A (3:27)

Yeah. Is it, you know, maybe Nick, you can comment on this. Is it that actually the volatility. We've had lots of geopolitical strife, we've had lots of back and forth on tariffs. Is it actually the market kind of came in slightly prepared for all of this, but is increasingly stressed and supply chain stuffing and so forth is kind of coming at an end and maybe the volatility, true volatility wave is yet to hit in some senses.

C (3:55)

I think that's right at a high level, Paul. And what you've seen in many of the key geopolitical arenas around the world that relate to engine commodity markets, a lot of noise and a lot of true socials, but not a huge amount of disruption to flows in volumetric terms. Right. You look at Russian exports since February 2022, it's hard to see a war in there. You look at Iranian exports, as the data from earlier showed, and you don't have all that much disruption. If you look at some of the other issues that could play out in the longer term, that's where the difficulty comes in. We had Philippe earlier talking about the difficulty of potentially signing 20 year LNG deals from the US to China. And that's the kind of place in the market where you'd have to really think through the geopolitical scenarios. But if we look at the balances in the near term, geopolitics hasn't yet affected those fundamentals, perhaps with the exception of the US Saudi Arabia relationship improving with Trump coming into office and more OPEC barrels coming online.

A (5:00)

Yeah. And it is that. We'll talk a bit about Timeframes where we get onto whether this is cyclical or structural. Kurt Saad mentioned bad volatility. I don't know whether that's an excuse for having a bad trading year, but there does seem to be that. Actually it's been a really difficult year where there has been volatility. It's been unpredictable and not directional. And that seems to have manifested in the financial traders suffering more than the physical. Can you give us some sense of how hard.

D (5:33)

I think we've seen some pretty serious events over the course of the last five years and they've tended to trend in one direction or not. And as you say, in the trading community, the trend is your friend. So you hop on and the market's going up because of Ukraine invasion or the market's going down because we have Covid. Traders generally like to have volatility. Without any volatility, there's not opportunity. But what we've seen recently is a lot of very strong and violent intraday volatility on the basis of uncertainty surrounding the geopolitical situation and also the economic power and situation coming out of the new US Administration. So what will happen is you'll put a position on, on the basis of your analysis and then you'll find within, you know, within, within minutes, you can't, you can't take the stress that the price move would, would, would, would indicate and you. And you get out. So I think there's been a lot of, a lot of people in the trading community, and I'm not talking just trading houses, but hedge funds, small boutique shops like ourselves, who say, I just, I have to step back until I get a better understanding. One of the things I do think that is happening, though, is that in any market environment, traders evolve. Right. And if this tool in your toolbox is not working, then you look at another tool in your toolbox and we'll maybe get in and chat about it a little bit later. But a movement back towards physical trading and having the fundamental backstop is one way to deal with this type of volatility.

A (7:25)

Yeah, yeah. David, maybe you can comment on your views on that volatility picture and give us some sense of between short, medium and long term where, you know, is it playing out on all fronts or not? What are you seeing in that?

E (7:40)

Well, I think one of the, I mean, one of the key messages is that, you know, ultimately we've seen some of these physical or threatened dislocations. Prices have reacted accordingly. So the market rebalances through the medium of price and we have Seen that. And although, although I know what, what Nick is saying about in terms of Russian flows, you know, before, before the conflict, Russia sold euros at 2 to 3 bucks below bread and now selling it for 15 bucks below Brent. So you know, this is shut out of a certain market and the logistics and the freight has adjusted to enable that oil to go where it can go. So the market works, but it works with a shift in pricing relationships, a shift in arbitrage relationships. I think in terms of the volatility that we were talking about. I mean it's one thing you can have volatility that's brought about by things like sanctions or tariffs that, that are concrete and are sort of inked in. What it's much more difficult to trade, I suspect is when you get those policy decisions changing almost day to day, if not day to day, week to week. Because that is something that is almost impossible to trade. I mean the trading business has learned how to deal with the shutout of Russian commodities from Europe and it's learned how to send that economically to other regions because we know that's a given. Okay. What is much more difficult is when you hear there's going to be a tariff of X and then it's going to be a tariff of X minus 10% and then there's not going to be a tariff and then there's going to be a tariff on raw material Y. But hang on a minute. No there isn't. So you know, that's where the problem is, this inconsistency in policy formulation. The business will adjust if it's given the chance to do so and price is the mechanism that will enable it to do that.

