“Not Until May” The Real Timeline for Controlling the Strait of Hormuz | Nadia Martin Wiggen Svelland Capital

Today's episode is brought to you by the Tukrium corn fond ticker, C-O-R-N. Let's get into it.

Welcome to this special edition of other people's money. I am joined today by Nadia Martin-Wig

and Director at Svelin Capital. I've had Svelin Capital on before on the program and they're

a hedge fund specializing in commodities and shipping markets. So when the crisis in the

Middle East kicked off, I thought if there's one manager that I should bring back onto the program,

it had to be somebody from Svelin Capital. So Nadia, thank you so much for joining me today.

Thank you. It's our pleasure. As I said, you specialize in commodities and shipping. That's

that's really the crux of the crisis that is really driving pretty much every market in the

world right now. As we record the morning of Monday, March 23rd, we just got a major announcement

out of the US in President Trump claiming that that that he has had productive talks with Iran.

We immediately got a denial from from Iranian authorities and markets are are generally taking

it in stride with Brent prices down not as much as they were down on the original announcement

and generally equity markets up bond markets around the world reacting well. What do you make of

these big announcements this morning? Well, we have to contextualize where the announcements came

from over the course of the weekend going into the weekend. We had an announcement from Trump

suggesting that he may be pulling back in Iran and we saw the oil price sell off on Friday

evening. It came up a little bit by the time the market closed, but really it had sold off quite

a bit. Then over the weekend, we saw continued attacks and then we received an ultimatum

announcement from Trump stating that if Iran does not open the spirit of her moves within 48 hours,

then an attack continued, then energy infrastructure could be under fire.

That really I think alarmed the markets quite a lot and we had a strong opening in Asia. We did

have some weakness over the course of the evening because there's one one thing is the announcements,

the other is the other side is the practicality of what is occurring. So the feeling and

observances in the market were number one, the street of her moves is not open and it remains

fully under control of the Iranian side and any ships that I've been getting through have done

so with the blessing of the Iranians be it for themselves on their own ships or ships that are

allowed officially by them. We had an Indian LPG vessel for example. These are done on a bilateral

basis that some ships are allowed through the street. So number one is that there was no change in

terms of the opening of the straight for the general world and by the Americans and Israeli side.

The other point was whether the US would really be willing to do this to attack this energy

infrastructure and if the US military led by the Navy is in a position to actively open up the

street in the next 48 hours or even in the next week to make a difference. So our assessment was that

no, this is not a real threat from the part of the Trump administration given that

it was already escalatory when we saw this attack. It's not like last June when we had Qatar

struck an announcement by Iran that they were going to strike US emptied personnel bases.

What they did this time last week is that they announced we are going to hit these possibly

these five facilities and they got through and hit Qatar's largest LNG facility with potentially

a hypersonic missile that we were not really certain that the Iranians had possession of. So it's

a much different environment than last year and therefore Trump's comments seemed very escalatory

on the weekend. At a time when we were not convinced that the US military wants to escalate

because not everything is in position in terms of troops and ships and so forth. The US

as Ford is in maintenance in the Mediterranean for example. So we're not at peak presence

in the region. So when you think about the risks caused by escalation versus the risk that the

the straight remaining closed which one seems to have the market more spooked because you hear

from people who say look if the straight is closed prices have to go higher but at the same time

clearly the market cares about potential further damage to energy infrastructure. So how are you

thinking about those two sides of the coin? So regardless of the announcements right now while

the straight is closed we are losing 13 million barrels per day of production out of the region right

that's what's been shut in in our estimate and right before this started we had peak flows of

23 million barrels per day right. We've since then had some more flowing out on the Iranian side

so they've reached around 2 million barrels per day of exports. So that part continues flow

and we've had the opening up of the east-west pipeline and expansion that it's always been running

a little bit in Saudi Arabia because there are two refineries there and usage of the Yan Bu port

which we're trying to have the peak production. Now Saudi ramico and Saudi Arabia have announced

already several weeks ago that we would have 7 million barrels per day up and running

through that pipeline infrastructure. However as again and this is when we're looking at the

context of the comments we already had 1 million barrels per day of oil flowing there

to the local refineries that serve local Saudi ravens. We also had an LPG pipeline that's around

500,000 barrels per day so that leaves around plus minus 5 million barrels per day of flow capacity.

