Chapter 1: What is the significance of the Iran war on global oil markets?
Should the U.S. start bringing troops home from Europe? I worry a lot that this is where we were headed. Trump sort of signaled it a lot during his first term. And in my conversations with European friends, I have been telling them, be ready for this because I do not think we get through four years without the United States reducing its European footprint. I'm Jake Sullivan. I'm Jake Sullivan.
And I'm John Finer, and we're the hosts of The Long Game, a weekly national security podcast. This week, we debate whether the U.S. should draw down its true presence in Europe, and we break down the latest developments in the Iran war. The episode's out now. Search for and follow The Long Game wherever you get your podcasts.
Megan Rapinoe here. This week on A Touch More, I'm talking to my good friend, former soccer player and current soccer analyst Lori Lindsey about all things NWSL, the past, the present, and the future. Plus, I'm taking a look at the athletes who crushed at the Met Gala and Angel Reese's firm boundaries with the media.
Chapter 2: How has Iran's oil production evolved over the decades?
Check out the latest episode of A Touch More wherever you get your podcasts and on YouTube.
Does anyone really know what goes on behind closed doors at the Supreme Court?
Four years ago, I got a tip about the court, and I was not in the market to cover it whatsoever. But this tip was about a secret influence campaign that had been carried out inside the court. As you know, the very idea of that is outrageous.
I'm Preet Bharara, and this week, New York Times investigative journalist Jodi Kantor joins me to discuss her expose on the court's shadow docket. The episode is out now.
Search and follow Stay Tuned with Preet wherever you get your podcasts. Welcome to Profiteer Markets. Scott is off today, but we have a big episode for you nonetheless. We will be talking in this episode about oil, specifically the oil markets, which have now endured more than two months of disruption from the Iran war. Given all of this news, we wanted to take a step back
and help make sense of oil's role in the world and what this extended disruption means for our global economy, also for global energy and where everything is going next. So we decided to bring in someone who has spent decades studying all of these topics, the intersection of energy, geopolitics, global markets, and we spoke with him earlier this week while I was in Florence.
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Chapter 3: What role does the Strait of Hormuz play in global oil supply?
He is essentially the man who wrote the Bible on the history of oil, at least that is what a lot of people have said. He is regarded as one of the world's leading experts on oil. His Pulitzer Prize-winning book, The Prize, is considered the definitive work on how energy shapes global power.
So without further ado, here is our conversation with Daniel Yergin, vice chairman of S&P Global and author of the new map, Energy, Climate, and the clash of nations. I would love to start with just a brief history from you on Iran and Iran's place in the world of oil. And then we'll get into what's happened over the past few months. But for those who aren't aware,
Give us sort of the Iran and oil 101. What is their role in the world of energy?
That's a very good question because I've been thinking about the fact that the blockade against the export of Iranian oil demonstrates the degree to which Iran, as a country for well over a century, has been a country that has been made possible by oil. Iran, like in the 1960s, was competing with Saudi Arabia to be the largest Middle East oil producer.
It's much more oil than it's producing today. And that oil wealth was channeled by the Shah of Iran into Iran. trying to turn iran into an industrial power he overplayed his hand i was overthrown and the islamic republic came in and iran has continued to produce oil but often under uh under sanctions which have limited the amount of oil that it can export
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Chapter 4: Why is the Strait of Hormuz more important now than in the past?
And in the last few years, it's been really exporting oil at a discount to countries like China. So it's not a big player in the way that it historically had been. I still think back to when Iran and Saudi Arabia were almost in a battle to see who could produce more oil. But those days are long past.
What Iran recognizes by shutting the Strait of Hormuz gives it enormous leverage on the world economy and really shutting off a significant supply of oil in which the world depends.
So would you say then that Iran's real power isn't necessarily the actual oil, but the fact that they are situated in a place where a lot of oil goes through? In other words, they're sort of the gatekeeper to global oil?
Well, there's certainly the gatekeeper. 20% of world oil normally would go through the Strait of Hormuz. We've also learned, you know, if we had been talking on February 27th and I said to you, oh, the Strait of Hormuz is going to be closed, you would have said, well, that's probably going to affect oil.
You might have said it's going to affect natural gas, but you wouldn't have said it's going to affect petrochemicals, helium, fertilizer, metal exports, because really those Gulf Arab countries have become so integrated into the world economy on a much bigger scale than was anticipated.
But right now, what Iran is doing is by shutting, trying to change the Strait of Hormuz into an Iranian canal for which you pay tolls. What they are trying to do, what they're doing is, if this continues for another month, will create shortages that will be felt all across the world, will affect air travel, will affect agriculture, will affect the production of semiconductors.
So they have a lot of leverage as long as they control the strait.
Is it the case, then, that the Strait of Hormuz has become more powerful or more important in recent years?
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Chapter 5: How does the Iran conflict affect energy prices worldwide?
I mean, clearly, it has been a significant passageway for oil, but you mentioned that if we had discussed this a few months ago before the invasion, if we were talking about petrochemicals, we would not have talked about petrochemicals. We would not have talked about helium. And we would not have talked about fertilizer, which is really a big impact around the world.
