00:00Building new roads around the Strait of Hormuz will cost more.
00:03Energy researcher Gabriel Collins says that doesn't necessarily mean higher oil prices
00:09because Gulf producers still have some of the lowest production costs in the world.
00:15The logistics will cost more if you have to build alternative routes
00:20and potentially protect them from Iranian or Houthi strikes in the future.
00:26But what ultimately sets the price of oil on the world market is supply and demand
00:32and the price of the marginal barrel.
00:35Even if you were to add an extra $5 or $6 per barrel in logistics costs for bypass routes,
00:42crude oil that's produced in places like Saudi Arabia and the UAE and Iraq
00:48is still by far and away the lowest cost oil in the world.
00:52And so what it'll likely do is it'll shrink to some extent,
00:59all else held equal the rent and the profit that those low-cost producers make per barrel.
01:06But what will ultimately set the price that consumers pay all around the world
01:11is the interaction between supply and demand
01:14and how much the marginal suppliers on the higher end of the cost curve can produce oil for.
01:21So let's look at our government earlier in the world.
01:23So let's look at these
01:23You
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