Category
🗞
NewsTranscript
00:00Peter McGuire is joining us, he's CEO at XM Australia.
00:03Peter, very good morning to you from where we are.
00:05Pleasure as always to speak with you.
00:08What are you making of the kind of conflagration
00:11we've seen between Iran and Israel
00:15from a market's perspective?
00:18And I'm not talking about the war itself
00:20or the geopolitics of it, but from a market's perspective,
00:22how much of a concern is that Iran's crude supplies
00:26or entire oil machinery will get hit?
00:30Well, good morning Tamana.
00:32I think that we've been down this pathway before
00:35and this really creates much angst from a supply side
00:39if there was to be an attack on those Iranian fields.
00:42We all understand geographically where they're positioned
00:44in the Strait of Hormuz on the Persian Gulf
00:47and the impact that that would have to shipping
00:50and of course, all the crude that flows through that region.
00:53So this would derail in a lot of ways
00:56a lot of crude being exported globally.
00:58So there's the first part.
00:59And the second part is a war premium
01:02would be quickly built into price
01:04and that could add five, 10, $20,
01:06depends on the severity of it,
01:08very, very quickly, if not more.
01:11Right.
01:12Peter, morning.
01:13You know, there were some reports
01:15over Tuesday and Wednesday as well,
01:18but there was some speculation with respect to OPEC
01:21going ahead and increasing production going ahead.
01:24Of course, since then,
01:25we've had certain stories being rebutted
01:27and this is a Wall Street Journal story
01:29being rebutted by the OPEC.
01:31There was still speculation that oil prices
01:33could potentially go down to $50 a barrel.
01:35That looks unlikely, yes?
01:37Well, again, perhaps the same.
01:38Good morning.
01:39I think a couple of things.
01:40First off, if you look at these,
01:42there are two very different processes in play.
01:45You've got, if you strip out the war
01:47and there was nothing happening
01:48and you were going to increase production,
01:50you would think that prices would fall in value.
01:53But now you've got a war premium
01:54that could be built in and escalating
01:56and you've got major conflict across that Mideast Basin.
02:00So that creates uncertainty
02:02and uncertainty is not what the market's like.
02:04The markets want certainty.
02:05So these are all factors that are going to,
02:08I think, unwrap themselves over the next matter of days.
02:14To understand, you know,
02:16the impact that Iran has on global crude supplies,
02:20the war and the uncertainty there, of course, remains,
02:24but the fact is that Iran is not such a huge supplier
02:28by itself and the fact that there's a glut.
02:31Do you think that tempers down expectations to some extent
02:34or tempers down at least the impact of this war
02:38on crude prices?
02:40Well, Tamana, it depends if there was a severe strike
02:43on the actual oil refineries and the whole Iranian oil,
02:50you know, the complex pipelines
02:52and everything that goes into the production of oil.
02:55So there's the first part.
02:56So if they would take out their infrastructure,
02:58that would create much angst
03:00because naturally are they going to be their counterparts
03:03or their allies coming to their support?
03:07And then the next part of it is what happens
03:09as far as distribution through the Persian Gulf?
03:11So, you know, these are factors that can quickly escalate
03:16and we've just got to say how severe
03:18that that particular process or scenario was to play out.
03:23This is all unknown
03:24because this is going to be into the future
03:26and we've just got to sit here
03:27and see what the retaliatory action
03:29is going to be from Israel.
03:32Moving on to, well, I'm going to talk about metals
03:34in this case because we've actually seen
03:36a lot of policy traction
03:37with respect to what China is doing there.
03:39And because of that, we've actually seen
03:40a little bit of resurgence in metal prices as well.
03:43How are you reading into things here?
03:46Well, Agam, I mean, you know,
03:47you've got copper now through 10,000 a metric ton.
03:50It's bounced very strongly to the upside.
03:52So is aluminium, nickel, tin, zinc.
03:55So all of them have had a really nice rally
03:57and, you know, it's on the back naturally
03:59of that China stimulus.
04:01And are we going to see an ongoing,
04:02I mean, the stock market has been mind blowing,
04:05which you've seen for the performance in September
04:07and certainly over the last week and a half
04:09across the Chinese equity markets.
04:12So if this is going to be the pathway forward
04:14and you're going to see continued uplift
04:16and really a concentrated effort
04:18from a stimulus perspective, as far as China's concerned,
04:23then that's a good sign because you're going to,
04:25but you naturally need to see consumption
04:27out the other side.
04:29That's global consumption.
04:30So again, it's early days, but at the moment,
04:33it's been a market that many traders
04:35have enjoyed terrifically in the sense of base metals
04:38and that quite bullish move to the upside.
04:42All right.
04:42Thank you so much for that, Peter McGuire there.
04:45And, you know, a lot of uncertainty out there,
04:48but remember that the kind of impact we will see
04:52from the Iran-Israel conflict, at least on crude prices,
04:55will be limited because of the huge glutton supply.
04:58And also we'll have to wait and see.
05:00I think what the market is waiting to see
05:01is what exactly is the shape and form of Israel's retaliation.