A (9:45)

Yeah. And I guess taking somewhat for granted and we'll come back to what the skills needed to tackle it, that kind of intraday volatility around which tweet has come out or whatever, you know that piece. If you take sort of a medium to long term view. The question I sort of want us to discuss is whether structurally we're in a longer period of political geopolitical volatility and this time it is different or whether it's just cyclical. And the lens there is in some ways big oil and gas companies made big bets on Russian LNG exports. I mean huge enormous bets. You could argue that the trading houses, traffic area included, made significant investments in assets building an LNG platform, building an xyz, you know, getting into power and gas. Those that geographical footprint is now has, has been at risk and some of those investments have had to be Written off. So it's, it's, you know, maybe, maybe we can start with usad. Is this is a big question, but structural or cyclical? Are we get, you know, are we on a period of volatility, is going to go back to normal, or has something fundamentally changed in the last five years?

B (11:02)

I mean, it seems like something has certainly changed. Right. I mean, if we even go back to just before COVID I always say, you know, people forget we had the attacks on abcake. Right. That was a big event and we've had Covid. I think one thing actually, and to pick up on some of the comments from Kurt, from Dave, is that how resilient the market has been in terms of still allowing everything to flow. Right. We haven't seen sustained outages. We've seen the market, in fact, forward solving a lot of these problems. You know, I mean, the fact that we had potential disruption in the Straits of Hormuz for the first time ever, an actual bombing of Iran. Right. If you had done that. Yeah. I mean, if that's it, and if you had said that five years ago, you know, we always say we would joke about if in our trading simulations for the grads and whatever that was the event that would have sent you up $10 instead. Actually. Yeah. The market said, okay, well, we can adjust for it. So it seems like we are both in a period of structurally higher volatility. I think there's an increasing competition between, it looks like China, the US and across many different spheres on this. We were talking about the price of gold before we came on. I think that's a great indicator of how much geopolitical uncertainty and volatility seems to be baked in now. So I think this seems to continue for a while now. What that does for trading opportunities, again, I think that creates dislocations and that's what's been happening for us. It's been, you know, not just buying assets like refineries, but expanding our fleet, for example, as well, to be able to have maximum flex flexibility around all of this. As, as these things have changed.

A (12:36)

As long as traded markets and open markets continue, that can serve it. But, yeah, I, I guess this is Green Mantle's bailiwick. You know, if you, if we were to take you back. Well, how different is the world compared to 10 years ago? Is this something that is seen as actually a true structural shift?

C (12:55)

I think so, Paul. And if you believe that there's a Cold War II framework that started with the election of Donald Trump, that Cold War began with Trump So if you play out the Cold war framework first one took roughly 40, 45 years to settle. We could be in a very different structural phase. But you also have a number of reasons to think that some of these risks are going to continue for much, much longer. Not only is this a US China question, it's also a question that is defining the Middle east in terms of Israel and Iran. It's a question if you look at the, if you look at the war between Russia and Ukraine, you have Russia set Ukraine sending Iranian drones and keeping its war machine afloat by largely sending hydrocarbons to China and some to India as well. And you have Ukraine backed up by the US And Europe. So not only do you have this US China dynamic that looks structural, but those, but the nature of the wars taking place means those devices may also be structural in other regions. There are some temporary aspects here, right? If we look at the near term, Netanyahu has to call an election Israel by October. There could be a resolution, either a violent one in Iran or a democratic one in Israel, to part of that issue. In the near term, Russia, Ukraine doesn't look like going anywhere soon. It looks like a classic frozen conflict. As long as the Russian economy doesn't break and as long as the Europeans keep funding the war, either of those things could change. So there are reasons to think that specific arenas of Cold War 2, and I'd probably put Venezuela in there as well, could change significantly in the near term.

A (14:45)

But.

C (14:47)

US China, not going anywhere.

E (14:52)

The energy and resources sector is experiencing unprecedented change. To help navigate this change and capture its opportunities, HC Group launched Enco Insights, a global advisory network dedicated to the.

A (15:05)

Sector, providing senior advisors and subject matter.

