War in Iran Is Already Reshaping East Asia's Energy Future

Summary

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Odd Lots Podcast Summary

Episode: War in Iran Is Already Reshaping East Asia's Energy Future

Hosts: Joe Weisenthal & Tracy Alloway (Bloomberg)
Guest: Alex Turnbull (Investor, Researcher at Australia National University)
Date: April 15, 2026

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Overview

This episode examines how escalated conflict in Iran and the Middle East—particularly the closure of the Strait of Hormuz—is causing acute energy supply disruptions in East Asia. Special guest Alex Turnbull, based in Singapore and a specialist in energy security, joins to detail real-time regional impacts, emerging market dynamics, and the broader implications for global energy, decarbonization, and geopolitics.

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The War’s Immediate Market Impact

[01:24–04:52]

• Partial ceasefire: Despite headlines, real cessation of fighting is minimal; regional conflict continues.
• Strait of Hormuz effect: Practically closed, with ship traffic down to a trickle ("two as of today") and significant portions of global oil supply blocked.
• Oil and refined products: Prices (WTI, Brent) are up but less dramatically than expected given the scale of disruption. Refined products, especially in East Asia (e.g., Singapore jet fuel), are seeing more extreme effects.
• Notable quote – Tracy Alloway [03:43]:
  "We're seeing a lot of these types of headlines, some in Korea, some Thailand, etc. ... the big question is whether or not the East... scrambles even harder to adapt to this."
• Essential question: Will this disruption accelerate coal mining, decarbonization, or boost American LNG demand?

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Asia’s Exposure & Energy Crunch

[05:27–10:03]

• Asia’s vulnerability: Major crude importer, heavily dependent on Middle East supply; limited domestic production.
• Economic distress: Countries like the Philippines and Vietnam are facing acute refinery shutdown risks due to lack of supply, credit constraints, and surging spot prices.
• Demand destruction: Already appearing in lower-income countries—those unable to outbid on scarce energy are seeing the "lights go off."
• Refining margins: Many Asian refiners (especially smaller "teapot" Chinese ones) hit negative margins, but are sometimes required to stay online due to government mandates.

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Alternative Supplies: Russia and US LNG

[11:20–15:54]

• US LNG: Flows to Asia are ramping up as the willingness to pay outstrips Europe’s; risk of panic if the crisis persists into summer.
• Russian crude: Previously unsold Russian oil had acted as a buffer, now largely absorbed by China and India.
• China’s strategic position: Export controls on oil products, selective support based on geopolitical strategy (notably concerning territorial disputes with neighbors).

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Accelerated Decarbonization and Coal’s Comeback

[16:11–21:31]

• Push for alternatives:
  • Japan and Korea accelerating nuclear restarts ("Japan will push very hard... the public polling is really strong for it" – Alex Turnbull, [16:38]).
  • China pushing to reduce LNG use in chemicals; EV demand is surging, with dealership inventory turnover dropping from weeks to just days in many Asian markets.
• Notable quote – Alex Turnbull [18:23]:
  "We're down to single digit days in most places now. So anything China can produce out of the EV sector, I think will get sold this year."
• Coal remains reliable: In Asia, especially with coal primarily sourced from countries not reliant on energy chokepoints (China, India, Australia, South Africa), there's "a bit of a comeback" given current vulnerabilities.
• Notable quote – Turnbull [19:43]:
  "In a pinch, and currently I think coal is going to have a bit of a comeback for that reason alone."

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Solar, Storage, and Regional Shifts

[21:48–24:34]

• Best alternatives depend on geography:
  • Solar + storage for equatorial/sunny locations.
  • Wind for higher-latitude regions.
• Australia as a model:
  • Government-pushed residential batteries are "crushing" the high-price intraday peaks.
  • Result: Gas-fired generation much less often sets market prices; price impacts from this shock are less severe than in 2022.
• Notable quote – Turnbull [21:48]:
  "Solar is crazy cheap... batteries are also pretty cheap. That's hard to beat."

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East vs. West: Market Divergence and Global Flows

[24:57–27:53]

• Market divide: East of Suez faces acute supply problems, while the West is relatively insulated—for now.
• Fluid boundaries: Asian buyers already outbidding European LNG buyers, redirecting tanker flows. Any sustained crisis will eventually translate to Western markets through higher prices and tighter supply.

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The Future of US LNG and Energy Independence

[27:53–29:34]

• US LNG “forever growth” in question:
  • Rising costs of gas turbines, infrastructure, and volatility make LNG less attractive for new power investments.
  • Geopolitical risks (e.g., more attacks along supply routes) underscore instability.
• Key insight – Turnbull [29:23]:
  "Maybe a country just decides, ‘I don't want this. ... I'd like something boring, please.’"

