No relief for high oil prices

SPEAKER_1 (0:00)

Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odoo, the only business software you'll ever need. It's an all-in-one, fully integrated platform that makes your work easier, from CRM, accounting, inventory, e-commerce and more. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. This is why over thousands of businesses have made the switch. So why not you?

Try Odoo for free at odoo.com. That's odoo.com.

Kimberly Adams (0:31)

With no end in sight to the war, there's no relief in sight when it comes to oil prices.

From Marketplace in Washington, I'm Kimberly Adams. Nearly seven months after Israel and the United States attacked Iran, oil prices are holding at over $100 a barrel. For more on the current state of the oil market and what's coming, I'm joined by Fernando Valle, Chief Investment Officer at Rio Shore Investments. Good morning.

Fernando Valle (0:57)

Good morning, Kimberly. Happy to be here.

Kimberly Adams (0:59)

Oil prices are still over $100 a barrel. How long do you think we'll be at these elevated prices?

Fernando Valle (1:05)

I think there's going to be considerable volatility still because there is this, will they find a solution? Won't they find a solution? But I think the new normal is definitely going to be above $80.

And I think $100 is going to be relatively normalized through the next six months to a year pending a much less severe resolution, I should say, to this conflict.

Kimberly Adams (1:29)

For much of the war, we've been talking about the straight of war moves, this vital shipping lane. But now alternative routes like pipelines are also closed or under threats. How is oil actually moving through the region these days? And how does that impact prices?

Fernando Valle (1:46)

It's a million dollar question. I think there are a lot of different routes that are less publicized than just the pipelines. We have East-West, which carries up to 7 million barrels a day. That has a smaller bottleneck at the export port that's only capable of 4.5 million barrels a day of loadings. So that's going through essentially the Red Sea. And then you have the pipeline to Fujairah, the Emirates, which is around 1.8 million barrels a day. Everything else that has been going on has been going through tankers, the ones that we can't track, which were just about 10 days ago, around 31 a day. That's about 10% of what the strait used to do when it was fully opened.

And then you have some that where the transplant ponders are off. Some you have what we'll call it as direct ship-to-ship transloading. So you try to avoid the straight, narrow part of the strait with moving with a small pipeline between ship-to-ship.

Kimberly Adams (2:56)

Fernando Vallee is Chief Investment Officer at Rio Shore Investments. Fernando, thank you.

Fernando Valle (3:02)

My pleasure. Thank you for having me.

SPEAKER_1 (3:21)

Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odoo, the only business software you'll ever need. It's an all-in-one, fully integrated platform that makes your work easier. From CRM, accounting, inventory, e-commerce, and more. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. This is why over thousands of businesses have made the switch. So why not you?

Try Odoo for free at odoo.com. That's odoo.com.

Kimberly Adams (3:52)

While some aspects of the global economy, like oil prices, impact just about everyone, there are some factors, like weather, that have a more regional influence. Take, for example, monsoon season. In India, the rainy season lasts from June to September. But this year, conditions were drier, and rainfall has been more uneven than in years past. In India and other monsoon-prone countries, the rainy season is an important economic force, and a dry spell could mean trouble. For more, we're joined by Madhavi Arora, Chief Economist at MK Global, speaking with us from Mumbai, India. Good morning.

Madhavi Arora (4:29)

Hi, good morning, guys.

Kimberly Adams (4:30)

Can you start by telling us a little bit more about monsoon season? It's not necessarily something that most parts of the US experience, but it is an important part of the Indian economy. Why is that?

Madhavi Arora (4:42)

Nearly 70% of the countries and rainfall is received during this period. To the extent that agriculture contributes almost 18% of India's GDP, but supports almost, say, 70% of the population. And to that extent, almost 60% of farmers depend directly on monsoon rainfall.

And thus, any disruption in the monsoon season could actually have ramifications for rural consumption and farm economy as well.