E (15:08)

Experts to investment and infrastructure funds, law firms and corporates. Enco Insights leverages HC Group's 20 years of connections in energy and commodities to give clients the expertise they need when.

C (15:22)

The stakes are high and insight matters.

E (15:25)

Learn more at encoinsight. I think it's important to recognize that when you say a shift is cyclical, I mean that cycle can be 20 or 30 years, right? So we have at the moment, arguably in the Atlantic Basin, in the west, we have a shift to much greater government intervention in industrial policy and industrial capacity in security of supply, etc. That is a pendulum that swings. And anyone who's over years of age remembers that we've been through that before and we get cycles of state interventionism in the west and then we gradually swing and we get a move back towards more liberalized markets. Now there are bumps in the way and the great financial crisis arguably is one that sort of has pulled the reins on outright liberalization occurring again in full. But I do think there are real cyclical elements, might be 20 or 30 year cycles. Okay. One I am intrigued about, apart from the broader issue of US China, is the position of the dollar. Because, you know, there's been a thesis over the last 12 months or more about de dollarization not only in terms of replacement of the dollar as the unit of international exchange, which I don't believe is going anywhere soon by the way, but also the underlying value of the dollar. And we talked a little bit about that on the panel this morning. I'm not necessarily of the belief that there's only one way for the dollar to go and it's further downwards. I actually think there are inflationary pressures that are going to kick in. Again, cyclical element that may mean the Fed has to be much more cautious next year and therefore you actually get a floor for the dollar. So you know, there's all of these different amplitude cycles at work, but some of them are very, can be very long term.

A (17:46)

Yeah, you've, you've seen a couple of cycles in oil trading.

D (17:52)

I mean, I think you should differentiate a little bit between kind of a geopolitical or an economic warfare cycle and the trading, you know, what, what it means for the trading community. I think it was alluded to before that we've had some events that have occurred recently which is not created massive dislocations in the markets or if the dislocations have occurred, they've occurred for a very short period of time. So the way I see it is that in some ways the trading system has, has, has been resilient and has served the purpose and the function that it was that it always was supposed to do, which is intermediate, the, the inefficiencies between governments and, and political strife and ensure that what you need that is produced in point A gets to point B and further on and without a real huge rise in price. So I would say that it's adaptive, it's evolving. But I, you know, but I don't know if it's a cyclical change in trading. It may be politically.

E (19:06)

Yeah, I mean you're, I think you're right. It, thank goodness we've had robust supply chains and, and trading in the middle between.

A (19:15)

Isn't that all threatened?

E (19:16)

But, but, but you know, nonetheless we've got highly suboptimal flows in terms of cost. So we are layering in on the provision of commodities. We are Layering in extra levels of cost, even if it's being minimized, you.

B (19:33)

Could argue that that was it. Right. The trade off was either we build in much more redundancy and resiliency at an upfront cost. I think the world said we don't want to do that. We want just in time, we want to highly optimize as leanly as possible so we don't have to spend that upfront. And so now you're seeing a little bit, I think, the consequences of some of that. Now what I think is interesting is I think if you'd gone back, as you say, 10 years and you said, hey, we're going to have sanctions on Venezuela, sanctions on Iran, we're going to have sanctions on Russia, we're going to have tariffs, we're going to have. And yet again, prices haven't blown out for any sustained period of time where, you know, we're going to have multiple conflicts globally. And yet also we're not dry anywhere. Right. We're still seeing all of this stuff flow. So I think it is again, some testament to the kind of the resiliency of the system.

D (20:21)

And I wanted to be, I mean, just real quick to, you know, to comment on a topic that's very poignant right now, which is the building of crude oil stocks in China with a strategic petroleum reserve. Right. Why is that occurring? That's occurring because there's a concern about a dislocation. So is there a cost associated with preventing some of these dislocations? There certainly is, and that's by accumulating stocks in a backwardated market.

A (20:52)

So one question I have, I want to talk about. Well, let's do it now. David, you mentioned the pendulum swinging. You know, we've gone from a long period of, you know, of decreasing government involvement in markets, less government intervention to very much now, it's been said on multiple panels, you know, energy security trumps certainly sustainability and even now affordability, you're getting market interventions going on. The SPR building in China is a market intervention. All of that, if it continues in that way, makes markets more fragile and their ability to adapt to these shocks impeded. So I want to sort of get your take on that. And then secondly, that is all ultimately political risk is political risk. Yes, we're seeing it. Perhaps the commodity markets are a bit more aware of it than others. But is political risk really being priced in?