However there are the practicalities of the port and it is in the Red Sea where we've had

historically the Houthis attacking and it's been underutilized and this is when we look through

what can actually load. It takes about 36 hours to load a VLCC 5 million barrels per day that's

2.5 VLCCs. We do not think that that can be physically done. You also have to sail through the

water during the daytime because it's dangerous because of potential attacks. So as a result we put

that number at more 2.5 million barrels per day to 3 million barrels per day is a sustainable

outflow of oil every day. In your blue sky scenario where everything goes perfectly for a couple

days you might hit 4 million barrels per day and that is again taking the context of where we are.

We continue to monitor and we've seen a lot of ships change their tracking to go into the Red Sea.

So when this attack first started we had a lot of congestion outside of the street of her muse

of ships going in there. We had the ships that were trapped inside. They turned into floating

storage facilities and then once those were exhausted that resulted in the shot in production

hence my 12.8 million barrels per day number. But then what we've seen since then is some of these

ships sitting outside. They've had to change course of where they are going to be because

it wants to hit your final loading date. You go on to a new contract and this is when it all started.

There was an expectation that you could get April loading barrels. Now the markets increasingly

wondering if they're even going to get may loading and this is when you look at the physical

benchmark of the price. The may loading barrels have skyrocketed this morning we had

due by pricing at $166 a barrel. After the true social announcement by Trump we saw

Brent dipped below $100 a barrel and this is where you had the physical market versus where

the paper market is trying to understand the strategy in the broader sense of the markets. But

what we see happening in that physical market in Asia. The reason I say it's Asia is because the

majority of that oil goes to the far east and it's done by term contracts so it's very reliable

what you're getting every month. They're not spot buyers in the market normally for those barrels.

So what they've had to do is they've had to take those ships and take a decision and we already saw

by the Thursday Friday of the first week of the attack that refiners from Japan, from Thailand.

They were shifting course on their ships straight for the US Gulf Coast, straight for West Africa,

Guiana. These were the alternative even the North Sea. These are the alternative loading

destinations for those ships. Now when you take a decision to go from the AG

you know where the straight of her muse is to the US Gulf Coast that's 30 days sailing.

So if we have the straight of her muse open tomorrow well you didn't have to sail back

or you've already started sailing before you even and you have to change course. So it's not

instant that everyone continues to wait there and that's why every week that this drags on

we see more and more of these ships moving on. Now what we've had to happen in the last two weeks

is increased buying by the Thai, by the South Koreans, by the Japanese even before the Japanese

Prime Minister met with President Trump of US barrels. Why did they choose US barrels? Well because

going into this in January the cheap and February the cheapest barrels in the world available were in

the US Gulf Coast and that is because we suddenly had this big jump because Venezuela and oil became

available in the US Gulf Coast and that's a heavier sour crude which is very good. It's the heavier

sour barrels that we've lost out of your rocky production for example. So it's a very good substitute

and it's been trading relatively cheaply. STWTI based and it also has had a cheaper differential

in terms of the physical market. Now we've had the Asian refiners starting to buy that. We've

even seen China buying even though they have this tremendous strategic petroleum reserve and they

are pulling that. So that's the short and that's why going back to my point at the beginning.

The oil market started up high this morning because they're the short. They have to pull the oil

and buy it. We then have Europe in the middle and this is where the refiners were shorter

sailing distance. If you're buying an Amsterdam from the North Sea that's really close by. That's

a couple days. If you're buying from the US Gulf Coast that's 20 days. It's still much shorter

than the US Gulf Coast. When you're in the US Gulf Coast it's another 40 days to get back over