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Singapore’s View on the Ground

[29:34–30:59]

• High stress among energy traders: Physical market is "extraordinarily stressed" while equities appear divorced from real-world chaos.
• Wartime mentality: Deep policy concern; Singapore’s historical experience with energy insecurity informs government and business outlook.

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Geopolitical Fallout and the US-Asia Relationship

[31:49–34:45]

• US unpredictability: Perception that American politics—especially on the Republican side—yields damaging global volatility; drives Asian interest in greater self-reliance and insulation from US shocks.
• Implications: Heightened focus on food, fuel, and material flow security may push countries away from reliance on US energy exports and toward local or regional alternatives.
• China’s alternative: Emerging as a pragmatic—if occasionally coercive—option for energy diplomacy in the region.
• Notable quote – Turnbull [34:45]:
  "All the pimps are bad. We need more Pam Bria." (metaphor for rejecting great power patronage in favor of autonomy)

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Concluding Reflections

[36:17–38:52]

• US energy independence questioned: Actual self-sufficiency may be overstated, with global linkages more profound and fragile than "hashtag blessed" politics suggest.
• Political will: Crises are accelerating public support for nuclear power and adoption of alternatives.
• Lesson for diplomacy: “Strength matters”—in dealing with both the US and China, resolve and leverage may be more effective than passive alignment.

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Notable Quotes & Timestamps

• On Asia’s exposure:
  “Frankly. The challenge right now for Asia is that most of their crude supply does come from the Middle East... Asia is very heavily exposed right now.” – Alex Turnbull [05:59]

• On China’s role:
  “There’s more or less a control on exports of oil products right now, which is not very helpful for the region...” – Alex Turnbull [15:30]

• On decarbonization after crisis:
  “Japan will push very hard on nuclear restarts and more importantly the public polling is really strong for it.” – Alex Turnbull [16:38]

• On coal’s comeback:
  “Currently I think coal is going to have a bit of a comeback for that reason alone.” – Alex Turnbull [19:43]

• On the future of US LNG:
  “There is this geopolitical risk attached to supply from the Middle East. ... Is this really what I want to build my power grid on? And the answer is probably not.” – Alex Turnbull [27:53]

• On regional autonomy:
  “All the pimps are bad. We need more Pam Bria.” – Alex Turnbull [34:45]

• On lessons for global diplomacy:
  “Maybe the lesson is that sort of like biding your time and trying to be friendly and obsequious. Maybe that's not the answer. Maybe stronger lines are the answer for global diplomacy right now.” – Joe Weisenthal [38:50]

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Episode Flow – Key Timestamps

• [01:24–04:52] War update, Strait of Hormuz situation, market anomalies
• [05:27–10:03] Asia’s immediate energy shock: refineries, rationing, and demand destruction
• [11:20–15:54] Status of US LNG and Russian oil in the Asian market; China’s maneuvering
• [16:11–21:31] Decarbonization acceleration, EV boom, coal’s resurgence
• [21:48–24:34] Solar, batteries, and storage—regional alternative energy prospects
• [24:57–27:53] East/West divide and global market seepage
• [27:53–29:34] Challenges for US LNG’s infinite growth story
• [29:34–30:59] On the ground in Singapore: industry anxiety, government vigilance
• [31:49–34:45] Geopolitical fallout: realignment and lessons for mid-sized powers
• [36:17–38:52] US energy independence: myth vs. reality, and the politics of energy transition

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This episode delivers a detailed, on-the-ground account of how Middle East conflict is rapidly reshaping energy, politics, and decarbonization trajectories across Asia, with profound ramifications for global markets, alliances, and the supposed security of "energy independence."

Transcript

[A]

I'm June Grosso inviting you to join me for the Bloomberg Law Podcast. Every weekday we help you make sense of the legal stories that shape the nation and the world. Listen for complete analysis of the biggest court cases, the latest actions from Congress and regulators, and the legal moves driving the markets. From corporate law to constitutional law, and from state courts to the Supreme Court. At Bloomberg Law, we go beyond the day's headlines. We speak with top attorneys, judges, scholars and policy experts, experts to break down what the rulings really mean. We do this every weekday, then bring you the best conversations in our daily podcast. Search for Bloomberg Law on YouTube, Apple, Spotify, or anywhere else you listen on the East Coast. Listen as you start your day and on the west coast, catch up in the evening. That's the Bloomberg Law Podcast with me, June Grosso. Subscribe today wherever you get your podcasts. Bloomberg Audio Studios Podcasts, Radio News.