E (21:51)

I mean, I, I just want to, you know, you, you're saying it, it, it's, I mean, I think we're, we've layered in some extra cost. But arguably, arguably we went too far down the road to just in time. Yeah. Okay. And it is likely that, you know, various territories are going to want to hold higher levels of inventory, ironically at a time when the cost of capital, generally speaking, I mean, it's not going to go down materially when you look at the levels of debt, both public and private out there. So, you know, maybe to accumulate that inventory, we're going to need a steeper price signal to incentivize it. There's something interesting happening when we've got security of supply at the forefront with also higher levels of higher cost of capital than we were used to in the period, you know, post great financial crisis.

B (22:53)

I mean, no, I think that's very much in line with what we're seeing. Right. Yeah, I think the cost of capital one is a very interesting. Also going back to your point about mid to long term. Right. Because also what we're seeing, I think some of the volatility and some of the issues that we've seen is okay, are we going to get the right level of investment needed going out, meet some of this. Right. So again, obviously we're focused on the trading cycle, which is obviously much shorter term does raise some interesting questions going forward. Right. You're saying, hey, we're uncertain that what's given, you know, how much these policies have changed. Right. Two years ago we were just talking about energy transition and everyone was running one direction in that. That pendulum has also shifted now back away, you know, a little bit from that. But again, are we going to get the levels, you know, we've heard the number a couple of times over the last few days, terms of how much investment is needed and whether it's half a billion or more per year just to keep still, standing still on the oil side. But similar with copper, you know, with, with power, you know, if you look at where the AI boom is going, if you don't have policy certainty again, are you, you know, at the risk of saying, well, okay, well we'll underbuild a little bit just to make sure it's not costing as much. And then you end up with these risks get built up in the system that then come to the fore later.

A (24:07)

Yeah, and I guess starting to move towards the adaptation, then we'll talk about the skills bit. It seems to me that 10 years we heard it from your previous CEO that, you know, when he started the role, Jeremy didn't have to talk to governments that often. When he finished the role, he was spending a significant portion of his time on it. Nick, are you seeing an uptick in demand for understanding those geopolitical risks which perhaps the generation of traders coming through now just haven't been exposed to until the last couple of years?

C (24:36)

You're certainly seeing much bigger in house teams from some of the top trading firms in D.C. brussels and elsewhere. I think we are seeing much greater demand for political risk services. But there's a question of. The question becomes the applicability to trading, right? And if you took Trump as word, say in the copper market and took 50% tariffs on copper as what was going to happen and didn't have that granular understanding of how the administration wanted to implement it, you're in a very tough spot. The same is true for the reaction function and the pain point around oil prices that influenced both the administration's decision to bomb Iran's nuclear sites, but then also to twist the Israelis arms into a ceasefire. So there's a question of whether you build out these capabilities internally or externally by hiring by going externally. And what you really need is presences on the ground, which traders had for a long time, but also presences in the capitals and keeping up with an ever faster news cycle.

E (25:45)

At least from the outside, spend a small amount of time on the inside in trading. But now again, sort of from the outside, the cliched view of the traders is that they've always spent an awful lot of time understanding what's coming in terms of host governments where they access the commodity, and arguably a bit less time understanding what's happening in terms of consumer government policies, partly because they were able to, because laissez faire was the flavor of the day and the major consuming market centers, now that that's no longer the case, as you're saying, they're having to spend an awful lot more time understanding what Brussels or Washington or London are going to come up with in terms of whether it's strategic stockpiles or whatever it may be.

A (26:40)

So yeah, but which is fine for the large trading houses, right? We'll come on to what it means for the competitive landscape toward the end of the conversation for a smaller trading organization or for smaller trading entities. You mentioned earlier that sometimes with such volatility, it's better just walk away from it. But then the demands Are you still going to make money? How have you adapted your trading strategies to handle this environment?