Asia and this is where we've even seen Australia coming in and buying barrels from the US both of

crude oil and of gasoline. About three cargos of gasoline last week. That is not a normal trading

pattern at all because it takes so long to reach Asia. But why are they doing that? It's because

the first thing China did the first week when this war started is they announced a ban on

exporting refined products out of China of gasoline and diesel and the way we think of OPEC

and the Middle East is having that spare production capacity of oil besides what the US has

in terms of ramping up shale production. It's been Saudi Arabia when it comes to refined products

that spare refining capacity sits in China and China just said you know what we're not participating

we're just taking a seat back and thinking only about China China first and that is what has

really shifted things and when we look at where oil prices are relative to the refined product

prices we see that the Brent price could accelerate based on where we were on Friday night for

example to $130 a barrel and it still incentivizes a refiner to buy that oil run it and create

diesel and gasoline because we have not hit a demand destruction number yet but of course a

prolonged period can do that. What is that demand destruction number in your mind? It depends for

how long it continues it is really tough we've seen that jet fuel prices first they hit $130

and $230 we've seen you know thousands of flights cancelled it started in Asia we're seeing some

of it in Europe so I think that is starting to hit some of that but then it also depends on where

the rest of the markets are right so if stock markets are still doing well businesses are still

doing well and people are employed then they can handle a bit of a blip up I mean even two weeks into

this the gasoline price in the US was still cheaper than it was under the Biden administration so

it wasn't that problematic yet I think the main thing the markets are very concerned about and the

Trump administration is very concerned about is driving season in the US which starts officially

at the end of May so I think there is a view that okay the Trump administration can take care of

this by May when we look at the military analysis of what can be done to open up the street of

Hermes May is the earliest date that we're hearing is a possibility and that to us can can make sense

but it's not going to be full throttle exactly as it was before even and and this could involve

I think with increasing likelihood American boots on the ground to ensure that things are

done properly to open the street of Hermes so that means aircraft carriers that means two to

three planes at all times in the air you know probably 64 planes available that you have this

kind of coastal base to handle the drones and most importantly the mines the mines are extremely

difficult because there are thousands of little fishing boats that can deploy these mines and

that's where it needs to be done properly because this is where it's very difficult for the US

and for Israel because Iran can just go quiet let's say they are running out of missiles and

they're running out of drones they can go quiet for two weeks and then strike something and then

that completely changes that feeling in the commercial shipping fleet and it increases risk

premiums it increases the likelihood of the maritime community just saying I don't want to take

the risk and go on that ship so it increases the cost because it has to be just fine and that's

where I think we're seeing a complete repricing of the entire oil and gas energy complex and really

the entire energy complex across the world because renewables and any sort of electricity producer

also benefits from this because they are a more necessary part and they tend to be lower

lower price of course you know when the wind is blowing if you've already built the infrastructure

then that's basically free right so that's much better than having to rely on gas in Europe for

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Thanks for listening. Let's get back to today's interview. You say if it's done right, it's still

not going to be full throttle. That's why the the whole complex is reprising. What is the the new

floor? What is the the new base price for a barrel of oil coming out of the Middle East

in that scenario where the US does do everything right and you have that huge presence there

making sure that everything is running smoothly. When you say coming out of the Middle East,

when does the market start to feel you reliably have it? This is when I was quoting you

the Dubai and Oman price. That's at $166 right now. That's because only oil out of Oman

is reliably or semi reliably loading because even though Oman ports were hit a couple weeks ago.

So it's much higher. It's very difficult to say because it depends how long it lasts but

also what the IA is coming out with. There are actual injuries to facilities. So Saudi

Ramco, for example, they are saying they can ramp up quite quickly what they've had to shut down

and what they've preemptively shut down. There are however countries like Iraq, it could take

longer. We see the UAE has really taken a hit. Qatar has really taken a hit. It's been especially tough

on the natural gas infrastructure. We're talking about three to five years on that side. So I think

on the gas side, it's been a bigger problem. I'd say while this is going on, $100 seems to be

around plus minus Brent where the market kind of seeps down to. Yes, we've had it come down.

Even below $90 very temporarily, but I think the longer this duration continues, the higher that

price floor becomes. At the same time, the number of times we hear a pullback on the US situation,

the less effect it also has each time. It's like the SPR announcement. The first time when we were

expecting the SPR announcement, the oil price came down quite a lot. By the time we actually got

the SPR announcement, that was the fifth time we'd had that headline. The oil price didn't move

and then just went higher. So that is I think the situation that we're seeing, I would say general

markets though, aren't really pricing in that the straight of her moves won't be flowing until May.

I think there is very much expectation that it's two plus two weeks that keeps being what we hear.

