Javier Blas on Lessons from Closing Hormuz (So Far)

**Javier Blas** (0:04)
The price of gasoline has gone out. The cost of living has increased a bit, but nothing similar to what we thought. To me, that is the more remarkable aspect of this crisis. I mean, has it been a crisis? Yes, we are still losing more than 10 million dollars a day of production. And at the same time, looking at the market today, will I say that we're in a crisis mode? Probably not.
Three years ago, the prices were similar to today, and it was just a normal day in the market.

**Jason Bordoff** (0:33)
Five months into a major Middle East crisis that has shut down the Strait of Hormuz for extended stretches and disrupted anywhere between 10 and 15 million barrels a day of oil supply, global energy markets are still defying historical expectations. Despite all the lost production and the heightened geopolitical instability, as of late July, crude oil prices are hovering in the mid-80s, far below the $150 or $200 per barrel catastrophic scenarios many analysts had predicted early on. But beneath that headline number, the broader energy system tells a more complicated story. Refining margins have spiked to unprecedented levels, global coal consumption is headed toward a new record high, and the ways energy moves around the world are changing in real time as the crisis continues to unfold. So why hasn't this massive disruption triggered a full-blown global economic crisis? What role are China's massive strategic stockpile, shifting demand patterns and the ongoing energy transition played in dampening the shock? And what are the long-term security implications for global oil refining, shipping choke points, or the future of LNG infrastructure?
This is Columbia Energy Exchange, a weekly podcast 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. Previously, he was at the Financial Times, where he served in several key roles, including as Africa editor and commodities editor. He's also the co-author of The World For Sale, Money, Power, and The Traders Who Barter the Earth's Resources. Javier, join me to explore why the economic fallout from this energy crisis has been surprisingly muted so far. We discussed the rise in global cold use, particularly in China, while also looking at how the crisis might accelerate the clean energy transition. Finally, we examined how the straight closure is forcing the oil and gas industry to permanently build resilience into its supply chains. I hope you enjoy our conversation.
Javier Blas, very good to see you again, my friend. Thanks for joining us once again on Columbia Energy Exchange.

**Javier Blas** (2:55)
Thank you so much for having me again.

**Jason Bordoff** (2:57)
I think I reached out to you a few weeks ago about coming on the podcast again before we knew who the World Cup winner would be. So congratulations to you and all your fellow Spaniards.

**Javier Blas** (3:10)
I'm going to be very diplomatic and say that football won, which is also a way to insult every friend that I have in Argentina. But I think that for the next six months, they're going to have to deal with it.

**Jason Bordoff** (3:24)
Did, were you in Spain for the final or?

**Javier Blas** (3:27)
No, certainly I watched it remotely. I watched it here in London when I lived, but it was great. We have friends over, we have a Spanish food, we have a Spanish wine, and then we could celebrate, so I could not ask for more.

**Jason Bordoff** (3:42)
Well, it was a pretty remarkable performance by the team being so dominant all the way throughout. So congratulations. And I think I also reached out to you to have you on the podcast to talk about lessons learned from the crisis that was over. And you would be bored and you would have nothing to do because the strait would be open shortly after signing an MOU.
So what are you doing with all your free time now that the crisis is over?

**Javier Blas** (4:09)
The crisis is over if we were so lucky.
The day that we are recording this is 150 days since the war started.
Then we have a ceasefire, then we have more fighting, then we have ceasefire, then we have a MOU, we have more fighting, and now it seems that another ceasefire and perhaps another MOU, the market is struggling to adapt to all of this. But I think, however, that what I will say is that you have had me on day three of the conflict, 147 days ago, and told me all what was going to happen over this conflict, all the fighting, all the closure of the Strait of Hormuz, then the Houthis of Yemen joining, et cetera, et cetera. Problems in the Black Sea, we were fighting between Russia and Ukraine, and you have told me to guess where the oil price will be by now. I will have never said $79 per barrel for West Texas Intermediate. I think that to me is the biggest surprise of the crisis, is something that I think that we don't really get to understand how has happened. But this is perhaps the biggest, the first time that we have the biggest ever oil shock that doesn't really trigger a full-blown energy crisis. And by that I mean something that my dad is on the phone telling me why everything is so expensive, that the central banks everywhere are increasing interest rates, that we see unemployment going up, that people on the street feel it. And this time, of course, we have felt it. Of course, the price of gasoline has gone up. Of course, the cost of living has increased a bit, but nothing similar to what we thought. And to me, that is the more remarkable aspect of this crisis, which I almost struggle to label as a crisis. I mean, has it been a crisis? Yes. I mean, we are still losing more than 10 million dollars a day of production. That's more than 10% of global supply. And at the same time, looking at the market today, will I say that we are in a crisis mode? Probably not. Three years ago, prices were similar to today, and it was just a normal day in the market.