from

these higher prices. And so, you're gonna in order to see through, inflation through this period,

you're gonna need really good glasses. You're gonna need

really good glasses. We will leave it there.