And that kind of repricing will start to show. I also think that when we look at the general

markets, it's been buying the dips in SMB, buying the dips in the market. So that also says that

the general market isn't really pricing in a stagflation scenario or a period with very high

oil prices like we had in the 1970s, which means they're not changing their books. There's definitely

a lot of hot money in oil and we can see that because of the violent drops when the market gets

long. So that's a hedge probably for the overall trading books. But when we look on some of the

metals, they have actually really weakened. And golden silver are the ones that have weakened the

most throughout this. And our view on what is driving that first and foremost is that as investors

or individuals assess their risk and they want to take it down, what has been the hottest performer

going into this golden silver. So it always feels better to take some profits and then think about

how you need to invest and maybe invest that money in oil. When we look at the start of this year,

we had a 10 year low in terms of Brent length and a 10 year high in terms of WTI shorts. So that's

how disinterested the world was in oil. And they were super interested in gold. And now that some

of that money we think has shifted over. But of course, that creates more of this volatility.

When we look at base metals, they have overall weakened. But some have stayed steady. You know,

iron ore was initially quite steady, which meant going back to your demand destruction question that

we haven't experienced demand destruction. Iron ore is still being bought in China. When we had

this morning's true social, what we saw is that base metals were weaker and then base metals

actually recovered and are higher on on the morning than they were much like the stock markets.

Whereas oil really sold off still not back up to the highs. It's recovered a bit. And that just

tells you how how the market is thinking. It's not a demand destruction scenario yet. But every week

this continues. That's when we get closer to that scenario. I think also when we look at the emerging

markets, the first steps that they have taken is that they are subsidizing prices. So they are

allowing, for example, in countries like the Philippines that whatever is the wholesale price,

that can continue to be that because you need a high enough wholesale price for refined

products for refiners to be incentivized to run oil and buy the crude oil that is out there.

And what the government is doing is they are taking that hit and then allowing a subsidized

product price for their population. Now governments in emerging markets cannot do this

endlessly. They can do this as a temporary stock gap, but they will eventually run out of money.

Clearly there is a hope existing in the market that this is resolved faster than you think it's

going to be. Do you think that is going to make it more of an orderly repricing with prices steadily

rising or do you think there will be a moment where people kind of come to the conclusions that you

have that it's going to take longer and that it's going to be more of a stair step?

Well, based on the physical market, it started to look like it was going to just solidly move up.

And this is when we initially saw the price up to $100 and a little bit over. We saw that Dubai,

Oman, pricing very high. We saw the Asian refiners taking oil from the Atlantic basin,

you know, US, Guiana, North Sea, West Africa. And then we had very strong product prices in Asia,

so they would continue to pull that. But of course, as often happens, because there is a shortage of

that oil and the time that it takes to bring that oil out and that has used up a bit of ship

capacity and shipping rates go very high. They have come down because why? Well, when you don't

have the product to fill the ship, then the shipping price has to come down. And so initially going

into this, we had a very high tanker rates, very high LPG and LNG vessel rates. And then when

the shortage really hit in the straight of her moves, those came down and they came down quite

hard. So that allowed these Asian refiners to redirect to these cheaper crudes that are further

away, tying up the days because you're paying every single day to have that ship on on file.

But we still didn't have any action really coming from the Europeans because they have this

shorter lag time. We've been coming out of refinery maintenance. So now at the end of the

month, we see around 200,000 barrels per day of additional demand coming from refiners that are

coming back online. And then in next month, it's another 600,000 barrels per day. A positional

crew will add a time when it's stuck in the Middle East. So what we expected is for European

refined product prices to come up higher so that it could compete with that Asian pull. And that

is what has happened. And then things could price up towards the $130 a barrel, I suggested.

And then we start, and then it depends, right? Because then do we still not have the crew

available? So then we get to a situation of, okay, the prices have to go even higher on the product

side. And how are individual countries behaving? And this is the true danger of what China did by

hoarding its refined products. South Korea has started a partial hoarding as well. They're not

exporting diesel. So they're not exporting all of their products. And if you end up having the

entire world start to do this, and this is the huge fear if the US administration decided to

impose an export ban, either of crude oil or refined products or even a cap. Because then that

creates this mentality of, I need to buy as much as possible right now to protect my citizens.

