Europe's heatwave: Too hot to tour?

**Leanna Byrne** (0:01)
40-degree heat is forcing Paris to shut up shop early.

**Elodie Berthe** (0:04)
I've worked a long time and, I mean, we've had hot days in the past, but these consecutive really, really hot days and nights are really painful.

**Leanna Byrne** (0:14)
It's World Business Report from the BBC World Service. I'm Leanna Byrne. As the Louvre and Eiffel Tower cut their opening hours, we'll hear how extreme heat is hitting one of the world's biggest tourism cities. Also, oil markets flip as the reopening of the Strait of Hormuz sends more supply into the market.
When the US and Israel went to war with Iran, one of the biggest fears for the global economy was oil. The Strait of Hormuz, one of the world's most important shipping routes for oil and gas, was effectively shut. This sent prices surging.

**SPEAKER_3** (0:56)
We are seeing oil and gas prices jump. Earlier today, Brent Crude was trading at a four-year high of $126.

**SPEAKER_4** (1:03)
Oil prices spiking again today after they stabilized on Wednesday. The price of crude oil has risen above $100 a barrel.

**SPEAKER_5** (1:10)
This week, oil prices fell to a three-month low after the announced tentative deal to end the war with Iran. Oil prices have continued to fall sharply.

**SPEAKER_6** (1:19)
Today are lowest since the war began.

**Leanna Byrne** (1:24)
But today, it's a different story. Since the US-Iran agreement to reopen the waterway, oil cargoes that were stuck in the Gulf have started to move again quickly. Parts of the oil market are now awash with supply, and Brent Crude, the International Benchmark, has fallen below $75 a barrel for the first time since the war began. Sarah Emerson is president of the research and forecasting firm ESAI Energy. Sarah, thanks for joining us.

**Sarah Emerson** (1:49)
My pleasure.

**Leanna Byrne** (1:50)
So this is quite the turnaround. Was it expected?

**Sarah Emerson** (1:54)
I think to some degree it was expected that if the strait opened and we actually saw cargoes moving through it, yes, that prices would fall.

**Leanna Byrne** (2:02)
So who's supplying this oil coming out of the strait and who's buying it?

**Sarah Emerson** (2:06)
Well, there's six producers inside the Gulf are supplying it and it's being bought all over the world. It's flowing, a lot of it flowing primarily to Asia.

**Leanna Byrne** (2:17)
Where is China in all of this? Because it sounds like weaker Chinese demand is a big part of why this oil is not being snapped up. Obviously, other parts of Asia are taking it, but not China.

**Sarah Emerson** (2:29)
Yeah, it's a little bit complicated because China has very substantial inventories. So they don't have to import and I think, well, their demand is certainly down a bit or flat, flatish to down.
It's really the fact that they don't need to import so they haven't been a draw on the market like they could have been.

**Leanna Byrne** (2:50)
I'm going to bring in Susan Schmidt, Portfolio Manager at Exchange Capital Resources in Chicago. Susan, it's cheaper oil, it's just straightforward. It's just a good news story for markets or is it a bit more complex?

**Susan Schmidt** (3:04)
It's a straightforward good news story for markets, I think.
Investors have been anticipating this, optimistic about it. We've seen oil prices drop more consistently than we've seen the level of confidence in talks between Iran and the United States. So investors have been ahead on this one, betting that oil would start to flow freely again. 20 million barrels came through in the last 24 hours. That's resuming normal activity. And investors are looking at this thinking that now the supply chain will be replenished, will get back on track, and we'll see the price pressure ease off of manufacturers and general supplies return to normal levels.

**Leanna Byrne** (3:43)
All sounds like good news, but Sarah, could prices get too low? There's this $50 a barrel figure that people talk about that's often linked to US shale. Can you explain that to me?

**Sarah Emerson** (3:56)
Well, prices are falling down in the 70s. Could they get too low? I think the factor that generally the press or the media has not been talking about is the fact that oil demand is actually quite low right now. As the crisis hit, a lot of countries cut their consumption. The idea is, well, now we're adding all the supply to a market of lean consumption, but actually, seasonally, it'll rise, plus we'll see recovery as the availability of the oil hits markets, then we'll see an increase in demand. So I don't really think we're heading to the 50s.
I'd be even, I can't imagine we could go sustainably into the 60s. But if we did, I agree with you. There is definitely some question that the trail would have to slow down after had been ramping up rigs.