Venezuela, Iran causing a huge geopolitical risk in global oil markets. What does it mean for how the markets will react in the future?
Speaker 2
Jeff Currie
The geopolitical impact is by far the larger impact. Think through the lens of big importers like Europe, China, and India. The world just got a lot riskier.
Jeff Currie
If I'm China, I no longer feel secure about oil in the ground. I want oil above ground. This leads to risk-taking and hoarding.
What does that mean? What does China do? And actually, the outlook more bullish for oil full stop?
Speaker 2
Jeff Currie
The market has a record short based on perceived oil supply glut. But that glut is floating in dark fleet ships in places like the South China Sea.
Jeff Currie
This game is already in play - China did it with rare earth metals. What it's forcing is a re-rating of real asset prices.
This is a Currie chart looking at raw materials overall. Are we going to have record after record? I know you've been long bullish on copper. Does the record reach this month mark a peak or does it keep going?
Speaker 2
Jeff Currie
Raw industrial materials chart shows tightness in small commodities that go into manufacturing everything. This is the underlying cost structure of the economy and it's starting to rise quickly.
What can do something about it? Who can do something about it? Can OPEC+ do something about it on oil? Can BHP and Rio Tinto do something about raw materials?
Speaker 2
Jeff Currie
It's a fine line. If you start bringing on supply to push prices down, you run into capacity constraints, then fear kicks in.
Jeff Currie
What's different this time: in markets like oil, you've got a record short position (230M barrels two weeks ago) bigger than the glut floating in South China Sea.