# Oil, Gas and Metals in 2026: What to Watch This Year

An episode of [Switched On](https://invisiblenetwork.ai/podcast/1469286286), 14 Jan 2026, 37 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/01a10738-3608-4dec-883c-ae3c00026b36/5efbf9de-926e-4778-8967-b3d20080d1d2/audio.mp3?utm_source=Podcast&in_playlist=6d114f63-833d-4b78-bbf5-ae3c00026b44

Commodity markets are in a period of upheaval. Wars, sanctions and political shifts have already rewired global trade, and a new wave of pressures is coming into focus. A liquefied natural gas glut is looming, China is rapidly expanding its biofuel production, the global copper market is facing a supply crunch, and US military actions in Venezuela have thrown a new wild card into the mix. With so many forces pulling in different directions, which trends are set to define commodity markets in the year ahead? On today’s show, Tom Rowands-Rees is joined by David Doherty, BloombergNEF’s head of natural resources research, and Enrique Gonzalez, head of US gas, to discuss findings from the note “Commodities in 2026: 10 Numbers to Watch From Power to Oil.” Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal or on bnef.com Links to research notes from this episode: Commodities in 2026: 10 Numbers to Watch From Power to Oil - https://www.bnef.com/insights/38261 See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: This is Tom Rowland's Reese, and you're listening to Switched
[0:03] Speaker 1: on the podcast brought to you by Bloomberg NEF Commodity
[0:07] Speaker 1: markets have had a turbulent year, with wars, sanctions, and
[0:10] Speaker 1: political shifts rewiring global trade flows. As twenty twenty six
[0:14] Speaker 1: gets underway, Bloomberg ENIFS Commodities, Energy and Environmental Markets teams
[0:19] Speaker 1: are looking ahead to a series of pressure points, from
[0:21] Speaker 1: a looming glutt in LNG and slowing US oil growth
[0:24] Speaker 1: to China's rapid expansion in renewable fuels and petrochemicals reshaping
[0:28] Speaker 1: global supply chains. Layered on top of that are rising
[0:31] Speaker 1: carbon prices, shifting weather patterns, and a surge in power
[0:34] Speaker 1: demand from data centers, all of which are adding new
[0:37] Speaker 1: complexity and volatility to already type markets. With so many
[0:41] Speaker 1: forces pulling in different directions, which trends are likely to
[0:44] Speaker 1: find commodity markets in the year ahead. To discuss this
[0:47] Speaker 1: and more today, I'm joined by David Doherty, bienif's head
[0:50] Speaker 1: of Natural Resources Research, and Enrique Gonzalez, head of US Gas,
[0:55] Speaker 1: to review findings from the note Commodities in twenty twenty six.
[0:58] Speaker 1: Ten numbers to watch for power to oil, b and
[1:01] Speaker 1: EF clients can find this note, along with other commodities
[1:04] Speaker 1: research by heading to BNIF go on the Bloomberg terminal
[1:07] Speaker 1: or BNEF dot com. If you'd like to learn more
[1:10] Speaker 1: about how bn EF approaches strategy research on the energy transition,
[1:13] Speaker 1: including developments in commodity markets, trends across different sectors, and
[1:17] Speaker 1: the cross cutting technology shaping the future, you can find
[1:20] Speaker 1: more information on BNF dot com, and if you'd like
[1:23] Speaker 1: to speak with a member of our team about becoming
[1:25] Speaker 1: a client, email us at sales dot BNF at Bloomberg
[1:29] Speaker 1: dot net. With that, let's dive into the key numbers
[1:32] Speaker 1: and themes to watch this year. David, welcome to the podcast.
[1:44] Speaker 2: Thanks Tom for having me.
[1:45] Speaker 1: And Enrique welcome to the podcast.
[1:48] Speaker 3: Yeah, thanks for having me as well. Done.
[1:50] Speaker 1: So today's conversation is, in a way, it's like a
[1:53] Speaker 1: little bit of a pick and mix, because we've produced
[1:55] Speaker 1: this report that Commodities in twenty twenty six that just
[2:00] Speaker 1: pick out work from across different teams that focus on
[2:03] Speaker 1: commodities markets for some numbers that we think are gonna
[2:07] Speaker 1: maybe define twenty twenty six. So I suppose before we
[2:10] Speaker 1: kind of get into the weeds. I mean, how is
[2:13] Speaker 1: the process of trying to figure out, you know, which
[2:15] Speaker 1: of the key numbers? Was it difficult choosing your selection
[2:20] Speaker 1: curating it for our.
[2:21] Speaker 2: Readers, And that's a really interesting question. I think. Actually,
[2:25] Speaker 2: the more that I looked at it, I realized that
[2:27] Speaker 2: twenty twenty six has quite a bunch of tipping points
[2:30] Speaker 2: or pivot points. So whether it's like slow down in
[2:32] Speaker 2: American oil production, a tipping point in the copper balance,
[2:37] Speaker 2: LNG prices needing to incentivize export, for example, there's a
[2:41] Speaker 2: lot of really individual points that I was like, oh,
[2:44] Speaker 2: that's actually kind of interesting. Let's let's highlight that one.
[2:46] Speaker 2: And the more we went through, I found probably like
[2:48] Speaker 2: maybe seven of the ten or like crucial years. So
[2:51] Speaker 2: I thought, okay, this is going to be a good one.
[2:52] Speaker 1: This is kind of interesting. I mean, actually I was
[2:54] Speaker 1: just you know, looking through the notes before, and I
[2:56] Speaker 1: was I was thinking something similar. Is that a lot
[2:58] Speaker 1: of the kind of things we've spoken about more generally
[3:01] Speaker 1: be anyf about crucial transitions. They seem to be you know,
[3:05] Speaker 1: at the point where the rubber is hitting the rope.
[3:06] Speaker 1: But it does seem like a bit of a theme,
[3:08] Speaker 1: and so maybe we can identify them as we talk
[3:10] Speaker 1: about them. Let's start off with when we're talking about commodities,
[3:14] Speaker 1: the kind of I always say that, sort of if
[3:16] Speaker 1: commodities was like high school, then the jocks that everyone
[3:19] Speaker 1: is looking at aspirationally this was a teen movie. It's oil.
[3:23] Speaker 1: You know, they're cool and good looking, maybe disliked by
[3:27] Speaker 1: everyone else, but sort of with a certain amount of jealousy.
