Javier Blas on CERAWeek and the Energy Market's Reckoning

**Javier Blas** (0:04)
As one of the executives of the industry said, I like high oil prices, I like $100 oil, but I don't like $100 oil like this, because there is a massive crisis in the Middle East, and it could be that the economy goes into recession.

**Jason Bordoff** (0:18)
This week, as efforts to broker a ceasefire in Iran failed, and US oil and gasoline prices whipsawed, energy industry leaders gathered in Houston for CERAWeek. The annual event sometimes described as the Davos of Energy. Energy Secretary Chris Wright said that the current supply disruptions would be short-term, framing rising energy costs as a trade-off for the administration's goal of regime change in Iran. Meanwhile, some oil and gas CEOs warned of coming shortages and said the supply shock is not yet reflected in energy prices. So aside from the prevailing sense of instability, what are the takeaways from this year's CERAWeek? Where is the energy crisis headed from here? What of the supply shocks changed about how the industry thinks about risk and resource planning? How are the events in the Gulf changing the renewable coal and nuclear markets? And what does it all mean for global energy security? This is a special edition of Columbia Energy Exchange from the Center on Global Energy Policy at Columbia University. I'm Jason Bordoff.
Today on the show, Javier Blas. Javier is an opinion columnist for Bloomberg, covering energy and commodities. He was previously at the Financial Times. Javier joined me from CERAWeek in Houston on the afternoon of Thursday, March 26, to recap the events of the past week. We talked about the current supply disruptions and about what Javier calls the White House's verbal interventions that have impacted the market. We talked about how the conflict could impact the energy transition and net zero goals in Europe and elsewhere. We looked at what the crisis means for the US market and the scale of demand destruction that may lie ahead both here and abroad. I hope you enjoy our conversation. Javier Blas, welcome back to Columbia Energy Exchange. Great to see you, my friend. Thanks for making time for my very busy week at CERAWeek in Houston.

**Javier Blas** (2:22)
Pleasure to be back.

**Jason Bordoff** (2:23)
Tell everyone listening what's going on. CERAWeek, biggest energy conference by far internationally, and there's always a different vibe, a different focus, a different sense of the conference, depending on whether people are talking more or less about the energy transition, depending on whether oil prices are high or low. What's happening on the ground this year?

**Javier Blas** (2:44)
Well, CERAWeek just ended in Houston, and I think that this will be the first time since I have been coming to the conference, and that's more than a decade ago, that I will struggle for a theme because everyone was trying to, not to talk much. First of all, there were a lot of cancellations. All of the people, all the executives from the Middle East have to stay home, some of them joined by video conference, but obviously it's not the same. And then everyone else, it's very difficult, whatever you are doing in the energy industry, whether you are fossil fuels or the renewable side, to make any planning, because you could construct a scenario, quite realistic scenarios, in which the price of oil is somewhere around $75 if you are listening to this next week, because the world is over and almost miraculously, nothing, no more destruction has happened.
And suddenly you could also construct a scenario in which the price of oil is already at $200 and we are heading to something that really looks like 1973, redox. And in that situation, you have to forgive executives to basically trying to say a few pleasantries and no more than that.

**Jason Bordoff** (4:03)
And you're talking about executives and often the people that get the most media attention are the CEOs of the biggest energy companies, but few people know the world of commodities and energy trading quite like you do, having written the fantastic book about it. So what does that world mean for that world of commodities? Oil, gas, other commodities, and all the trading houses that you talk to all the time when you have no idea if things are 75 or 200 in a few days?

**Javier Blas** (4:29)
Well, I mean, those are the guys who are going to be making the great arbitrage. We are losing despite the White House having implemented a number of policies which have been quite successful, not least coordinated release of the International Energy Agency strategic reserves, the largest ever, and also easing sanctions on Russian and Iranian oil barrels, among other policy actions. But the White House has been very successful in keeping to talking the market down, just using verbal interventions, leaks, tweets, or social media posts on social media, just to keep the market down. But still, the truth of the matter is that we are losing every day, at least, and this is the best case scenario, we are losing around 10 million barrels a day of oil and refined products. That's 10% of the global typical consumption. And we are losing a good, probably about 20 million, sorry, about 20% of the world's LNG.