And that makes prices skyrocket like we saw in the 70s. And this is something that the IAA

absolutely does not want to allow to happen. And I think that the American administration

also doesn't want this to happen. Hence why they keep putting out, no, no, we're not planning

an export ban. They want to make it cheaper for American refiners to be able to run as much as

possible. But they don't want countries to start buying in excess of what they need to drive up

prices because the governments of course don't suffer the same kind of demand destruction as

individuals. And when we're talking about OECD countries, they have much bigger budgets, right?

If it's Germany, if it's Japan, if it's South Korea, and finally if it's the United States of America.

So do you think it's actually other countries export bans that would be the most likely thing to

cause a US export ban that that would be something that would only come if kind of everybody else

in the world has done it because it has the the counter effective actually raising prices.

Yeah, I think if every other country had done that, which they wanted because some of them,

yeah, it's Europe and the US. This is where we are so integrated. The US normally imports

additional gasoline in the summer. And Europe imports additional diesel from the US. So there is

this clear relationship between those two regions. So I'll do that. And so it could be partial.

But that's where I really don't think they want to do that because they have this

understanding what they really want is for the Asian refinements because since COVID, we've shut

down a lot of refinery capacity, millions of barrels of refining capacity in Europe and the US.

And now the Middle East was building up to be the new refinery center. And now that's stuck

in the street of Hermes. So this is where it's a very tricky situation. Yeah, and this is why

we expected Trump to first relax the guidelines of the Jones Act, which he did. Because that brings

down the costs a little bit to US refiners. The other huge advantage US refiners have. And this is

why from a market perspective, the US doesn't need to impose a ban because natural gas prices

are inherently so much cheaper because we have an excess of natural gas in the US. Henry Hub is

pricing just shy of three dollars per MBTU this morning. We don't even have the Marcellus

going at peak production. That's this enormous shale patch. So we have an excess capacity that

with a price signal, you know, I mean $3, $4, definitely $450. That would come online.

Refineries use natural gas as a feedstock. So this is a huge advantage for US refiners to continue

producing their products. And that will always have its own more self-sufficient part. But of

course, Europe and other countries would love to bid up the price of those products. But because

the US in general normally imports additional gasoline. It's very tricky to impose an export ban.

And if anything, they just want to convince China that, okay, now maybe you want to step in and

produce more products and allow them to be shared with the world. This is where the biggest

short right now globally is Australia. Going into this, Australia had around 32 days of cover.

That's last week came down to 15, now 10 days of cover. And what they really need is, that's why

they're importing gasoline from the US. And what they really need is Japan to share some of their

reserves. But Japan is actually in their SPR releasing more crude than products. They need more

products assured from South Korea, from China. And this is where the trading relationships matters

so much because they're a huge producer of LNG that goes to Japan, South Korea, China. They produce

iron ore. We've had gold mines have to shut down in China because they have a shortage of diesel.

Already, and this is where that mining complex comes out. And then it goes back to that

overall demand destruction number and concerns about markets. And this is where commodities,

I think the risk assessment on commodities will be much higher. It's much more necessary

for the fabric of the world. And there will be more confidence in having to hold real assets

of that nature. Then we're stuck with Europe in the middle that is very politically driven.

We have all these rules about LNG. We're not going to buy anymore from Russia. We have filling

targets. And this kind of seasonality that in 2022, we saw the peak in pricing in natural gas

prices came in August. When we looked at what happened after this morning's truth social,

the entire natural gas curve came down in Europe. And that doesn't make sense. It should have

been only the front, the near-dated TTF that should have come down in price. Whereas the whole

thing came down. So that's where we really see that there will be additional demand coming. Asia has

a summer filling season because they run air conditioning off of natural gas, for example.

And then there will be the winter filling season in Europe. In the meantime, we have

golden pass ramping up. We've had plack of mines going at above name plate capacity.

But as I mentioned, we still haven't had all the natural gas production coming up yet in the US.

So this is where the US is more protected. But LNG is becoming more like oil and globally traded.