[3:30] Speaker 1: And if that's that's how you'd characterize it. But we'll
[3:32] Speaker 1: start with the cool kids. What's going on in oil
[3:36] Speaker 1: and in particular, you know the global picture. Every year
[3:38] Speaker 1: we talk about whether there's a deficit or a surplus.
[3:41] Speaker 1: What is twenty twenty six looking like?
[3:43] Speaker 2: Yeah, first two? Thanks as a math lead in school.
[3:45] Speaker 2: I'm going to take this and run with it. Twenty
[3:48] Speaker 2: twenty six in the oil market, it's almost like for
[3:51] Speaker 2: four or five months, the oil market has been waiting
[3:53] Speaker 2: for this massive surplus of oil to happen, and then
[3:56] Speaker 2: we think it's possibly happening now, but there's no real clue.
[4:00] Speaker 2: Number is coming out to show us that it's well
[4:02] Speaker 2: over supplied. And you can ask a bunch of different agencies,
[4:05] Speaker 2: from BENAF to the International Energy Agency. You can have
[4:08] Speaker 2: between two and three and four million barrels per day
[4:11] Speaker 2: of an oversupply. But the oil price still is pretty comfortable.
[4:14] Speaker 2: The Brent oil price around sixty dollars per barrel, So
[4:16] Speaker 2: it's not really turning into a fundamental shift and the
[4:20] Speaker 2: oil price just yet. And everybody's looking at us saying
[4:23] Speaker 2: when will this happen? What's about to happen? And then
[4:25] Speaker 2: your big producers are looking at this saying like this
[4:27] Speaker 2: is going to dictate what I do in my investment
[4:29] Speaker 2: strategy because it's going down. I'm not going to throw
[4:31] Speaker 2: a bunch of cash into it right now.
[4:32] Speaker 1: Right, So why is it that there seems to be
[4:35] Speaker 1: this consensus that there's this big wave of surplus on
[4:38] Speaker 1: the way, you know, we haven't yet seen.
[4:41] Speaker 2: Yeah, we've had a big unwind from OPEC organization petroleum
[4:45] Speaker 2: exporting countries, right that organize about a third of the
[4:49] Speaker 2: world's oil production in a way to go for any
[4:53] Speaker 2: spikes and prices and manage an inventory to avoid any crisis. Right,
[4:57] Speaker 2: So any crunch and supply, they take oil off the
[5:00] Speaker 2: market when there's weak demand like during COVID right. So
[5:02] Speaker 2: OPEK over the past six months have basically stepped back
[5:06] Speaker 2: from that role. Having cut a bunch of production over
[5:09] Speaker 2: the past two to three years, they took a bunch
[5:11] Speaker 2: of oil out of the market. They lost a lot
[5:13] Speaker 2: of market share to the likes of Guyana, Brazil, and
[5:16] Speaker 2: the United States, and they're saying, we've lost enough market shares,
[5:18] Speaker 2: so we're bringing it back. So they turned on the
[5:20] Speaker 2: taps and from September onwards we saw a ton of
[5:23] Speaker 2: oil come back into the market. That's the main driver
[5:26] Speaker 2: in this big surplus. But there's also new new places
[5:29] Speaker 2: that never produced oil before. Guyana is now almost a
[5:31] Speaker 2: million boos per day producer from almost zero in twenty fifteen.
[5:35] Speaker 2: Brazil has boomed. You've got a lot of new markets
[5:38] Speaker 2: that never really produced before who are gone to market.
[5:41] Speaker 2: They have taken overshare from the likes of Saudi Arabia
[5:43] Speaker 2: the UAE, for example. So that's interesting.
[5:45] Speaker 1: I mean, I remember that being like a similar situation
[5:48] Speaker 1: in twenty twenty, and obviously the pandemic played a role there,
[5:51] Speaker 1: But from what I understood at the time, OPEK did
[5:54] Speaker 1: also increased supply, and now I know that they had
[5:56] Speaker 1: done that at some point in the twenty tens as well.
[5:59] Speaker 1: So this seems like a cycle and the narratives at
[6:02] Speaker 1: the time I remember in twenty twenty was some of
[6:04] Speaker 1: this is about pushing back on particularly the US producers,
[6:07] Speaker 1: you know, putting them back in their places. Now we
[6:09] Speaker 1: have it's not just the US, we have places like Guyana.
[6:12] Speaker 1: If this is a cycle, it's the cycle becoming tougher
[6:15] Speaker 1: and tougher for OPEK.
[6:16] Speaker 2: Yeah, I think is the answer. So traditionally they have
[6:19] Speaker 2: played this balancing player role right to keep things stable.
[6:22] Speaker 2: They have had moments in the past, but they've done
[6:25] Speaker 2: exactly what you just said and thrown a lot of
[6:27] Speaker 2: oil out into the market and tried to squeeze players out,
[6:30] Speaker 2: like US shale producers who from twenty fifteen on let
[6:34] Speaker 2: a boost in production that ate away at their profits,
[6:37] Speaker 2: right opex profits. So there's been a real interesting change
[6:40] Speaker 2: in how they posture themselves. They went from a kind
[6:43] Speaker 2: of a boring period and like the nineties and naughties,
[6:45] Speaker 2: to a more aggressive stance maybe in the past couple
[6:48] Speaker 2: of years as they've faced more threat from new suppliers
[6:51] Speaker 2: which didn't exist beforehand.
[6:53] Speaker 1: So I mean, going back to this thing you said
[6:55] Speaker 1: at the start of the podcast about around tipping points,
[6:58] Speaker 1: is the tipping point that you know, we're expecting all
[7:01] Speaker 1: the surplus to come onto the market in twenty twenty six,
[7:04] Speaker 1: and so at some point that tipping point will hit.
[7:07] Speaker 1: Or is the tipping point that this periodic rebalancing that
[7:12] Speaker 1: OPEC does is becoming less and less effective for them?
[7:15] Speaker 1: Is or is it something else when oil?
[7:17] Speaker 2: It's neither of the above. I think it's about a
[7:20] Speaker 2: bone just wide at the mark, you know, No, no,
[7:23] Speaker 2: I mean it's listen, the oil market isn't credibly flexible.
[7:26] Speaker 2: It always finds a way to do something with the
[7:28] Speaker 2: excess or to find a shortage, right, and price drives
[7:32] Speaker 2: all of these things. For context, rent is now about
[7:35] Speaker 2: sixty one dollars per barrel. We think over twenty twenty
[7:37] Speaker 2: six is going to average about fifty five dollars per barrel.