[B]

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

[C]

And I'm Tracy alloway.

[B]

Tracy, it's April 9th, 9:05am There's a ceasefire. Ish. It's sort of. There's been something announced that's called a ceasefire. There does not seem to actually have been much of a cessation of fire per se. Maybe it slowed down a little bit. Some of the headlines this morning are about Israel continuing to strike hard in Lebanon, Iran saying that, well, if there's no ceasefire in Lebanon, there's no ceasefire at all. But, you know, overall, at least as of right now, you know, the market, et cetera, we saw that huge drop in oil Tuesday night. You know, the market's still sort of. Still sort of buoyant, right? Still sort of resilient.

[C]

Well, I think the important thing for the purposes of this particular discussion is if you take a look at what's going on in the Strait of Hormuz, it still seems to be shut, more or less. And shout out to the Bloomberg function, Ican Hormuz, go. You can see the number of ships that are going through, through that particular choke point. And I have two as of today, which is basically not good. Two.

[B]

Today there were some headlines about how maybe even in the good case, they would let through 10 to 15, which is still sort of nothing compared to normal ship traffic. So, like, nothing's back to normal.

[C]

I was gonna say, to your point, I think the thing that's confusing everyone is we keep seeing these headlines about like a billion barrels lost of world supply or 20% of the world's oil supply now choked out because of the Hormuz situation. And yet if you look at the oil price, you know, wti Brent, they're definitely up, but they're not up as much as you might think. Given the scale of disruption, I think

[B]

many people feel intuitively the price should be higher. And then of course there's the whole refined products situation, which is more extreme. And a lot of the prices that feel really extreme in general have happened in or we see it in East Asia, whether it's like Singapore jet fuel, etc. Or a lot of the headlines that you see about extreme rationing come from East Asia. I forget which country was they were like, you know, they're doing that classic thing of only drive to work if your license plate ends in an odd number on this day, whatever.

[C]

1970s.

[B]

Yeah. And we're seeing a lot of these types of headlines, some in Korea, some Thailand, etc. So it also then raises the question, you know, the strait of hormones is closed. Maybe it'll be open, but does this change future energy trajectory in some way? Does this mean there's going to be more comfort with coal mining over the long term? Does this mean that economies are going to try to accelerate decarbonization efforts more intensely? Could this be a huge boon for the American LNG industry where we know we're building a lot of export terminals, et cetera, and if, you know, impair there's some sort of impairment to Qatari lng, then I don't know, huge questions about even just setting aside market price right this second or this week. The the future of energy.

[C]

One thing about our current market moment is we are getting like a crash course in real time about the flow of energy throughout the world. And as we will see in this conversation, like it is still very much geographically constrained east versus West. And so as you say, the big question is whether or not the east kind of. I don't. Scrambles even harder to adapt to this.

[B]

Well, I'm very excited to say we do in fact have the perfect guest, someone who knows about all this stuff, someone who's been on the podcast before, but we haven't talked to him in years, which is really sad because we really like the guy. And so very excited to welcome back onto the show Alex Turnbull. He's an investor based in Singapore, but he's also a researcher with the Australia National University focused on energy security. Really knows the energy scene very well, spends his time thinking about the present and future of energy. So, Alex, thank you so much for coming back on Outlaws.

[D]

Thank you Very much. It's great to be back on.

[B]

Yeah, really, really appreciate it. Talk about like right now, you know, this phenomenon that we talk about where yeah, prices are up but you know, by some measures still within some sort of historical range. Whereas the headlines that you see about rationing, et cetera, like oh, this is extremely dire, et cetera. Give us your lay of the land from the, from the, from the Asian perspective, from the perspective of East Asian countries, like how dire are things just like right now without that, without that flow, Terrible.

[D]

Frankly. The challenge right now for Asia is that most of their crude supply does come from the Middle east or there are some countries which do have some domestic production, Malaysia, China of course. But broadly speaking, Asia is a massive crude importer and principally from the Middle east because it's the most proximate supply and generally it's the cheapest shipping distances and costs. So Asia is very heavily exposed right now. And more acutely thinking about what the impacts might be, how they might want to pre answer than the United States, of course, which produces a lot of oil but still needs Middle Eastern grades for blending and refining. Also Europe, which has access to routes quite readily.