D (27:10)

No, it's a very valid point, right? I mean, the larger trading houses in particular, you know, Trafigura and Vitol have moved into assets Heavily so they can counterbalance this volatility, as I talked about, by capturing value in the physical markets. If you're a smaller boutique trading company or even a hedge fund, you're not, you're not really able to do that. I think what it means is that when you look at the trading opportunities in space, you probably move a little bit away from the front end towards the back end of the curve where you get less intraday volatility. But you can still put a viewpoint on. And we've started exploring the options market a lot more because you know what kind of premium you're going to pay basis, what you feel like, feel you know the direction of the market is going to move and you can limit your downside, so to speak, in that, in that aspect.

A (28:11)

Yeah, we heard that from Peter Keavey at the CME earlier saying the rise in demand for options.

D (28:17)

I'm not sure, I'm not sure I would take on volatility traders because I've never been a big fan of selling options, particularly in these type of markets. But buying options I think is a real solution.

A (28:29)

Yeah. So I'd obviously, I think you've invested heavily in ships you mentioned. I mean any other sort of adaptation strategies. I mean, how. Think about the next five years. It's a risk, right. Because also your geopolitical fragmentation, you might end up betting on a region or a block that suddenly you don't have access to. How do you go about thinking about making yourself robust or this more volatile world?

B (28:54)

I mean, I think it's. Well, part of it again is increasing our footprint across, as we said, some of these different assets. So whether it's refining, whether it's freight and all that. I think again also looking at capital requirements, making sure the financing, you know, to have in place to make sure you get these price spikes like you had in 2022 and wherever else you have all that covered. But I think so our new CEO, Richard Holtum. So his whole view on this really is it's one thing to be resilient and robust, but it's another to really, to think about being anti. Fragile. If you think about Steve Nicholas Tiles.

A (29:26)

Yeah, yeah.

B (29:27)

And that is a very different mindset. Right. So it's saying, okay, it's not enough to just and weather the storm in a sense. Right. And to be robust, but it's. How do you then position yourself to actually take advantage and to become stronger coming out of something like that. Right. That pressure actually makes it. And I think that's, that's a Different mindset, right. And it's trying to figure out, okay, well then how do we then play for that? And I think, you know, if we could do that successfully, who knows if we can. But you know, it's really, it's a different organizational mindset around that.

C (29:56)

Hello, I'm David Hunt, founder and managing.

B (29:58)

Director at Hyperion Search. Founded over a decade ago, Hyperion Search has helped organizations from major utilities to startups recruit their leadership teams and key individual contributors to accelerate both their growth and the energy transition. Our three main verticals are renewable power, energy storage and the mobility. The energy transition and the talent that delivers. It has been our passion since day one. To find out more, visit hyperionsearch.com or listen to my Leaders in Clean Tech podcast. Available on all platforms.

A (30:29)

And I guess from Augs, someone says it's sort of come up. Is that the last, whatever, 10 years maybe I'm making this up. Sort of lots of, you know, lots more publicly available data or subscription data available on pricing and so forth. But to some extent Nick was alluding to it. The boots on the ground, the people that really understand what's going on in region and in country. You know, what's Argus's approach? I mean, that's clearly what I'm read on.

E (30:57)

I think, I think, I think this is, this is the case that actually, you know, we, we need more information on, on infrastructure, on the availability of infrastructure, the true state of infrastructure. The problem is that in some cases this is considered to be state secret or whatever in the parts of the world where demand is growing fastest. So that is just a problem that's going to be with us, I suspect. But I think, you know, even in, you know, the areas that, that we know about in the Atlantic Basin, there's probably a need for it, for more information on the true state of storage capacity, what is operational, you know, what can be done in terms of pipelines and, and, and other infrastructure. You know, if security supply has genuinely moved up the political agenda, which I think it has, and I don't think that's an element that is going to ebb and dissipate, then there, there is room, I think for more information and more information flow on true state of infrastructure. If I can characterize it, we heard.

A (32:09)

Earlier on that some sources of data are degrading as well. Right. I mean it's, it's becoming a less, less transparent in some circumstances before we move on to the skills and the competitive landscape. I know this is something. Well, Nick, any lessons from history on this? I Mean, there's one, you know, the consensus seems to be that this is cyclical. You know, we're in a bit, it's a lot, might be a long cycle, but you know, it's somewhat analogous to historical periods and so forth. There's also, you know, I'm gonna sound alarmist, but it could also. These things aren't, they're non linear and can be spiraling and we can have some significant market dislocations and so forth. Is there any sort of comfort that history can give us or terror, perhaps?