[7:40] Speaker 2: So it's not a huge gap, but we do think
[7:42] Speaker 2: that it's going to trend down closer towards fifty towards
[7:45] Speaker 2: the end of the year as this surplus starts to
[7:47] Speaker 2: build up. But you can do a lot of things.
[7:49] Speaker 2: You can store it where you have storage on ground.
[7:51] Speaker 2: China has been doing a great job of just filling
[7:53] Speaker 2: up its taverns and its storage capacity and buying it
[7:56] Speaker 2: at a cheap price. You can even storage on a ship.
[7:58] Speaker 2: So you see rates of hiring out vessels in order
[8:01] Speaker 2: just to keep them stationary offshore with a bunch of
[8:04] Speaker 2: crude oil in it increasing. So there's lots of different
[8:07] Speaker 2: ways you can, let's say, buy cheap oil when it's
[8:10] Speaker 2: hanging around and keep it until you need it. And
[8:12] Speaker 2: we've seen that in the past few weeks.
[8:14] Speaker 1: Okay, it's interesting. So it might be that we see
[8:17] Speaker 1: this less manifesting in prices and more in the sort
[8:19] Speaker 1: of the behavior of players in the market, which plan
[8:23] Speaker 1: of leads me to my next question, which is around
[8:25] Speaker 1: specifically how all of this impacts US crude production.
[8:30] Speaker 2: Yeah, so we forecast a much much slower story in
[8:33] Speaker 2: terms of incremental production from the US out to twenty thirty,
[8:37] Speaker 2: but there is still growth there and that is probably
[8:39] Speaker 2: where we're different to some other forecasters. You all maybe
[8:42] Speaker 2: heard of peak shale or is the jale revolution coming
[8:45] Speaker 2: to an end, et cetera. We don't believe that.
[8:47] Speaker 1: So this is a non tipping point for US.
[8:49] Speaker 2: Non tipping point. If a plateau could be a tipping point,
[8:51] Speaker 2: this would be a tipping point. I guess, but it's
[8:53] Speaker 2: you know, you've address it whatever you want. A lot
[8:55] Speaker 2: of other forecasters are saying we're going to see decline
[8:57] Speaker 2: in shale. We actually think that the efficiencies the shale
[9:00] Speaker 2: producers have built out over the past few years are
[9:02] Speaker 2: now coming to fruition. They can spend a lot less
[9:04] Speaker 2: and get a lot more, and that's becoming apparent in
[9:07] Speaker 2: their production profiles. So you might have large oil companies
[9:11] Speaker 2: in the US indicating let's say five to seven percent
[9:14] Speaker 2: increase in capex over the next few years and aiming
[9:16] Speaker 2: for a twenty percent increase in output. You got this detachment,
[9:20] Speaker 2: whereas for a few years it was like, let's borrow
[9:22] Speaker 2: just to drill. So the capital discipline has tightened. They're
[9:26] Speaker 2: being a lot smarter with their money, and technology has
[9:28] Speaker 2: really allowed them to improve how they drill wells, the
[9:31] Speaker 2: direction of wells, the efficiency of all of this. But
[9:34] Speaker 2: you are starting to see costs balance out of that
[9:36] Speaker 2: incremental investment, right, So they're playing a sort of a
[9:38] Speaker 2: smarter game than they had done in the past.
[9:40] Speaker 1: That's so interesting, and it comes back to this thing
[9:43] Speaker 1: that we're saying is, you know, maybe some of the
[9:45] Speaker 1: power of OPEC to dictate who's going to be able
[9:48] Speaker 1: to be profitable has weakened. I mean, I remember in
[9:51] Speaker 1: twenty twenty was devastating for a lot of shale producers,
[9:55] Speaker 1: and then that was the start of the era of
[9:57] Speaker 1: this capital discipline, and now we're seeing more resilient industry
[10:01] Speaker 1: with maybe more global market power.
[10:03] Speaker 2: As a result, there all of the small mama pop
[10:06] Speaker 2: shops merged, they all became part of larger corporations, much
[10:09] Speaker 2: more financially stable. They go to market, they don't have
[10:12] Speaker 2: to go to the banks for loans anymore, not at
[10:13] Speaker 2: the same extent they used to anyway. So it's just
[10:15] Speaker 2: they're just bigger players. They're more stable.
[10:18] Speaker 1: And then when we're talking about oil, the other dimension
[10:21] Speaker 1: in all of this, you know, if we're thinking downstream,
[10:25] Speaker 1: is what could all of this mean for Petcam's markets
[10:28] Speaker 1: any significant things happening in twenty twenty six in there?
[10:32] Speaker 2: Yeah, there is a lot actually, So this is a
[10:34] Speaker 2: perfect example of a boom bus cycle industry. High prices,
[10:38] Speaker 2: a lot of new capacity. It's the low prices, it's
[10:41] Speaker 2: the closures in all capacity, and we're going through this
[10:43] Speaker 2: really tight pinch where you're seeing a lot a lot
[10:46] Speaker 2: of capacity coming on, particularly in India and in China
[10:49] Speaker 2: and Southeast Asia, and a lot of capacity in Europe
[10:52] Speaker 2: and the US really struggling with weak margins as a
[10:54] Speaker 2: result of that, particularly in Europe. You're seeing a lot
[10:57] Speaker 2: of closures in Europe when it comes to these facilities.
[11:00] Speaker 1: It's like the pattern that we've seen in all of
[11:02] Speaker 1: the renewable energy industries as well playing out. You know,
[11:05] Speaker 1: capacity moving to Asia. So what does that mean for
[11:08] Speaker 1: China specifically? You know, firstly, why is so much capacity
[11:13] Speaker 1: building up in China around this and is that going
[11:15] Speaker 1: to be a profitable industry for those producers as well
[11:19] Speaker 1: or are they working on really thin margins?
