Oil Edges Higher With Hormuz Risks and Lebanon Tensions in Focus

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.
This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 AM Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube.

**Tom Keene** (0:27)
Javier Blas is so good in informing that Paul you can turn to his LinkedIn dump and say, okay, we got to talk about that. Yeah. Or his tweets or that we got to talk about that. Just him bouncing off people worldwide. Or you can look at a piece out this morning, which is absolutely definitive and I think news to most Americans. Javier Blas, America's challenge to Middle East oil won't stop. Javier, I think most Americans don't understand our independence and dominance in oil. Do you agree?

**Javier Blas** (1:05)
I think that that's true and it's not just the US.
I know that for Americans, typically, US played the continent between North America and South America. It's just across the whole of the Americas, from Alaska all the way to Tierra del Fuego in Argentina. Oil production is absolutely booming in the region. I mean, sure, Texas, but you look what is happening in Baca Muerta in Argentina, Brazil, Guyana, the amount of oil that the continent is putting is astonishing.

**Tom Keene** (1:36)
I don't know, Bloomberg Opinion, I'll get this out on social as well. And Paul, it's just simple. We've done a double since about 2007

**Paul Sweeney** (1:44)
Yeah, it's been just revolutionary. So Javier, what does that mean for the parts of the world that at the moment are really dependent upon mid-East oil? I'm thinking Europe, parts of Asia as well.

**Javier Blas** (1:57)
Well, I give you a couple of statistics that to me are shocking. Back in July, the European Union imported 60% of his LNG liquefied natural gas from the United States.
It is the United States that is saving the day for Europe when it comes to LNG supply because of the closure of the Strait of Hormuz for Qatari gas. Another example, a third of the oil that Japan imported in July came also from the United States. This is a country that used to import 95% of his oil from the Middle East. Now, it's relying on America.
It changed the global map of geoeconomics. It gives the White House a lot more influence than it ever had on energy affairs. It's helping allies of America in a moment of need. It still cannot replace the Strait of Hormuz for sure, but in a global economy, which is at the moment energy short, every barrel, every molecule of gas matter. It's one of the reasons that we are with the prices that we have today, rather than talking about triple digit or very high triple digit prices for oil.

**Paul Sweeney** (3:09)
Talk to us about the refining capability in the Americas, the ability to get that shale oil into distillates, and then including natural gas. Where are we in terms of capacity?

**Javier Blas** (3:24)
That is really the bottleneck right now. The US has invested a lot of money in increasing his production capacity of crude oil.
The same thing has happened across the Americas, Brazil, Argentina, Guyana, Canada, for sure. But we have invested very little on or not nearly enough, for sure, in transforming that crude oil in usable products for day to day. Very few people in the global economy buy crude oil. The only people who do it run a refinery. Everyone buys gasoline, jet fuel, or we buy a product, a service that has an airline ticket that has a bit of jet fuel with it. We have not invested enough. That's the bottleneck today, and that's why we see oil prices relatively low, considering all what is happening in the Middle East. But we see gasoline and diesel prices much higher, and that probably is not going to disappear anytime soon.

**Tom Keene** (4:19)
Javier Blas with us folks. Can't say enough about us. We're from Queen Victoria Street in London, and we continue with Mr. Blas. We welcome all of you worldwide. Javier, I got a fancy made up function here, which is distillate gas oil in Europe, priced per barrel in US dollars. And we're really buttressed up right against new highs.
If diesel and jet fuel break out to new highs, what will that do for our listeners and our viewers?

**Javier Blas** (4:54)
That's going to make everything that we buy more expensive. Diesel goes into transportation, is the workhorse of the global economy. So it means that the cost of transporting goods is going to increase. The cost of flying around is going to remain very high. So expect having to pay significant prices, going into the return of home for holiday, and thinking more of starting to book holiday for the second half of the year, Thanksgiving, Christmas, that's going to be expensive.