[C]

How much do the spot prices actually matter at this moment in time? Because you know, you can look up something like Dubai, Oman or some type of oil that you would assume would be maybe flowing into East Asia and you can look at the spot price. But like if it's not actually moving, does that like moving out of the Strait of Hormuz into Asia, does that mean anything?

[D]

It does certainly for some grades. So for Amani, crude can still be loaded and is being loaded. Those are real prices. Prompt Brent. Those sorts of trades are real. So you're often seen even for loadings from Yanbu and Saudi Arabia, OSPs, which I guess indications of price are anywhere from 20 to $25 above whatever the prevailing bread contract is.

[B]

So in terms of like the knock on effects on the economy, we mentioned some of the rationing thing. Okay, yes, this is very, there's, they're highly exposed to it. What are, is it, is it hitting now? Is it, is the economic destruction already taking place? Like talk to us about like just sort of like I guess on the ground, figuratively and literally. What are some of the ripple effects that we're seeing?

[D]

You're certainly seeing serious constraints on consumption where they don't really have a lot of refining capacity and where they just don't have large amounts of crude storage. So places like the Philippines and Vietnam are already under some significant stress. A Lot of it is also driven by the fact it's just kind of a question of whether you can get credit lines to be able to pay these prices. And ultimately the decision at the refineries is if they don't have inputs, they have to shut the refinery down, which incurs a large amount of fixed costs and downtime and so forth. So a lot of the players are kind of living hand to mouth and trying to get whatever they can to stay open as long as they can. So that's how you have this extreme willingness to pay for prompt cargoes in order to keep these assets operating and running. But then the futures curve is out 30, 60 days and that's a long time in the current federal context where you could get resolution or not. And so that that disconnect is going to remain I think, so long as there is no sense of a clear

[B]

path here who's not getting energy. Because all right, if there are some entities that are almost going to be price completely price insensitive, they have to keep the lights on, they're going to just pay whatever. And so you get these huge short term spot prices, but volume is volume. And so who is actually being forced to turn off the lights or not run a refinery or whatever because they're getting outbid if there are fewer molecules. There are fewer molecules, yeah.

[D]

I mean certainly less high income countries in Asia you're starting to see quite an acute crunch in the Philippines. So they've recently secured some cargoes from China on a one off basis. Some Vietnam, the same, you know, places like the Pacific Islands, they're in a not very good place. So it's already starting to building the demand destruction starting mostly caused mostly by income.

[C]

So you mentioned refineries there. And one of the headlines that's come up recently is Asian refining margins slip into negative territory, which would seem like a bad thing if you're a refiner. And I take the point that you need to keep these assets going because it's hard to shut them down and then restart them again. But if you're not making any money, how long are these refiners actually going to keep going for?

[D]

Well, for some Chinese teapot refineries, just smaller private ones, they live in a different political, economic context and if they are told to stay on, they will. Depends on which. In many of these countries you don't have purely market price fuels. So whether that's Vietnam or China, in places where you have market pricing pass through, like Australia, the price of fuel is getting very expensive indeed.

[B]

So in in those situations, basically where Tracy mentioned, a refiner might be actually operating at negative margin. That's in an environment in which the retail price of fuel is not liberalized. There is a set, the government sets the price of fuel or sets them band or something like that. And the refineries just have to keep operating until the next time that band is changed.

[D]

Yes.

[B]

Okay, got it. So what are you seeing? Let's talk about, you know, right now. Is this, is there what's happening with us lng? Is it all being taken up by Europe? Is Europe, is Asia trying to get in on the action or bidding for cargoes like what's happening with American flows?

[D]

American flows are going to move into Asia quite sharply right now. So Asian prices and spot or even the JKM futures above European TTF or title transfer facility futures for the next period. That could change quickly. But at the moment, Asia has a much higher urgency and willingness to pay as they go into summer. Higher power demand from cooling, air conditioning and also just a much more acute dependence upon LNG in certain countries. So in Europe you've also. So you're going into summer have this solar and wind and it's not quite panic stations just yet. So I think Europe will be a little bit more slow to fill its storage. But then by if this goes on till say June or July, then that's when the real panic will set in. Security program on spreadsheets, new regulations piling up and audit dread.

[B]

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[A]

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[C]

For Asia, how much of a role does Russian oil play right now in terms of replacing lost Middle Eastern supply?

[D]

I mean, most of the Russian crude has already been sold anyway and it was being sold very heavily into Chinese refineries and teapots. So it's not like some of it was sitting offshore when it was going through a period of more robust US Sanctions. The offshore barrels of oil and water has been dropping very sharply as all that crude has been absorbed into various places. India, China, like I said. So. Yeah, so I think that sort of, that has provided something of a buffer to this shock because there was this backup of Russian crude that couldn't. No one was quite sure whether they could pay for it without getting sanctioned by the US but of course that's melted away in the current context.