And there will definitely still be an impact on the US. Is there enough one capacity in terms of

production, but then also export capacity and then import capacity because it takes terminals to

bring it actually into Europe and into Asia. Is there enough in the world to make up for what is

being lost out of the Middle East region right now? You talked about those ships choosing to take

30 days to sail to Europe, to Guyana, to the United States instead of going to the Red Sea.

Even if they get there, is there enough to make up for what is lost?

Not really. I mean, we've lost globally. What comes out of the Middle East is around 19% of the

world's LNG in 83% of Asia's demand. And they are these long term contract buyers. But we've

lost out of Qatar itself, which maybe out for three to five years is 9% of what we import

into Europe. If the EU goes ahead and cancels buying additional LNG or Putin goes ahead and cancels

buying a selling of LNG, because this is one thing we have to remember for Europe. The first thing

Putin did when all this happened is he said, well, Europe hasn't been nice and they say they're

going to go off our LNG. Well, we're not going to deliver any LNG into Europe from May 1st.

If that were to happen, that's 16% of our supply into Europe at a time when our

inventory is 30% lower than it was last year. So we're losing 25% of our potential fill

just from those two countries alone. And this is where it is very, very tricky. In 2022,

the difference is, of course, we had some Russian pipe gas coming. But we also had nuclear power

outages across France because of a heat wave and also some problems within the systems themselves,

which can always reoccur. This is where if we had a heat wave in Europe, we could absolutely see

record natural gas prices here, which means we have to pull from everywhere else in the world.

And that will have a big knock on effect. In terms of import capacity, well,

the Europeans have been very relaxed. I think especially because in 2022,

traders really overpaid for that natural gas. And this was because they had filling targets

mandated by the European Union politicians. And what we've seen in the last two years is they

keep relaxing these mandates. So nobody wants to pay up and then have the mandate be relaxed

because it's political about having natural gas in storage rather than having an immediate

need. But the problem is we cannot rely because this goes back to your question about terminal

capacity. We cannot rely only on deliveries at the time in winter. Our storage capacity when

it's completely full, that's 25% of winter demand. So 75% is already coming from these constant

deliveries. For Europe, we should have the FSRU capacity. But when we look globally,

this and this is exactly what happened in 2022 is we take from other emerging markets

what they could be having in terms of facilities to take LNG. And this is where countries like

Pakistan, Bangladesh, they are already getting priced out in these markets, LPG, the same problem.

So we need as much LNG as possible out of the US as quickly as possible. Canada also has some more

coming online. But it's not enough for the entire world. And I think this also goes back to positioning.

Because Placamines was such a success in ramping up production so well, so quickly across 19

trains. So if there's a problem, you still maintain a lot of production versus having a huge

facility with only two trains. Everyone became very bearish in expectations of this huge

oversupply of LNG coming over the next 18 to 24 months. And now we're in that opposite situation,

which as a result has made everyone unprepared. Traders and buyers unwilling to act quickly,

because they are very concerned that the EU will give out some mixed messaging and somebody will

say something out of turn, either saying we're delaying this or we're going back to Russian

Pythgas or the opposite of there's no chance we can handle this winter. So we'll probably also get

some mixed messages from European politicians coming, which as a result does not allow an

orderly market development for price to handle things and for things to flow smoothly.

So you're saying that lack of decisiveness means that for instance, that spare production

capacity in the US is going to be delayed and coming online because it's not going to be clear.

I think that the US incentive is there to produce that LNG side. And this is when you look at

especially the companies that are benefiting from a lot of spot pricing, they're doing extremely

well. So the incentives are there for them to come online as soon as possible because there are

buyers. But the buyers aren't fighting each other yet to get that LNG. We're not seeing a bidding

war between Asia and Europe. Europe hasn't really entered the bidding. We've been trading like $2.50

cheaper than Asia. That's nothing compared to what we, the natural gas price it was quite cheap

going into this 20 to 30 euros. Then we popped up to 65 up to 70 and this morning we were at 65

and then the truth social came out and then we dropped down to 54. So there is a lot of volatility

and hopefulness on this reopening of the street. But the market signal is absolutely there for the

US. And I think for the long term, it's there because everyone understands the straight of

is a real choke point. And therefore, we need a diversification. And this is where offshore

and onshore production globally in the oil and gas industry. And our view is going to explode.

