The AI the Government Just Shut Down

**Jon Quast** (0:02)
The government just shut down a really powerful AI model. You're listening to Motley Fool Hidden Gems Investing.
Welcome to Motley Fool Hidden Gems Investing. I'm Jon Quast, and I'm joined today by Foolish Contributors, Matt Frankel and Rachel Warren. And we're gonna talk about that government concern with AI and leading to that shutdown.
We're also gonna talk about an acquisition that I didn't see coming personally, but first we want to talk about the news of the weekend, and that is that the US and Iran have a tentative deal in place to end the ongoing conflict. And it looks like they may sign that deal in Switzerland on Friday. Hopefully that is the case, but as we think about this as terms of what this does, obviously it ends the conflict that is really good from a human life perspective, but the main economic benefit is regarding the Strait of Hormuz. The Strait of Hormuz, so much passes through that little narrow part of that waterway, and it's been not working very well since this conflict began. But it seems like maybe we can get this strait reopened. So Rachel, if the strait was fully reopened, let's just pretend it's gonna be fully reopened today as a result of this deal. How long would it take before we start catching back up from it being closed all this time to begin with?

**Rachel Warren** (1:25)
Well, I think it's important to note that fixing the bottleneck will take far longer than breaking it did. So just to put some perspective to this, about 2,000 ships and about 170 million barrels of crude oil are currently stranded or idling in the Persian Gulf. And so clearing these immense maritime traffic bottlenecks, that will take several weeks to a month alone. And this is due to a variety of factors. It's also worth noting that tankers physically move at very low speeds.
On the production side, we see independent energy assessments from sources like Wood Mackenzie that indicate that affected Middle Eastern oil fields will require three months to safely ramp back up to 70 percent of prior production and six months to reach 90 percent production levels. So consequently, the global energy supply chain will face a residual lag. It's very unlikely to fully catch up to its pre-war fluid capacity until late 2026

**Jon Quast** (2:23)
Yeah, and so just to be clear, we're talking about the traffic in the street. That's going to, according to some of Rachel's, what she's been researching is going to take several months at a minimum. And I guess I think that for some of our listeners, they're vaguely aware that maybe they're paying a little bit more at the pump than what they would like to be paying as a result of what has been going on, the fact that oil can't ship freely through that strait. I've got a summer road trip coming up where I'm going to be putting a lot of gallons of gas in the tank.
Does this mean that we're not going to see any relief at the pump anytime soon?

**Rachel Warren** (2:58)
If the deal holds, we should see relief at US pumps within three to four weeks or so. We already saw, based on the news of this deal, Brent crude plummeting over 5% at one point. It might be more by the time we're recording this. But I also want to note, this agreement is somewhat fragile compared to past deals. It relies on an intense 60-day negotiation window covering nuclear capabilities and sanctions relief. And all of that creates a dynamic where there is still a lot of uncertainty moving forward. But this also means at a very practical level, for example, that shipping operators are highly skeptical and they're likely going to delay major voyages until, for example, mine clearance is verified. So we are still very, very much at the early stages of this thing.

**Jon Quast** (3:46)
Yeah, that is such a good point because this isn't the first time that it felt like maybe we could see the light at the end of the tunnel, that maybe there was finally a framework to end the conflict only for that to fall through. So Matt, I do want to ask you here about confidence because it's one thing to have potentially the deal signed in Switzerland this Friday, but does that mean that everyone has the confidence to go ahead and start acting on it?

**Matt Frankel** (4:12)
Yeah, this is the closest we've had to having signatures on a deal. We don't have that yet, but Rachel did a good job of going through all the numbers, but I want to put some kind of just context behind them. So there's a few things that need to happen here. So first, the reopening of the strait is just one part of it, right? Captains need to be willing to sail their ships through. Insurance companies need to be willing to underwrite those ships sailing through the strait with, like she said, with the minesweeping not necessarily complete. Tanker owners must be willing to take the risk that they have.