[B]

You mentioned that the Philippines has imported some gas from China. And I'm curious, like, what has has China. We know they've been a big accumulator over the years generally of natural resources and they have strategic stockpiles and so forth. But right now, what are they doing and are they trying to play some role in stabilizing or easing the crunch for the region?

[D]

Overall, I think they've been very strategic. They're not certainly there's a. There's more or less a control on exports of oil products right now, which is not very helpful for the region because they have over time been large exporters. They are clearly doing this in a very targeted fashion. And I would assume there's other considerations behind that.

[C]

Oh, wait, say more.

[D]

Well, for example, China has territorial disputes with the Philippines and Vietnam and the South China Sea, and they've now got something interesting.

[B]

Okay, that makes sense.

[C]

Yeah. Oil as geopolitical tool is a tale as old as.

[B]

As old as. Time.

[C]

I was going to say time, but I guess as. As old as what, 200 years or something like that. Okay, so we were talking about the potential for an energy crisis to actually hasten decarbonization efforts in as. This is something that came up before on an episode we did on China's teapot refineries. Are you seeing rumblings of that at the moment or are people still in sort of wait and see mode?

[D]

No, there's definitely been a notable pickup in certain areas where there was already a bit of momentum. So in Japan they have been undertaking A number of nuclear restarts they've been, were moving very tentatively as the public got behind nuclear and the politics became less challenging. That is all apparently accelerating now. So Japan will push very hard on nuclear restarts and more importantly the public polling is really strong for it. So there's not a lot of political risk. And of course Takaichi had a massive election win so she's in favor of it. The public's behind it and there's a matter of necessity now. So I think that's something one could assume is only going to move faster. And then in Korea there's also more of a push for nuclear restarts, so that's moving quickly. China is doing some very pointed stuff to try to reduce LNG burns and use in chemicals. It's tricky to. If you've got a plastics plant, that's kind of hard to do, but they're having a red hot go at it. And similarly you're also starting to see a staggering acceleration in EV adoption. If you do calls to auto dealers around Asia and ask them how much time electric vehicles stay on the lots down to single days. And many of them are back ordered now. So if there probably wasn't even what

[C]

you're doing, are you calling up the car lots and asking them this?

[D]

Yeah, of course.

[B]

Wait, say more about this. And what would they have said? This is actually, this is, this is not. This is new. This is new. It's on the ground information. But talk about this, like what would they have said a month ago? What are the type of dealers you're talking to? What would they have said a month ago and what are they saying now?

[D]

I mean, you know January when there was. Yeah, you would see BYD cars for example, couple of dealers in Australia, Singapore, other parts of Asia, they would be on the lot for 25 plus days. You know, the inventory turns were kind of a bit slow and the market did look kind of glutted. We're down to single digit days in most places now. So anything China can produce out of the RV sector I think will get sold this year. That's just really the, the constraint is on the supply side, not on the demand side.

[B]

Now I don't know the degree of granularity that you pay attention to American politics. Are you familiar with. Do you know who Thomas Massey is? Does this name ring a bell?

[D]

Oh yeah, yeah. Isn't there?

[B]

He's a Kentucky from. Congressman from Kentucky who drives a Tesla with a bumper sticker that said this, this, this Tesla is powered by Kentucky Coal. So he's like, you know, he's a politician from Kentucky, Republican, very pro coal, but he's also pro Tesla. So he has his coal powered Tesla. Is that basically the sort of near or medium term future of Asia which is like, okay, LNG is impaired by these are flying off the lot. And so essentially we have a lot of like de facto coal powered Tesla's driving around or sorry, coal powered by these flying around.

[D]

To a certain extent, yeah. I mean it's also, there's also very hard analytic math behind this in the sense that there are the Straits of Hormuz do not aside from the east west pipeline which looks like it got pretty badly hit today over the last 24, 48 hours, there is no way for that oil to make its way out otherwise. So this is very different to 2022 where you have sanctions, you have this and that, but the spice will flow if it can physically move or be moved by pipelines, by rail or what have you. And so in 2022 I was pretty sanguine about the impacts on the oil market because Russia's got a lot of pipeline capacity to China through Kazakhstan and there was clearly not really the appetite to do full on shadow fleet sanctions that would be required to slow it down. In this case, you actually just can't get it out. That's all there is to it. And so if you look at that vulnerability with oil where 20 plus percent of the market comes from the Middle east and LNG, which is about the same numbers, and then you look at say a big network flow graph model of global coal market, which I've done, the coal is not really dependent upon choke points, but the biggest producers are places like first of all, China produces an enormous amount domestically. It's the world's largest producer. India does too. Australia, South Africa, these are all places with access to open ocean, no quirky straits. And so you don't really have to worry too much about whether some geopolitical event takes out coal. The most reliable option of course is just producing stuff in country, whether that's solar, wind, you know, batteries, nuclear. But in a pinch, and currently I think coal is going to have a bit of a comeback for that reason alone.