[11:22] Speaker 2: Yeah, profitable and China is a really great question because
[11:25] Speaker 2: maybe maybe not. You never really have the transparency on
[11:28] Speaker 2: the data. What China loves to do is to solve
[11:31] Speaker 2: for its biggest short So if it's relying on importing
[11:34] Speaker 2: products like gasoline or JEF fuel or diesel, we've seen
[11:38] Speaker 2: them in the past build the refining capacity so that
[11:41] Speaker 2: they can supply themselves. Right, So they're doing the exact
[11:43] Speaker 2: same thing in the petrochemical sector. They currently import polyathylene
[11:47] Speaker 2: from different parts around the world, and what they're trying
[11:49] Speaker 2: to do is to build facilities so that they can
[11:51] Speaker 2: produce that polyathlene domestically. So we have this big build
[11:54] Speaker 2: out over the next couple of years of polyethylene production
[11:57] Speaker 2: capacity and polyethylene stuff that goes into plastics right right
[12:02] Speaker 2: into manufacturing cars for example, really televisions, and they are
[12:06] Speaker 2: basically trying to solve that short. They're very close to
[12:08] Speaker 2: doing so as well, so we would think at that
[12:10] Speaker 2: stage the build that would probably slow down. And what
[12:13] Speaker 2: they've started to do with the other products which they
[12:15] Speaker 2: now have excess capacity of is sell that into the
[12:18] Speaker 2: international market. So a great example is gasoline, Right, there's
[12:21] Speaker 2: a ton of vvs in China. They have a ton
[12:23] Speaker 2: of refining capacity and they have more gasoline than they
[12:26] Speaker 2: consume and they sell it out into the market.
[12:28] Speaker 1: Right, So it's almost like Chinese self sufficiency or the
[12:32] Speaker 1: drived self sufficiency in China means over capacity for the
[12:36] Speaker 1: rest of the world.
[12:37] Speaker 2: Yeah, I mean the elephant in the room when it
[12:39] Speaker 2: comes to it is it doesn't have enough oil right, right,
[12:42] Speaker 2: there's not enough crude oil, and you can't just build
[12:45] Speaker 2: to solve that short. You have to import because you
[12:48] Speaker 2: can either take it out of the ground or you
[12:50] Speaker 2: cannot right, So that is a big problem, I suppose
[12:53] Speaker 2: in terms of the weak point of that strategy. But
[12:55] Speaker 2: this is why they store so much oil in China.
[12:57] Speaker 2: This is why they are the biggest buyers in the world.
[12:59] Speaker 2: Is why they have all of this capacity, much bigger
[13:02] Speaker 2: than the US to stock oil. And they've had a
[13:05] Speaker 2: great time over the past few years and being able
[13:07] Speaker 2: to source super barrels. I mean, whilst we're.
[13:09] Speaker 1: On the topic of you know, securing supply, you know,
[13:13] Speaker 1: at the time of recording, the president of Venezuela has
[13:18] Speaker 1: been taken to New York to face charges by the US.
[13:22] Speaker 1: So there's a lot of uncertainty what's happening in Venezuela,
[13:25] Speaker 1: and oil is being talked about a lot there. So
[13:28] Speaker 1: what does all of this mean for US oil and
[13:32] Speaker 1: US energy security and just generally the oil market generally.
[13:35] Speaker 2: Yeah, there's a ton of question marks. What does it
[13:38] Speaker 2: even mean for the oil market? Who is in charge,
[13:40] Speaker 2: Who's going to get oil out, who's going to keep
[13:42] Speaker 2: oil in? Venezuela produces a very heavy oil mutrik into
[13:46] Speaker 2: Canadian oil, which US refiners are really perfectly suited to process.
[13:51] Speaker 2: They built themselves actually off of the concept of having
[13:54] Speaker 2: the import available from a Venezuelan barol, for example, so
[13:57] Speaker 2: they can take a high sulfur heavy barrel and it
[14:00] Speaker 2: into high class products like gasoline, golf. Coast refiners are
[14:03] Speaker 2: a perfectly place to do it. Venezuela has had years
[14:05] Speaker 2: of neglect in the oil industry in Venezuela, and production
[14:09] Speaker 2: has gone from about two and a half million barrows
[14:11] Speaker 2: per day around twenty ten to twenty fifteen down to
[14:14] Speaker 2: about just under a million baros per day that we
[14:16] Speaker 2: know of now. And I say that we know of
[14:17] Speaker 2: because the data's pretty difficult to track and it's not
[14:20] Speaker 2: overnight that you can go and send an oil major
[14:22] Speaker 2: in turn that back on and have it back into
[14:24] Speaker 2: the market. Right, It's going to take a lot of time.
[14:26] Speaker 2: If it does, though, they will compete with the likes
[14:28] Speaker 2: of Canadian barrels or even Columbian barrels or Mexican barrels,
[14:32] Speaker 2: which will then find their way somewhere else into the
[14:34] Speaker 2: world and the market will have to solve for that.
[14:36] Speaker 2: But it is an interesting time because there's a lot
[14:39] Speaker 2: of excitement around getting the soil out onto the market,
[14:41] Speaker 2: but it won't be that fast It's not going to
[14:43] Speaker 2: happen overnight. It doesn't turn this two or three million
[14:45] Speaker 2: barrel surplus. So I was talking about at the start
[14:48] Speaker 2: into a two and a half million barrows per day
[14:50] Speaker 2: larger surplus. It takes a lot of time for that
[14:52] Speaker 2: to come out.
[14:53] Speaker 1: And the other question I have, I mean, if you're
[14:55] Speaker 1: making the comparison to Canadian crud is and in my
[14:58] Speaker 1: limits and understanding, you might correct me, but I know
[15:01] Speaker 1: at a certain point in time, the narrative was that
[15:03] Speaker 1: Canadian crud is, you know, very much on the margin,
[15:06] Speaker 1: you know, not the most competitive from a cost point
[15:09] Speaker 1: of view. Is the same truth for Venezuelan.
[15:11] Speaker 2: Oil and what Canadian is actually pretty competitive from a
[15:14] Speaker 2: cost point of view in terms of like a green
[15:16] Speaker 2: field in Canada, that's quite expensive, but in terms of
[15:19] Speaker 2: brown field and what that means, green is like brand
[15:22] Speaker 2: new brown weans continuing to operate what is already there,
[15:25] Speaker 2: and the costs are pretty low for Canadian actually got it,
[15:27] Speaker 2: and so it can trickle through, it can compete pretty well.
[15:30] Speaker 2: So it's in a pretty good place. The big difficulty
[15:33] Speaker 2: is getting it out right. You can get it to
[15:34] Speaker 2: the US pretty easily, you can't really get it anywhere else, right, right, right,
[15:38] Speaker 2: So they're kind of stuck there with the US for
[15:41] Speaker 2: now unless they build out infrastructure, which we've heard about.
