An extended U.S.-Iran ceasefire is the 'worst-case scenario' for energy: Rory Jo [0:00-5:00]

I think in terms of guaranteed impact on the market, a longer ceasefire where the situation hormones and flow is not resumed is actually kind of a worst case scenario because we just keep accumulating this deficit with these drawdowns and global stockpiles without any of the pressure to resolve the crisis. I do think, however, that the extension of the ceasefire is important for market pricing because what we had seen through March was just how freaked out very frankly, the oil market was in a lot of physical traders were by the prospect of attacks on upstream infrastructure. We saw this after Israel attacked Iran's south part of the gas field and Iran retaliated by hitting the Qatari LNG facility at Rosloffin. That I think was one of those things like, oh, wow, this can get so much worse. And I think that's the thing is that, you know, even in this worst case scenario, we can still talk about unwinding the crisis in months. If you start hitting ab cake or other major upstream facilities in the region, that's like not a month. That could be a year's delay of recovery. And that's just a very, very different kind of cliff face for the market. So I do think that the extension of the ceasefire at the very base minimum is really important but it doesn't solve our problem. It just kicks down the can and avoids the worst case scenario of, you know, upstream attacks, you know, renewing again. What about the demand side? What is the picture that you are getting, Rory, because I was just looking at, and this is something that I mentioned at the top of the show, the Energy Information Administration talking about, just last week alone, they were talking about stockpiles falling because refiners, consumers, demand actually rose. Do we need a deeper sort of wider global campaign to kill demand going into the summer season right now? Yeah. So let's separate this into kind of two pieces here. So one, the data that you're referring to, the US data that was just released showed another 17.4 million barrels of oil were drawn down over the past week across United States. That's inclusive of the 9.1 million barrels that were released from the US SPR, but still these are big sustained inventory draws, and we're seeing this week after week after week, and we're seeing a massively rapid draw down in US domestic stockpiles. In the rest of the world, where we are starting to see some early signs of demand destruction is in Asia. However, I think the other aspect here that's important is that when people are talking about the epicenter of demand destruction right now in Asia, they're looking at China. Because what we've seen in China is upwards of a 5 million barrel a day reduction in crude oil imports. That's like a 40% reduction in how much crude oil China had been importing via tanker by sea. A lot of people say like, look at that. That's demand destruction. But the challenge is that we've seen imports drop by a huge amount. We've seen refinery runs drop by a little amount. So already we're starting to see some impact of likely SPR injections into the system. And then finally down the line, we just haven't seen the types of mobility contractions that we saw during COVID-0 and 22, that we would normally associate with the type of demand destruction that refining runs in China are implying right now. So what this is telling us is that you're seeing a lot of injected kind of strategic and non-visible inventories applies into the system that are buying yet more buffer time for the global market. But at the end of the day, these are all finite stocks and the hormones needs to reopen because at this stage, we're currently drawing down global stockpiles at the fastest rate in the history of the market. So what is your base case? I mean, I know that all of that depends on the duration of this uncertainty around an negotiation, ceasefire, extension of ceasefire, the straight and promote closure or not. But what is the number that you're going with, while you point out all these buffers are thinning? Yeah, so very frankly, and Mayacolpa, I expected oil prices to already be higher than they are right now. But I think that even with buffers, even starting the year in a surplus high inventory position, historically, the oil market ran way ahead of these types of shocks. The difference this year is the volume and the kind of vehement of the verbal interventions, the jaw boning by Trump and his secretaries and the rest of his cabinet, that I think this has injected such a heavy dose of volatility in the market and so much downside risk. You know, in this normal market right now, if you were to say we're like 13, 15 million barrels a day in deficit, we're drawing stocks of the fastest baseline record and Brent seeing a hundred bucks, you could pretty confidently hold that position and say, yeah, fundamentals are driving to the upside. But when you look empirically over the past two, three months, you would see every single time we got into 110, 115 Brent, you got a new injection of a new kind of headline via True Social Post by the president that shocks crude down $15 and 15 minutes.