Chapter 1: What is the main topic discussed in this episode?
Music and more. Music and more.
Welcome to Fuelcast. I'm Carrington Clark, and this is your source to stay on top of the numbers behind the ongoing energy crisis. It's Monday, May the 4th. We're recording mid-morning. Let's have a look at the figures. The price of Brent crude has fallen to $108 a barrel since we last checked in.
The national average price of unleaded has fallen to $1.85 per litre, and the national average price of diesel has risen to $2.65 per litre. Today, I'm joined by Alan Kohler to dig into the major energy headlines. Good morning, Alan. Good morning, Carrington.
Alan, Donald Trump has announced this new Project Freedom, which he says will kick off tomorrow, with the US helping to guide stranded ships through the Strait of Hormuz. Now... There's very little detail about this plan.
According to the Wall Street Journal, it does not include the US Navy escorting ships, but US Central Command says the support will include guided missile destroyers, over 100 land and sea-based aircraft, multi-domain unmanned platforms, and 15,000 service members. So... Very little in the way of detail. We haven't seen a major reaction when it comes to the oil price. What do you make of it?
What's your analysis? I don't know what to make of it.
I mean, what does all that mean? I've got no idea. I mean, there used to be, before the war, there was 120, 130, 140 ships a day going through the Strait of Hormuz. So if they're going to escort all of them through, they're going to be very busy, I would have thought. So I don't think that's going to work. But so, yeah, look, will that mean any ships get through? I don't know.
I mean, it's hard to know.
It's near impossible to know. We know Donald Trump has once again rejected the Iranian proposal, which was to deal with the opening up of the Strait of Hormuz border and kind of park the discussions when it comes to the nuclear program. Now, Donald Trump, when he sent out this social media post, said this was a kind of humanitarian activity because of all these stranded ships.
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Chapter 2: What is Project Freedom and how does it relate to the Strait of Hormuz?
It kind of trended down ever since we had that excise cut. Is there any reason to believe that it can stay at that level? Surely if we've got the Brent crude price now up at $108 a barrel, are we going to start seeing that move up again? Is that going to be the major driver?
Look, there's two things for everyone to keep an eye on. One is the price of the two benchmarks, West Texas and Brent crude. And the other is the premium that's having to be paid for actual Persian Gulf oil that's needed to make diesel. and jet fuel in the Asian refineries that we get that stuff from.
So as for the two benchmarks, if you look at a graph of those, which are easy to get hold of, you can see that they jumped, obviously, that the price jumped at the beginning of the war on February the 28th. But since then, it's jumped around all over the place. But the trend has been upwards.
And so the traders who trade oil are trying to keep up with what Donald Trump says on social media or whatever, and that's causing the sort of volatility. But the trend is definitely upwards. And then separate to that, there's this premium that has to be paid for Persian Gulf oil, which is needed for diesel and jet fuel in Asia. And that is hard to get hold of. But it is also going up.
So I think it's fair to say, as you kind of said at the beginning, the short story is that really we can only expect particularly diesel and jet fuel to continue to rise.
We've got the Japanese prime minister currently visiting Australia. Again, this is partly, it's not just about fuel, but obviously that's part of the conversation that's occurring. Do you have any view on how this petrol diplomacy or whatever we want to frame it how successful it has been to shore up Australia's supplies going forward, and how critical will that conversation be with Japan?
Yeah, well, look, they've got some big refineries, so yeah, we need to get them to look on us favourably. Look, I think it's been pretty successful, really. It's certainly worth doing. So the people that he's talking to, like the Japanese Prime Minister, don't own the refinery. They can't actually...
guarantee the oil, but what they can, the fuel, but what they can do is the same as what Anthony Albanese is doing, which is to say they won't stop, for some reason, exports of the stuff to Australia. And we, that is Anthony Albanese, won't stop, for some reason, the export of gas to those countries. And so really it's a sort of a double negative in a way or a negative, a positive negative.
I don't know how to look at it. But he's saying that, you know, they're both saying that we won't kind of do anything to stop what's going on and we can, that the suppliers of those exports will be allowed to continue.
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