[15:44] Speaker 2: So let's see what happens there. I guess the big
[15:46] Speaker 2: question mark is if if you're an oil company, like,
[15:49] Speaker 2: why would you risk going into Venezuela and throwing tons
[15:52] Speaker 2: of cash into a market that's pretty risky when you
[15:54] Speaker 2: could go to neighboring Guyana, or you could invest somewhere else,
[15:58] Speaker 2: maybe Brazil, maybe Colombia, maybe any of those other markets
[16:01] Speaker 2: that are a bit more stable. When Venezuela was the
[16:04] Speaker 2: king of oil in South America fifteen twenty years ago,
[16:07] Speaker 2: nobody else really competed with it. Brazil has since increased
[16:11] Speaker 2: by over two million boos per day of production, Guyana
[16:14] Speaker 2: by over one million bows per day production. You're seeing
[16:16] Speaker 2: a bit of a revolution in Argentina around the shale
[16:20] Speaker 2: plays down there. So you had all these markets that
[16:22] Speaker 2: weren't really big players back in the day when Venezuela
[16:25] Speaker 2: was the big player. I know they're bigger. Brazil will
[16:28] Speaker 2: be bigger than Venezuela was at its peak, So the
[16:31] Speaker 2: market's completely changed there, So we might be treating it
[16:33] Speaker 2: as well. It worked like this before, so it will
[16:35] Speaker 2: probably work like this again, and I don't think that's
[16:37] Speaker 2: the case.
[16:38] Speaker 1: It's interesting, I mean, and it comes back to this
[16:40] Speaker 1: theme of tipping points and things in twenty twenty six
[16:43] Speaker 1: being different to how they were. So we have an
[16:46] Speaker 1: oil rich nation with political uncertainty, and I think our
[16:49] Speaker 1: off the shelf narrative of that is, you know, oh, well,
[16:52] Speaker 1: of course someone's going to be wanting to get their
[16:54] Speaker 1: hands on the oil. But right now it seems like
[16:57] Speaker 1: I wouldn't want to say it's hardly worth it. But
[16:59] Speaker 1: there's no uh for that because there's a surplus elsewhere,
[17:03] Speaker 1: and as you say, there are better options.
[17:06] Speaker 2: Yeah, I mean, oil is a depleting business. You have
[17:08] Speaker 2: to just spend money to stay flat, right. That is
[17:11] Speaker 2: just the function of the market. So this is a
[17:13] Speaker 2: longer term play, if anything. If the objective is to
[17:16] Speaker 2: go to Venezuela in order to secure future powers, this
[17:18] Speaker 2: is the objective. It's not to get them onto the
[17:20] Speaker 2: market in the next two to three years. This is
[17:23] Speaker 2: further down the line than that.
[17:24] Speaker 1: Let's switch gears and bringing Rique into the conversation because
[17:27] Speaker 1: we've been talking about oil a lot and we've been
[17:29] Speaker 1: talking about, you know, in particular how some of this
[17:31] Speaker 1: affects the US. Now you focus on US gas, which
[17:36] Speaker 1: is potentially of pivotal importance to global gas. So what
[17:40] Speaker 1: do you think has been the sort of the key
[17:41] Speaker 1: feature in our view of what's going to change in
[17:43] Speaker 1: twenty twenty six, maybe starting with the US and then
[17:45] Speaker 1: we'll move onto the global picture.
[17:47] Speaker 3: Yeah, No, as you mentioned, Yeah, the US I think
[17:50] Speaker 3: now more than ever place a huge role, specially in
[17:54] Speaker 3: global LNG markets liquefied natural gas markets. A few years
[17:58] Speaker 3: ago it surpassed Katar as the biggest exporter of LNG.
[18:03] Speaker 3: And yeah, in the US, we continue to see the
[18:05] Speaker 3: country build out LNG exporting capacity. So twenty twenty five
[18:09] Speaker 3: was kind of the kickoff of the second wave of facilities.
[18:13] Speaker 3: We also saw a lot of new facilities reach a
[18:15] Speaker 3: final investment decision, so we have a lot more capacity
[18:19] Speaker 3: coming online. It should double between twenty twenty five and
[18:23] Speaker 3: twenty thirty, so really flooding the market in a way
[18:26] Speaker 3: with a lot more liquefied natural gas.
[18:29] Speaker 1: So twenty twenty six is kind of the start of
[18:31] Speaker 1: a new phase on something that's already huge, which is
[18:34] Speaker 1: US LNG exports. But I suppose it's one thing that
[18:37] Speaker 1: US being the biggest player, because someone has to be
[18:39] Speaker 1: the biggest player, right, So the fact that the US
[18:41] Speaker 1: is the biggest player doesn't necessarily have global significance. But
[18:44] Speaker 1: if the biggest player is then ramping up to another level,
[18:48] Speaker 1: then that does. And are we saying that twenty twenty
[18:51] Speaker 1: six is the year we start to see the beginnings
[18:53] Speaker 1: of a new phase of the global LNG market because
[18:56] Speaker 1: of what's happening in the US.
[18:58] Speaker 3: Yeah, it's more like the continuation of the US still
[19:01] Speaker 3: stepping on the gas right to build new facilita and
[19:04] Speaker 3: then yeah, and then katar as well joining in twenty
[19:10] Speaker 3: twenty six with the Northfield expansion, so also adding a
[19:14] Speaker 3: lot more capacity. And the difference was that, Yeah, before
[19:17] Speaker 3: it was kind of the US leading the way alone.
[19:20] Speaker 3: There were there's also a few other countries Australia, Mexico
[19:23] Speaker 3: and then in Africa there's some more capacity. But now
[19:26] Speaker 3: we have the second biggest player joining the party in
[19:29] Speaker 3: a way, so things are picking up.
[19:32] Speaker 1: So how is this going to affect LNG prices in
[19:36] Speaker 1: twenty six?
[19:36] Speaker 2: Yeah?