C (32:59)

I can certainly give you terror. One of the good way of think, thinking about history is what lessons leaders take from history. If you knew that Vladimir Putin had a statue of Peter the Great who largely integrated Russia Ukraine into the Russian empire and is in, in his office above his desk, you might be a little bit less surprised in February 22nd. And there's a great portrait in the White House called the Tariff Men. It's got Donald Trump in the middle the left. It's got Henry Clay and Abraham Lincoln, the senator from Kentucky and the President who led the protectionist agenda in the first half of the 19th century. And then it's got Thomas Jefferson who did so in the 18th century, and William McKinley who did so at the turn of the, of the 20th century. And if we look at what all of those episodes in at least American political history led us to, it was higher domestic costs. Now the US had some input cost advantages, but tariffs that persisted for quite a long time at levels quite a lot higher than today's average tariff rate. And then obviously we went back to, to the Cold War argument earlier, just.

A (34:11)

After McKinley First World War happened. Pretty.

C (34:15)

Yeah. The lesson, the lesson of Lincoln and McKinley is not that we're headed for peace time.

B (34:19)

Yeah.

C (34:20)

But I think we also need to look at some of the, some of the other analogies. I mean, if you look at Russia, Ukraine, the Korean War took a number of years to become frozen conflict. And it's been so for a very long time. So the lesson I think is exactly as David put it, that these may be cyclical occurrences, but they can be cycles measured in decades. From a trading perspective, that becomes your status quo.

B (34:41)

And I think one thing that's interesting is it's not just also when we think geopolitics and all these stresses, it's between nations, but increasingly the pressures and the stresses within nations as well. Look at how the political landscape is changing, the risks that that may bring. Right. And growing inequality. And these things, you know, these are things we've talked about for a long time, but a lot of it seems to be coming to a head now. Right. And that really could throw up some very interesting challenges going forward.

A (35:09)

Yeah. Okay, so final bit, let's talk about what it means for the competitive landscape out there. First question to get your comments on would be since 2019, 2020, that extraordinary period of volatility and directional, good volatility, let's call it, attracted a lot of hedge funds into the space. They've been, you know, these broad asset class hedge funds have been very active in hiring sentiment is. It's been a more challenging couple of years for the last 18 months as that directional volatility has dropped off. And they are just for the most part financial. They are of course, getting into the physical markets. Is this a very challenging environment for them? Is this going to be the case of we might see some hedge funds fall away as we did a decade ago, or actually is this right up their alley because they've got the broad teams, the intelligence, the capability to lever up these when events do happen to capture them? I don't know who wants to tackle that one.

D (36:09)

I'll give it, I'll give it a shot. I mean, I think when the whole, you know, quantitative analysis influence, you know, really came on, on the, on the horizon and using AI and data scraping and you had to have programmers who knew how to, how to use Python. You saw, you saw that happening in, in the hedge fund community because they were doing that in, in traditional fixed income markets. Right. And applying that to commodities. And all the trading houses were like, we're missing a beat. We need to go hire our own quants, we need to do our own data scraping. We need to have the abilities to respond to markets quickly through algorithmic systematic systems. What's interesting is I just read an article recently about squarepoint which has been, they've been, they've been kind of on the cutting edge of, of using quantitative methods to trade in, particularly the metals markets. Well, what are they trying to do now? They're trying to go, they're trying to go back down into the actual physical commodity and trade the physical commodity in order to back up what their quantitative approach is. So I think what you're seeing is you're seeing a blending of both the physical trading community and the quantitative trading community to find some competitive advantage somewhere in between. And so in some ways we're seeing a little bit of emerging.

A (37:45)

Yeah.

D (37:45)

So don't write off superior logistics, don't write off superior trade finance, don't Write off relationship management, whether it's government or, or other counterparties in the industry, but also have the bright young men and women that you need in order to gather all that information to try to make something.

A (38:10)

I think we're definitely seeing that.

E (38:11)

Right.