It's been felt in the United States. Does that suggest then that this is a new development, that the Strait of Hormuz has become increasingly more central to global trade, not just in terms of oil, but in terms of many other materials?
Absolutely, because those Arab countries have established themselves as players in many different ways in the world economy. providing essential sources. Right now, there is an LNG project in the United States that is worried as to whether it can go forward because it depends upon steel from Abu Dhabi. Who would have thought that?
So I guess the question then becomes... Did we know this when we invaded? Or more importantly, did Trump and did the administration know this when they decided to invade? Did they understand that by doing this, you would disrupt not only the global supplies of oil, but also the global supplies of everything else?
You mentioned fertilizer, which was, of course, necessary to grow crops, which is, of course, necessary to put food on shelves and then feed people. I mean, to what extent were we actually aware of how important the Strait of Hormuz actually was?
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Chapter 6: What are the implications of U.S. military actions in Iran?
I think in general, there was not that awareness on a global basis about how the world economy had changed. And also, by the way, those countries export one other thing that's very important, and that's money. They have among the largest sovereign wealth funds in the world. So they play a very important role in that regard as well. So I don't think it was on the agenda.
It was necessary to envision that we'd be in the position that we're in today.
When you saw the invasion, when you read the headlines that the U.S. had struck Iran, what did you think and what did you predict would be coming next?
I thought Iran is not Venezuela. Venezuela was remarkably successful. You got one guy out and his wife, and it's a whole different game there now. But Iran, you have an IRGC, which is not only a military force, but an ideological movement as well.
and that the whole basis of that government has been based on their chant of death to America, the animosity of the U.S., and that they, in a sense, for many years, the U.S. has war-gamed what would happen in the Strait of Hormuz with Iran. Iran clearly was war-gaming as well and built up very considerable missile capabilities and indeed, I think, was quite...
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Chapter 7: How do global economies respond to rising energy prices?
It was a shock when we realized that the Iranians could send a missile 2,500 miles, so that they have really built themselves as a resistant state. And for them, this war is existential.
Did this strike make sense to you in terms of timing, in terms of reasoning?
Well, I didn't think about it one way. In those ways, I thought that, in a sense, that this war had been brewing for 47 years, is the way I thought. Was it going to take this form? I think that probably the administration, having seen the decimation of the Iranian proxies in the Middle East and so forth, that this seemed timely to do.
And there was that congregation of senior leaders all in one place, a target of opportunity. But I do think of this quote from Winston Churchill who said, once a war begins, policy and plans go out the window and it becomes unknowable and unexplicable in terms of what happens. And I think we're in that state today. And I was just talking to some people in the Gulf today.
For them, on the Arab Gulf, it's absolutely intolerable to have a situation where Iran remains in control of the Strait of Hormuz.
It's their highway. So it sounds like your view is that this has been boiling for a while and then we kind of reached a boiling point this year.
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Chapter 8: What does the future of energy look like in light of current events?
Was that boiling point the conflict that we saw within Iran, the persecution of their own citizens? Was that the moment or was there something else?
I think that certainly contributed to the sense that the regime's hands were really weakening, that there was popular uprising opposition, but the notion that they also killed perhaps 30,000 people or more is very sobering because all the guns are with the IRGC, with the militias, and with the military.
It may have been read that the regime was weak because of the scale of these demonstrations and the degree to which the rulers have ruined the economy. Iran today could have been a great force in the world economy. The basis was there before 1979, and they've ruined it. It's a country where people have been impoverished. They don't have enough water. It's been very badly ruled.
I mean, there were so many talented people Iranians who were studying in American universities, getting PhDs in economics and engineering, who would have gone back. And some of them did go back when the Shah felled, but now many of them are in exile again.
When you think about how the invasion has gone down so far, it seems as though we keep on... semi-claiming victory, or at least the administration continues to semi-claim victory in various ways, but ultimately the result seems to be the same, which is that the Strait of Hormuz is still blockaded, the regime remains somewhat intact, or at least it's now led by the old leader's son.
It still seems that the situation is extremely volatile on the ground, extremely radicalized. When you look at how it's unfolded so far two months into this war, What do you make of it? Do you think that it's going to plan, or is it not?
Of course, there's been a war, but it was an aerial war. It was air power, so there has not been a land invasion. I think it's thought that any boots on the ground is very precarious. It's the thing that... Trump criticized everybody else for. The scale would have to be very large. Will there be a more focused military option to sort of regain control of the strait?
Everything is more difficult now. Of course, we're in an age of drones where an inexpensive drone can do a lot of damage, and there are a lot of drones. The way I think about it, Ukraine was really the testbed or the beta test for 21st century warfare in terms of both traditional warfare but also drone warfare. And that is, you know, in terms of securing...
the Strait of Hormuz, unless you can also take out the drone problem, it's gonna be harder. But I guess I find it hard to believe that the situation we see now with Iran in control of the Strait of Hormuz will continue. But how that gets resolved, we're still going to see, and it may be in surprising ways.
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