[19:37] Speaker 3: No, First thinking about the demand side, we are expecting
[19:40] Speaker 3: demand for liquefied natural guests to increase global first, Asia
[19:44] Speaker 3: is the place we see that will drive that growth,
[19:46] Speaker 3: as like many countries there, continue to industrialize but also
[19:50] Speaker 3: seek to decarbonize. We have markets like India where they're
[19:53] Speaker 3: still investing heavily in their infrastructure and we expect industrial
[19:58] Speaker 3: demand to increase. There is a dec amount of buildout
[20:01] Speaker 3: of new gas fired power plants as well. Maybe when
[20:04] Speaker 3: we're thinking of Asia, China's where we haven't seen as
[20:07] Speaker 3: much growth as some we're expecting, so there's there's some
[20:10] Speaker 3: risks there. And then you also have Europe that's a
[20:12] Speaker 3: pretty large consumer of energy, where we expect gas will
[20:15] Speaker 3: stick for longer than we originally thought. But the fact
[20:19] Speaker 3: is supply is increasing so rapidly that we're expecting it
[20:23] Speaker 3: to outpace demand by twenty twenty seven.
[20:26] Speaker 1: So sort of a couple of years of abundant cheat.
[20:30] Speaker 3: Energy, Yeah, exactly, Like out to twenty thirty, we're expecting
[20:35] Speaker 3: the market to remain pretty loose, and then of course
[20:38] Speaker 3: you get that access supply prices are expected to drop.
[20:41] Speaker 3: But at the end of the day, for example, to
[20:43] Speaker 3: unlock a lot of new demand, you would need to
[20:45] Speaker 3: be able to replace coal right, and for that to happen,
[20:48] Speaker 3: you would need extremely low energy prices to the point
[20:51] Speaker 3: where it would no longer make sense to export that
[20:54] Speaker 3: energy because you just don't have that margin.
[20:57] Speaker 1: Let me just make sure I understand what you're saying
[20:59] Speaker 1: is to replace coal, you need to build the gas capacity,
[21:03] Speaker 1: So you need a lower gas price than just to
[21:06] Speaker 1: displace coal with an existing gas plant. Right, But then
[21:10] Speaker 1: for the gas price to be that low, it's not
[21:12] Speaker 1: going to be enough to incentivize, you know, expansion of capacity.
[21:16] Speaker 1: So that's sort of the limit we run into at
[21:18] Speaker 1: the moment.
[21:19] Speaker 3: Yeah, and goal is so cheap in that like some
[21:22] Speaker 3: of these countries that yeah, gas is ease country being
[21:26] Speaker 3: for example, like China and India to the point where, yeah,
[21:30] Speaker 3: using lergy for power to replace coal wouldn't make sense
[21:33] Speaker 3: just on an economics based.
[21:35] Speaker 1: So this is a sort of a story that really
[21:37] Speaker 1: impacts say Europe in terms of you know, the consumers,
[21:41] Speaker 1: and then say Japan and maybe Korea as the sort
[21:45] Speaker 1: of the countries that would be making use of this energy.
[21:48] Speaker 3: Yeah, and also like the other area where we see
[21:52] Speaker 3: I think also across Asia where the surplus could be absorbed.
[21:56] Speaker 3: This on the industry side of things, so replacing some
[21:59] Speaker 3: fuel oil again, Like the point where I'm trying to
[22:01] Speaker 3: drive us to is, yeah, that this oversupply might might
[22:04] Speaker 3: be big enough that even with lower prices, there might
[22:07] Speaker 3: not be enough demand out there. So we might actually
[22:10] Speaker 3: get to a situation where you have to close some
[22:13] Speaker 3: of your L and G export facilities right and stop
[22:16] Speaker 3: liquefying that gas until the prices makes the ense again
[22:20] Speaker 3: or the demand shows up in the market.
[22:22] Speaker 1: The other dimension, well, the other part of this equation
[22:25] Speaker 1: that I find interesting is how this affects gas in
[22:29] Speaker 1: the US. I've been in the US since twenty twenty one,
[22:32] Speaker 1: been doing analysis on the US since twenty twenty and
[22:36] Speaker 1: as someone look at the power sector, the thing I
[22:37] Speaker 1: had to get used to is is how cheap gases
[22:40] Speaker 1: in the US compared to the rest of lot It
[22:41] Speaker 1: sort of changes everything. And the narrative has sort of
[22:44] Speaker 1: always been it's like the gas is boxed into the
[22:46] Speaker 1: country because there's not enough capacity to export it. That's
[22:49] Speaker 1: beginning to change, right from what you're describing. So are
[22:52] Speaker 1: we seeing up with pressure on US natural gas prices?
[22:55] Speaker 1: Are we expecting to see a big change there? In
[22:58] Speaker 1: twenty twenty.
[22:58] Speaker 3: Six yeah, it's I think even already now we've felt
[23:02] Speaker 3: the pressure that energ has put on the market since
[23:05] Speaker 3: the start of the second half of twenty twenty five,
[23:07] Speaker 3: as we had a black and Mint's lngs the liquefaction
[23:11] Speaker 3: facilities start to ramp up. We already started seeing prices
[23:16] Speaker 3: fuel that pressure and start to rise. One of the
[23:19] Speaker 3: largest facilities, especially going into the winter. We started with
[23:23] Speaker 3: a pretty cold December, we saw price a spike. I
[23:26] Speaker 3: think we got up to five dollars. And one of
[23:29] Speaker 3: the big differences if we go back even three four
[23:32] Speaker 3: years back, or something to think about more than a difference,
[23:35] Speaker 3: is you still have the same amount of storage capacity.
[23:38] Speaker 3: So with these lergy facilities you have potentially a lot
[23:42] Speaker 3: more demand while you're buffer right for the winter when
[23:45] Speaker 3: you have more demand than you have supply staying the same.
[23:49] Speaker 3: So it does open the door for more volatility as
[23:52] Speaker 3: well besides higher prices.
[23:54] Speaker 1: It's interesting, I mean, and we come back to this
[23:56] Speaker 1: theme of the sort of tipping points ioinants that were
[24:00] Speaker 1: sort of always on the cards, but maybe twenty twenty
[24:03] Speaker 1: six is when those cards come in because we're seeing
[24:05] Speaker 1: falling natural gas prices globally and rising natural gas prices
[24:09] Speaker 1: in the US. So like the logical end game of
[24:12] Speaker 1: the US expanding its lng xport capacity is a convergence
[24:17] Speaker 1: between global and US natural gas prices. I'm not saying
[24:20] Speaker 1: we're that yet, because I think if you go to
[24:21] Speaker 1: Europe and say five dollars per mmbtu, you've converted that
[24:24] Speaker 1: into mega our euros permegal hour, that's still yeah, that's
[24:28] Speaker 1: still pretty cheap if you're in Europe. But maybe twenty
[24:31] Speaker 1: twenty six we're starting to see the start of a
[24:34] Speaker 1: meaningful price convergence between the global and the US pictures.