[C]

Yeah, sending coal aside for a second, when you look at alternate sources of energy, do you have like, I don't want to say a personal favorite, but which one, which one of them do you think comes out on top in the sort of medium to longer term from this particular situation?

[D]

It's like asking someone, well you know what wine should I Grow what, what, what, what should I plant? I'm like, well, okay, where are you? So if you're anywhere close to the equator or have a good solar resource, solar is crazy cheap. And if you've got it year round, batteries are also pretty cheap. That's, that's hard to beat. If you're somewhere in the Baltic or something, then it's wind. Right. So I think the appeal with solar, which is that you can roll it out very quickly, particularly with households. And it's interesting, you're already starting to see the impacts of Australia's government pushing residential batteries and that is that the intraday spreads in power in Australia are very subdued and the gas fired generators are not really pricing the market anywhere near as often as they used to. And gas burns have actually collapsed as they have in California. So if you want to decouple from gas prices, batteries plus storage, Solar plus storage is a very quick fix and can be rolled out very quickly and it seems to be working very well in Australia. The price impact of this shock is vastly less than 2022 already.

[B]

This is really interesting talk about that spread to some extent. Would it be fair to say that a proxy or a gauge of how well solar plus batteries is working or affecting a market is not in lower prices per se, but in a diminishing spread between the highest and the lowest price of the day and that you have this like growing, you know that it's a sign of a sort of like pure power stability.

[D]

Yeah. I mean one, one thing in Palmox is a spark spread. So what is the, what is the cost to get out of bed for a gas fired power plant? So you take the heat rate times whatever the gas price is and you work out how many hours a day over a week are effectively priced by gas. And what happens, what happened in Australia was we had a lot of solar and not much storage and still the peaks were still very expensive because that was the gas plants knew they could set the price. What's happened with this proliferation of storages that gas no longer reliably sets the price in those hours. And particularly in Australia where it's often somewhat oligopolistic market structure, having a lot of residential batteries tied together in a mesh network which then bids into the market is really crushing those, those peaky times of the day. And that has a disproportionate impact on average daily prices. The problem in places like the UK is there's a lot of renewables, there's really no storage, so they're not getting much benefit out of this because they still get priced on the margin by gas.

[B]

Is it just because they haven't made the they they have to bite the bullet and buy a lot of batteries from China or like, what is why is there the lack of storage to complement the renewables in the UK Market structure design?

[D]

They're fixing this right now, and I'm sure they'll be in a very different place in two years. But it was a somewhat of an oversight, I would say.

[C]

So one of the things that stood out from a previous episode we did on the energy situation with our Bloomberg colleague Javier Blass was he was talking about how the world is still very much divided between, you know, I guess, east of the Suez Canal and west of the Suez Canal. And if you're east at the moment, you have energy problems because of the situation in the Strait of Hormuz. And if you're to the west, maybe the pressures aren't quite as acute just yet. And one of the things we keep hearing from the Trump administration is, well, we have a lot of oil here in the US we are hashtag blessed in carbons and molecules and all of that. When would you expect or would you expect at all the pressures from the Middle east to start really filtering into the western part of the world?

[D]

Well, I mean, like I said earlier, you're already seeing it in lng. So Asian buyers outbidding European buyers for now, that's obviously pushing up prices for Europeans. You are seeing more and more tanker traffic from the Atlantic Basin move towards Asia as Asia just is happy to this maybe 10 or $15 more shipping costs. But they are willing to bid those barrels at this point. They, they do not care. So the idea that any of these systems are going to be there are frictions caused by shipping and time. But if the pool is and the need is that acute in Asia will absolutely find its way to the Western Hemisphere.