We need more drilling. We need to have multiple resources. Guiana will continue to be popular.

Namibia is going to go forward places like that just to diversify from potential choke points

in the future. So when you think about the trading opportunities that you were looking at,

what are the areas that you've been most focused on right now?

Yeah. So number one is the early signal from shipping, right? Understanding what happened

from day one in the street of Hermues. You know, an understanding that it was the US Navy actually

that told the commercial fleet to not come within a 30 nautical mile radius of the street of

Hermues until things were under control. Then there's the insurance element of it, right?

And how is that insurance price? And then what is the behavior of individual companies?

And are they willing to take that risk? And we could see early on that some of the Greek

ship owners were willing to take that risk to go into the street of Hermues. And so that's what we

were observing. What is happening in terms of that signal on tankers, on LNG, on LPG, on car

carriers and so forth? How is everything moving? Then we look at it in the scope of,

is there a shortage of this commodity or is there an excess of this commodity globally?

And then we think about legging into a strategy or an idea, right? So it's not only trading oil

or LNG. It's also that shipping leg and how do things start to change? And this is where we can

very much see the potential scenario that we have the war in Ukraine and COVID at the same time.

Because we have the logistic backup, because we see that these ships have now diverting course.

So the earliest we can start to get LNG into Europe after what has already happened in

Middle East is 70 days from today. And so if things open up, let's say in May, things are starting

to trade and by June they're going faster. Well, by then we've had all these diversions go to Europe,

then we have oil and gas trading out of the street of Hermues. Then we could end up with Port

congestion in Asia where they can't actually land to get to the refiner's. So that can make shipping

rates go a lot higher because you're paying for the marriage. And that's what we're trying to look

at that flow and what is the first buyer of oil is always your refiner. So looking at that

element of it and how does that fill in within markets, we don't trade electricity itself.

But we are looking at electricity producers and how is the spot market in electricity in Europe

affected by this? And then you have the weather parts that affect supply and demand as well as

an element of this. And then general markets, right? Because this is where things like waste

plastics, right? We're recycled plastic, right? We're potentially, because the pet chem

industry is really making big cuts in Asia right now because they just don't have the LPG available.

There's a global shortage of NAFTA. We need NAFTA to make Venezuela oil flow

enough because it's so thick to put it on a ship. But we also need NAFTA to make plastics,

and we need LPG to make plastics. And then, well, if there's a shortage of that, then, you know,

we have to look to recycle plastic. And so this is where it's looking at all those kinds of

opportunities within that space as the entire logistical chain makes and adjustment. But still

keeping in mind that it's not doom and gloom in the US stock market right now.

Of all of the refined products we've discussed, the commodities, whether it's gas, oil,

what are you most concerned about moving higher from this point on?

Well, it is the combined products together, right? If we look at diesel prices are very important

for Europe. They're important for American trucking, so forth. That's their kind of industrial

benchmark. And so far, you know, it has strengthened a lot in Europe. Diesel, of course,

refiners are deciding about that versus jet. Could we hit a situation where we actually

have a shortage of jet fuel? That could happen. How necessary is that relatively speaking

for the fabric of a country to work if we're in a less globalized world, which is right now what

we're looking at with these kind of hoarding situations? I think for the US gasoline matters the

most. And that's the biggest influence on the Trump administration. If they eventually decide

to actually pull back right now, I don't see an actual pullback, they want to wrestle control

of the straight of Hermes rather than leave it as we could not take control of the straight of

Hermes of complete pullback today would kind of suggest that because everyone knows Iran is in

control of it. But of course, there is a pain threshold when it comes to the gasoline price.

But so long as refining margins are positive, then refiners will keep running. And we are very much

in that situation with space for oil prices to appreciate and things to keep working.

But that hoarding scenario is when the numbers get very scary.

All right, Nadia. Well, thank you so much. I think we'll leave it right there. And

look, I think there's going to be plenty more for us to discuss in the coming week. So hopefully

we can do it again soon. Absolutely. Thank you so much. I hope you enjoyed today's episode.

Those interested in learning more about the two-cream corn fund,

ticker-c-o-r-n, can find more information at the link in the description. Until next time.