[24:38] Speaker 3: Yeah, and we're already seeing not only the prices in
[24:41] Speaker 3: Europe in the forward curb dropping in the anticipation right
[24:44] Speaker 3: of all this new supply that's coming into the market,
[24:48] Speaker 3: but we've also seen the Japan Korea marker, the forward
[24:52] Speaker 3: curve for those prices fall as well in anticipation of
[24:56] Speaker 3: all this new supply. So it's something the market's already
[25:00] Speaker 3: expecting to happen. And of course, yeah, this spread between
[25:03] Speaker 3: Henry Harbor and this global prices tightening up.
[25:06] Speaker 1: It's fascinating. So it's almost like twenty twenty six could
[25:10] Speaker 1: be the beginning of a new phase for the global
[25:13] Speaker 1: gas market and the US gas market. Maybe we won't
[25:16] Speaker 1: be talking about them separately so much anymore.
[25:18] Speaker 2: Yeah.
[25:19] Speaker 3: No, I think twenty twenty six and till the end
[25:22] Speaker 3: of the decade is definitely a big shift. I think
[25:26] Speaker 3: the gas market has evolved from yeah, market that typically
[25:29] Speaker 3: has been very regional or not as interconnected globally, to
[25:34] Speaker 3: something that's becoming completely different than what we were used
[25:38] Speaker 3: to before.
[25:39] Speaker 1: Let's move on to another commodity that is really interesting
[25:42] Speaker 1: to us, and that is renewable fuels. And I know
[25:45] Speaker 1: that there was a part of the report we published
[25:48] Speaker 1: was looking at what's going on in China with renewable fuels,
[25:50] Speaker 1: So David tell us more.
[25:52] Speaker 2: Yeah, this is an interesting market. So you go talking
[25:55] Speaker 2: about oil, which is very cool, to renewable fuels, which
[25:57] Speaker 2: I feel like is the real athlete of the classroom,
[26:00] Speaker 2: which I also enjoy. It's a really interesting market because
[26:03] Speaker 2: you know, China's more than half of every story in
[26:05] Speaker 2: every renewable except for renewable fuels. They don't have mandates
[26:09] Speaker 2: for gasoline like they do here in the US, or
[26:11] Speaker 2: they do in Brazil or in Europe. But I think
[26:14] Speaker 2: this is the year I'll call it that they that
[26:16] Speaker 2: they tip into being a leader specifically in this sustainable
[26:19] Speaker 2: aviation fuel, so the saf market. And the reason for
[26:22] Speaker 2: this is if China says it's going to do something,
[26:24] Speaker 2: it does it, and it doesn't do it in five years,
[26:26] Speaker 2: it does it when it says is going to do it.
[26:28] Speaker 2: In March, they have their five year plan where the
[26:30] Speaker 2: latest five year plan will be announced and there's i'll
[26:33] Speaker 2: emphasize rumors and whispers that within that there'll be a
[26:37] Speaker 2: mandate for sustainable aviation fuel that is currently limited to
[26:40] Speaker 2: places like Europe where you see a blend mandate for
[26:43] Speaker 2: twenty thirty depending on the country, between five and ten
[26:46] Speaker 2: percent for example, or in Singapore. Interesting, but not the
[26:49] Speaker 2: hugest markets. China huge market, and if they say they're
[26:52] Speaker 2: going to do it, they will do it. Another interesting
[26:55] Speaker 2: part behind it is China has for the longest time
[26:57] Speaker 2: been sending used cooking oil, which is one of the
[26:59] Speaker 2: lost carbon feedstocks, to create sustainable aviation fuel around the world.
[27:04] Speaker 2: So they've been sending it to Europe and they've been
[27:06] Speaker 2: sending it to the US, and there's been a lot
[27:07] Speaker 2: of controversy around how used that cooking oil actually was
[27:12] Speaker 2: was it used once? Did they use it just to
[27:14] Speaker 2: say it was used? Lots of classification, so there's been
[27:16] Speaker 2: a lot of restrictions on those imports.
[27:18] Speaker 1: I love the idea of someone doing some token cooking, yeah.
[27:23] Speaker 2: But the big difference is now they have a lot
[27:24] Speaker 2: of use cooking oil in China, right, so they don't
[27:26] Speaker 2: need to export it. They can produce it their sustainable
[27:28] Speaker 2: aviation fuel domestically from that U code used cooking oil.
[27:32] Speaker 2: And what we've seen is the build out and capacity
[27:35] Speaker 2: of over a billion gallon schedule for twenty twenty six
[27:38] Speaker 2: in China. That's a huge number. That's over half of
[27:40] Speaker 2: the global total expected to come online in twenty twenty six.
[27:43] Speaker 2: And again emphasizing China just wasn't really a big player
[27:47] Speaker 2: up until recently. So you're seeing the early signs of
[27:50] Speaker 2: a infrastructure build out, a policy support potentially coming in
[27:54] Speaker 2: really quickly, like in the next twelve weeks, and then
[27:57] Speaker 2: a concentrated aviation market that's pretty much ran by the government.
[28:01] Speaker 2: So that could change the whole landscape. It would change flows,
[28:04] Speaker 2: it would change feedstock flows, and it would change a boit.
[28:06] Speaker 2: I suppose the way we perceive sustainable aviation fuel, right.
[28:10] Speaker 1: I suppose that, you know, because whenever China moves into
[28:12] Speaker 1: an area, you know, the rest of the world has
[28:14] Speaker 1: to take No, it's either a great opportunity or a
[28:16] Speaker 1: great threat, or maybe a little bit of both. So
[28:19] Speaker 1: the sustainable aviation fuel, it seems, then, moves are to
[28:23] Speaker 1: supply this emerging domestic demand which is going to be
[28:25] Speaker 1: created by policy provisions for the rest of the world.
[28:28] Speaker 1: That might mean not they're not being as much of
[28:30] Speaker 1: this used cooking oil as a feedstock anymore, which would
[28:34] Speaker 1: presumably push up global prices. You know, how do you
[28:36] Speaker 1: see it playing out? Does China become an amazing market
[28:41] Speaker 1: for sustainable aviation fuel or does it become like it
[28:44] Speaker 1: has in so many other areas that the dominant supplier
[28:47] Speaker 1: in this in a global industry.