[C]

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[B]

So there is this view, and I think it really started with, well, some people have had the dream for very long time, some of the great pioneers of the industry. But then in 2022, with Russia's invasion of Ukraine, there's like, okay, the future belongs to us. LNG Exporters that this is just, we can keep growing export, adding export terminals forever because there's just going to be all that we have all this gas and there's just incredible demand for it all around the world. Is that story at risk? I mean, again, like if part of the thing that's going to happen is that around the world there is this and the political appetite for restarting nuclear and so forth is higher. Are there any weaknesses in the US LNG growth straight up lineup forever story?

[D]

I think there's a lot of problems with it, but they're mostly due to overall problems with gas. First of all, the gas turbines you use to build a power plant in Asia are the same ones you use to build a data center. And the cost of a turbine is now it's over $2,500 per kilowatt. It used to be about a thousand. I mean this is, this crunch in gas fired turbines is well noted, I would say. Then you have the issue of so your customers have been priced out of using gas for that reason alone. Then you have this geopolitical risk attached to supply from the Middle East. There is no certainty that if there is some sort of toll on the Straits of Hormuz that the Houthis might say, well, I'd like some of that too, please. And then we have another issue in the Red Sea. So I think while US supply is probably lower risk depending on the actions of the US government, of course people are overall looking at this market and thinking, well, is this really what I want to build my power grid on? And the answer is probably not.

[B]

So I got it. So US lng. Yes, that is a perfect substitute for LNG from anywhere else. The big question is if lng, LNG generally has the potential for such volatility, then maybe a country just decides, oh yeah, okay, the US exists, but maybe a country just decides, this is not the future of energy for me.

[D]

Yeah, they might just look at this and say like, I don't, I don't want this. This is far too much crazy in a five, six year period. And I, I'd like, I'd like something boring, please.

[C]

We're all full up on crazy. Yeah. So one of the reasons we wanted to speak to you is because you are in Singapore and you know, in Singapore you can literally see the tankers sitting out there in the street of Malacca. But talk to us about the general vibes in the city as you know, a big hub of oil trading.

[D]

It's, it's very interesting. People in the physical business are saying levels of stress that are extraordinary. And then they look at their phones, at equities, and just. They don't get it.

[B]

Yeah, we don't get it either.

[D]

And it's also what is quite challenging is people who have been in the physical trade and dealing with this part of the world and have a deeper, empathetic anthropological sense of how a toll is likely to be received in a lot of that world or whether that's a stable configuration. They have their doubts on whether we can get back to normal terribly quickly. So there's that people in government are taking this extraordinarily seriously. They're very concerned. They are. Singapore, I think, is more than most places. There's a real sense of what a wartime economy looks like due to historical reasons from the fall of Singapore and World War II. And so I can tell that there's a real gravity. And I think that's coming out certainly through some of the comments of the Foreign Minister, Vivian Balakrishnan.

[B]

Do you think, I mean, talking just pure politics, like, okay, the US and Israel, they start a war and suddenly everybody around the world immediately has to do rationing, higher energy prices, et cetera. You know, for years there was this talk like, okay, the US is going to pivot to Asia and try to have closer relationships with some of the non China Asia countries and so forth. And just generally, like, does this. We. We hear about this. The version of this conversation we hear most about is in Europe, right. And like, what is the future of our relationship with the U.S. what is the Asian version of this conversation? And thinking about the future of the US either as some sort of like business or political partner.

[D]

The problem is this, is that if this is what one side of politics is going to be about on a sustained basis, which is doing stuff which doesn't make a lot of sense and is very damaging and unpredictable. And the other side is maybe a bit of a wet noodle at times, but a bit more predictable. You kind of need to live through the full cycle. Right.

[B]

So Republicans are, what you're saying? They're more. Okay, more stuff like this and the Democrats, the wet noodles, many people maybe. Okay, we keep going, but I'm just trying to make sure. Okay, keep going.

[D]

Yeah, sorry. So, so, I mean, so, so if there's that perception that there is going to be this regular source of volatility and also, you know, politics animated by things which do not really animate Asia, like evangelical Christianity or a desire for a catacomb or fighting with the Pope, like, if this is kind of what the US Is now, then there is going to be a natural desire to insulate oneself from it as much as you humanly can and that there are real limits to what you can do. It's a big economy, it's very important. But you know, food, fuel, you know, basic material flow security I think is going to be looked at very differently going forward. And I think there is a, that that will lead to a drive towards much higher energy security which is not going to go well with US efforts to promote fossil exports for sure.

[C]

Is China the natural alternative in that scenario? I mean we already talked about some shipments from China going to places like the Philippines. Are we seeing the emergence of that sort of energy diplomacy?