A (38:11)

You are seeing this hedge funds getting into the physical, seeing the NOCs that we heard this morning, you know, getting into, getting into trading. Because in this environment you can't afford not to have risk management and optimization capabilities. Even if it's not outright trading, which does. We had another hour we could talk about it puts lots of pressure on the types of, on talent that you need. That's what obviously HC Group is busy in providing that for use the plug. The other bit though is actually last 15 years you've seen huge consolidation in the number of market participants ultimately, right? Yes, some hedge funds have. We've started seeing a reversal of that the last couple of years, but we've gone from 15 trading houses down to five. We've gone from every oil major having a trading platform down to one or two and now rebuilding again. My question is, does this just. And Saad, I'll ask you first, but does this, you know, when you think about this environment and needing those market intelligence teams, higher cost of capital, needing that global footprint to take advantage and manage those dislocations, does this just make the moat, the competitive moat around the trading houses even deeper and wider?

B (39:30)

I mean, I think yes, because I mean, I think you just look at the facts around it. Right? I mean, I think so. I'll give you the. So when I joined Trafigura just over ten years ago, we were trading two and a half million barrels a day of oil, crude and products. Right. We're up to now call it roughly seven. Right. But it's not just us growing our market share. It has been our peers as well. Right. But the market has not tripled in size. So obviously there is a need for this, for the service that we provide to keep going. But as you say, the number of participants has not gotten bigger and if anything actually has probably gotten a little bit less. But that's again, because, you know, we've built this, this business over 30 plus years. But it's really these investments, you know, these relationships with not just producers and consumers, but even with the banks, governments, you know, we have access to something like $75 billion of credit lines. Right. So that gives you some idea of the scale that is needed to trade those volumes across oil, metals, power, gas, whatever else it is. Right. So for a new Entrant to come in and say, okay, we're going to suddenly have access to $75 billion of credit lines for example, or the fleet of ships again that I keep mentioning, but that we have access to. Right. It allows us to do this. I think. Yeah, that is a pretty, it is a pretty big moat. I think what will be interesting now is not just the insurance of funds and things like that, but obviously you have to look at again the hot topic of the day. But AI, what's happening there? Does that start to come in? And look, you know, where we, there are arbitrage opportunities, dislocations, disconnects, does that start to smooth out some of that and then reduce that pie a little bit? Right. I think that's what to me is going to be interesting. And on that, I mean for me it's interesting because I always look at it and I know myself and people who are probably more my age group were using it more as a glorified search engine. And then you look at the guy who's, you know, the 25 year old citizen row and he's creating agents and sub agents that are then replicating, you know, and they're doing a whole different thing. Right. And that's I think where the interesting thing is going to come.

E (41:24)

Yeah, I mean you do have a, for want of a better phrase, a sort of shadow trading sector at the moment that has been specifically set up because of what's happening in terms of Russia. But I would park that to one side and say that's a very specific instance of something that's happening. The other global trend you can talk about is more regionalization. There's a lot of talk about de globalization and much more intra, your intra regional trade. And I think that's all very well and you can talk about reshoring manufacturing and all the rest of it. You can't really talk about reshoring access to commodities. What it is, it is the ultimate global business. And for that reason I think over the, over the 10, 15, 20 year future, the people who are going to succeed are the big players with global reach, global access to intelligent intelligence and global access to assets, physical flow. So just parking for one moment this proliferation of small scale shadowy traders who've emerged because of sanctions. Ultimately it's going to be the people with heft and global reach.

A (42:46)

Unless those divides grow and what, what's shadowy becomes transparent but for a different block if you'd like.

D (42:55)

I mean there is a mode. There is a mode, but the, you know, where it really boils down to is access to capital.

B (43:01)

Yeah.

D (43:01)

Quite frankly.

A (43:03)

And talent and.

D (43:05)

Yeah, perhaps. But you know, what I would what I would say is that, you know, the, the large trading companies have a lot of capital. They made a fair, good, fair bit of money over the last several years. Okay, maybe last year was a little bit more challenging. This year is but and they have the ability to finance themselves by, by in accessing the market. And as you said, your growth volumes have tripled, and that's because they have the money to do so.

A (43:36)

Well, I will invite some questions from the audience, but thank you very much for a fascinating discussion. Thank you for listening. To find out more about HC Group, our global offices and our expertise in search within the commodities sector, please visit www.hcgroup.global.