Carlyle Group's Jeff Currie Talks Global Supply Chain, Oil
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What is the main topic discussed in this episode?
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Jeff joins us for more. Jeff, good morning. Good to see you. Good morning. Great to be here. We've got time here, so let's take a step back. You believe that even if there's a ceasefire, tomorrow, right now, the next five minutes, the world's changed. The commodities have accrued. What's changed? For one, you've disrupted global supply chains. This is not just a disruption to oil. It's gas, it's fertilizers, it's metals, it's petrochemicals. The list goes on and on. And then you've disrupted supply chains in countries all over the world. The ships are in the wrong places. The insurances have been canceled. You've taken the pressure out of the fields that you've shut in in places like Saudi Arabia or Iraq or even in the UAE.
The list goes on and on. The damage is going to take months to unwind. But I want to bring it to the immediate. There is no policy response that can stop this ascent in crude. None. And yes, you hear this 400 million barrel headline. Flow rate is what matters. You know, the maximum sustainable flow rate is 2 million barrels per day.
What impact is the Iran war having on the global energy supply chain?
So 400, that'll take them 200 days to get that out. And you put that in the context of a disruption of, you know, let's net it out. It's got to be somewhere around 18 million barrels per day right now. You're just minuscule in terms of offsetting it. So, again, there's not many options here. What would you call this then, a PR campaign? in terms of doing this, it's all they have. They're going to do whatever they can. But I think the key issue here, keep the hoarding down. Because we know what happened in the 1970s when you got the hoarding. It created an increase of demand of somewhere around 2 million barrels per day. In the size of this market, try 3 million barrels per day, on top of the disruption of somewhere around 18.
That word comes up in your research repeatedly, hoarding. China has been rewarded for doing just that over the last 12 months. Do you think others will follow now? They already are. Whether it's places like Japan and Korea, they're hoarding anything they can get their hands on at this point. And it even happens down to people driving. Keep your tank filled up. By the way, that's meaningful in terms of the demand pull. You know, most people drive and they take it down to about a quarter filled and then refill it.
How are global supply chains disrupted beyond oil?
Now they're going to be going into the gas station filling it back up every time it gets to a half or even three quarters. So what kind of premium are you talking about longer term? We were just speaking with Steve Voth of Federated Hermes earlier saying that if oil prices go above $90 for a prolonged period of time, that will cause real damage to the underlying economy. Is that a base case for you? By the way, the one thing... We're going through a regime change. This is not a trade. This is a regime change. We're moving from that world that was defined from 2014 to 2024, you know, is the new economy boom, you know, driven by Mag7, is a technology boom, asset light. Similar to what we saw, the dot-com boom.
What came after the dot-com boom? Remember, it was the exact same thing. You had a geopolitical event, switched you in 2001. And then actually directly connected to the 9-11 was China's admission of WTO. By the way, they were connected. George Bush Jr. needed to use force in the Middle East.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–1:47
2
What impact is the Iran war having on the global energy supply chain?
1:47–2:57
3
How are global supply chains disrupted beyond oil?
2:57–4:25
4
What will it take to unwind the damage to the energy supply chain?
4:25–4:51
5
What is the significance of the current crude oil price trends?
4:51–7:05
6
How does hoarding affect oil demand and supply dynamics?
7:05–9:33
7
What are the implications of rising oil prices on the economy?
9:33–10:04
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