[D]

I think what people. People of not appreciated well is that China responds well to strength. The US now responds well to strength. So who does Trump not mess with China because they restricted rare earths and basically threatened to put Detroit into cardiac arrest and shrug their shoulders. And I think what Europe in particular is missing is that there are hands they can play that maybe are not intuitive to them but doesn't mean they would work. The IRGC appears to have beaten the US to the most humiliating geopolitical defeat since Suez and looks like they're going to get a toll out of it. So what do like what is the takeaway from how to deal with the US going forward? But similarly with China, I mean they've been very aggressively coercive on materials supply chains with technology. So I think this kind of idea that is a mid sized power. You should be thinking that you need a pimp to keep you safe on the streets. I mean actually all the pimps are bad. We need, we need more Pam Bria.

[C]

All right, you want to leave it there?

[B]

I think that's a good place. That's a, all the pimps are bad strike me as a pretty good place to leave.

[C]

True words. True words.

[D]

Sorry if that sounds strong but it's like.

[B]

Sorry, no, no, it's. You'll have to cut. That sounds like a good, it sounds like a good spot spot to leave it. Alex Turnbull. It's always great catching up with you. Really appreciate you taking the time. Very interesting conversation.

[D]

Cool. Thank you. Bye bye.

[B]

Setting everything aside. And there's a lot in, in that conversation to talk about. I think a story that I want to do more coverage of is essentially like how solid is the US energy story actually? Because I think there is this view that okay, we're, we have achieved oil independence basically. I know we still refine, bring in Some blends of crude from, or kinds of crude from anywhere else. But we have plenty of oil and then we're going to have plenty of gas and gas exports are going to go to the moon. And I think that like, you know, Alex presents an argument and there are good reasons to think that maybe the future isn't going to be gas related. And there are reasons to not for economies to not build an LNG dependent economy. And then you know, I think there are like questions about like well, what if the oil depletes a little bit faster than people think and so forth. So I just want to do more on actual like stress testing the, the assumptions about American domestic energy.

[C]

Absolutely. And it's really interesting what Alex was saying about just the EV dealership. Yeah, yeah, right. Like you can see some of this starting to happen and like the alternative so far is not, you know, turning to US gas. It's not even buying a Tesla, it's let's buy a byd. Right. The other thing just on like a pure basic oil and gas basis, I think to Alex's point earlier, like there are these interconnections in the overall market which we haven't necessarily seen like the pressure from one half of the world come into the other half of the world just yet. And there's an open question over like how that happens. Sorry. The reason I'm not expressing myself well, but one of the papers I was reading from Alex's substack actually or one of his substack contributions is a paper from 2022 called the Myth of US Energy Independence. And so I think there is this open question just on a pure hydrocarbon basis, how much of the hashtag Blessed America story actually is true?

[B]

Yeah, no, I mean like, you know, a lot of things don't seem to be going great. Some things are going better for the US than others these days, some not so much. I do think a lot of like, well you know, at least we have energy. At least we're not like it's on a relative basis.

[C]

Sure.

[B]

But like if that were to change, if they, if they were to sort of get a reassumption, sort of reassessment about America's energy stability or energy independence or that would be like a very, that'd be a really big story. I also just think, you know, it's very interesting that the nuclear re acceleration etc that's happening, that there's political will

[C]

now, there's nothing like an energy crisis to change like political will towards nuclear power.

[B]

And on that political will his last point, which is like, what is the lesson that we keep learning is like, strength matters. And, you know, it's like Trump hasn't gone very hard against China because China went very hard against the US Iran may end up in a situation in which it comes out stronger than it was two months ago, where it actually is collecting a toll, you know, getting a cash cow for the Strait of Hormuz. So it's interesting is his point where it's like, okay, Europe, other parts of Asia, like, what is the lesson that they learned from this? And maybe the lesson is that sort of like biding your time and trying to be friendly and obsequious. Maybe that's not the answer. Maybe. Maybe stronger lines are the answer for global diplomacy right now.

[C]

Also, the pimps are bad.

[B]

All pimps are bad.

[C]

PSA pimps are bad. All right, shall we leave it there?

[B]

Let's leave it there.

[C]

This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracee Alloway.

[B]

And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our guest Alex Turnbull. He's at Alex BH Turnbull. Follow our producers Carmen Rodriguez at Carmen Armand, dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks. And for more Odd Laws content, go to bloomberg.com odd lots we have a daily newsletter and all of our episodes and you can chat about all these topics 24. Seven in our Discord, Discord, GG odd lots.

[C]

And if you enjoy odd lots, if you like it when we talk about the future of cloud global energy, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening.

[B]

Sam.