00:00So Brent crude is nearing $100 a barrel after a wave of Houthi attacks hit Saudi energy facilities.
00:07The strikes have forced some facilities to suspend operations temporarily.
00:11Brent reached its highest level since July.
00:14Oil prices have risen more than 8% this month amid renewed U.S.-Iran fighting and disruption to shipping through
00:21the Strait of Hormuz.
00:23Meanwhile, Kuwait's crude exports are showing signs of recovery.
00:27Shipments have climbed to around 1 million barrels a day, almost two-thirds of the last year's average.
00:33The country is using its own and charters tankers as well as ship-to-ship transfers outside the Strait of
00:39Hormuz to keep supplies moving.
00:42Jonathan Lam is an oil and gas analyst at Wood & Company.
00:46Jonathan, great to have you on the show.
00:48So first of all, oil prices are once again approaching $100 a barrel.
00:52So how much of this rise is driven by really supply disruption or how much of that is about fears?
01:00Well, one threat that has gone through every market move this year is that we've reacted with fear to certain
01:08trends.
01:09But we can't ignore the fact that the real supply of crude has been impacted by this conflict.
01:17And so there is actually, to some extent, a shortage of crude.
01:22So I would say that both factors are important here.
01:25And Saudi Arabia is the world's biggest crude exporter, but the conflict is now affecting both shipping routes and its
01:31own energy infrastructure.
01:32So just how vulnerable are Saudi oil exports?
01:38Well, as you say, the Saudis shifted a lot of their supply to the Red Sea using the East-West
01:47pipeline.
01:48Now that route is under threat.
01:51We've seen attacks from Houthis on the actual installations in Saudi Arabia.
01:57And I think this is a new phase.
02:01And I think there is a risk that Saudi exports could significantly fall.
02:06But we have to see whether these attacks can continue or whether they're just a short-term thing.
02:12And what practical options does Saudi Arabia have to get its oil to the international market without relying too much
02:19on the street of Hormuz?
02:20Could the East-West pipeline to the Red Sea provide a long-term solution, do you think?
02:25Well, I think we were all slightly surprised at how much crude could be moved on the East-West pipeline.
02:34If that is running without trouble, and if the ports on the Red Sea are not under attack,
02:41then yes, I think long-term this is an alternative to the Straits of Hormuz for the majority of Saudi
02:47exports.
02:49And I guess you must have been asked a lot of times, so if disruption around the street continues,
02:55where do you see oil prices heading?
02:57And what would a prolonged period around or above $100 mean for the global economy?
03:04Well, you know, as you said at the beginning of this piece, we're heading towards $100 now.
03:10If we go through another period when the disruption increases,
03:15then obviously we're going to see a period when oil prices remain above $100.
03:21The world still has quite a lot of oil inventories, so I don't see it going up very much more
03:31from here.
03:31Maybe we get $110, maybe $120, unless this conflict is drawn out for another few months.
03:39Now, last year, we thought oil prices were more like $60 a barrel.
03:45So if you think double where we were a year ago, I think the impact on global growth,
03:51the impact on inflation is going to be significant.
03:53Yeah, exactly. Thank you very much for your insight.
03:55So that is Jonathan Lam, an oil and gas analyst at Wood & Company.