[28:49] Speaker 2: Yeah, it could. The sustainable aviation fuel market is incredibly bizarre.
[28:53] Speaker 2: Think about it like this. The US is vegan, right,
[28:56] Speaker 2: Europe is presitarian, and China is kind of a You
[29:01] Speaker 2: can make a cake that's gluten free, you can make
[29:03] Speaker 2: a cake that has let's say milk in it, or
[29:06] Speaker 2: you know, bacon on top, whatever, and then you can
[29:09] Speaker 2: have a cake in China that's just laced with steaks
[29:12] Speaker 2: on top whatever, right, Right, that is a weird cake.
[29:15] Speaker 2: There's a weird cake. But the ingredients that go into
[29:17] Speaker 2: it to find the product that come out of it,
[29:19] Speaker 2: and not every market recognizes the product based on the
[29:24] Speaker 2: stuff that goes into it.
[29:25] Speaker 3: Right.
[29:25] Speaker 2: The vegan's not going to eat the cake that's made
[29:27] Speaker 2: with eggs, right. So this is any aleviation fuel. Some
[29:30] Speaker 2: markets will take ethanol, for example, as an input, or
[29:35] Speaker 2: soybean oil for example, that you'd get here in the
[29:37] Speaker 2: US that might not be recognized as a saf in Europe, right,
[29:42] Speaker 2: But the ingredients really define the product that comes out.
[29:45] Speaker 2: In Europe. You're not allow allowed you certain types of
[29:48] Speaker 2: palm oil, for example, which you might source as a
[29:50] Speaker 2: feedstock in Asia, which is normally not a problem if
[29:52] Speaker 2: you're driving a car, right because you're probably not going
[29:55] Speaker 2: to drive the car to China. If you're flying an airplane, though,
[29:57] Speaker 2: you might take off in London and land in Beijing
[30:00] Speaker 2: or vice versa, and one of those jurisdictions might recognize
[30:04] Speaker 2: that you're using sustainable aviation fuel, whereas the other one
[30:06] Speaker 2: might not. Right, It's a really weird market, so yeah,
[30:09] Speaker 2: they might become the leader in specific types. It might
[30:12] Speaker 2: not become the leader in all of the types. Right.
[30:15] Speaker 2: That makes sense.
[30:16] Speaker 1: Because it's fundamentally a market that is created out of policy.
[30:22] Speaker 2: Out of policy. Yeah, and the policy is different in
[30:24] Speaker 2: all of the large markets, which is the patchwork of confusion.
[30:27] Speaker 1: I guess yeah, like it' very it can be very fragmented.
[30:31] Speaker 2: It really depends on what the consuming market will allow
[30:35] Speaker 2: be registered as consumption. Right, because all these airlines are
[30:38] Speaker 2: in theory paying premium for this product. So if they're
[30:40] Speaker 2: going to pay premium, they wanted to count towards the
[30:43] Speaker 2: regulation in the market they're flying it in.
[30:45] Speaker 1: It's maybe not as simple as you know, China is
[30:48] Speaker 1: going to just move on and dominate, but it certainly
[30:51] Speaker 1: is the case that if these policies are put in place,
[30:54] Speaker 1: it will shake things up in the industry globally.
[30:56] Speaker 2: It will absolutely shake things up. The really interesting part
[30:59] Speaker 2: is if it's not enough let's say, use cooking oil
[31:02] Speaker 2: to produce sustainable aviation fuels a sort of traditional way
[31:05] Speaker 2: if you want to call it, through hydro processing, like
[31:08] Speaker 2: through refinery. If they then start to develop these new
[31:12] Speaker 2: technologies to create let's say, e fuels, then those can
[31:15] Speaker 2: scale and they're really pretty I would say universal if
[31:19] Speaker 2: you make it from clean power hydrogen carbon, make sustainable
[31:23] Speaker 2: aviation fuel from it. Europe recognize that, the US recognizes
[31:26] Speaker 2: that it's not as dependent on the feedstock. And that
[31:29] Speaker 2: is where I think the tipping point could come. If
[31:31] Speaker 2: China doesn't have enough to supply itself with this used
[31:35] Speaker 2: cooking oil technology, and then the new technologies could really
[31:38] Speaker 2: start to turn into the solar panels, the next solar
[31:41] Speaker 2: panels of the world. They could export that. That would
[31:43] Speaker 2: be a technology that was scale.
[31:45] Speaker 1: So I suppose on that front we need to just
[31:47] Speaker 1: watch this space.
[31:48] Speaker 2: Yeah, but March twenty twenty six might be the month
[31:51] Speaker 2: to watch if I was going to watch any money.
[31:53] Speaker 1: Yeah, Okay, that's that's really interesting. Put that in your
[31:55] Speaker 1: diaries if you're at all interested in biofuels. Could be
[31:58] Speaker 1: a defining month. So we've talked about a few tipping points. Today.
[32:02] Speaker 1: You identified a tipping point around copper, So what is that,
[32:05] Speaker 1: what's going on there and does it fit into any
[32:07] Speaker 1: of the types of tipping point that we're seeing for
[32:10] Speaker 1: the other commodities.
[32:11] Speaker 2: Yeah, it's a really interesting one because it's a market
[32:13] Speaker 2: that's gone from fairly balanced slightly in surplus. We think
[32:16] Speaker 2: that twenty twenty six we'll see it go into a
[32:19] Speaker 2: deficit and a sustained deficit. And that is kind of
[32:22] Speaker 2: different point to the other commodities we spoke about today,
[32:25] Speaker 2: But it's one that's really driven by transition, yeah, which
[32:29] Speaker 2: makes it, I suppose, just different to the other ones
[32:31] Speaker 2: we talked about, which are a bit more fundamentally driven
[32:33] Speaker 2: potentially their words.
[32:35] Speaker 1: Shoot, I mean, if I was to try and like
[32:36] Speaker 1: force a narrative onto this, a lot of the traditional commodities,
[32:41] Speaker 1: you know, fossil fuels surplus, and then you know the
[32:45] Speaker 1: transition commodity was in short supply. I know that's too simple,
[32:48] Speaker 1: but you know there's maybe something symbolic about that.
[32:50] Speaker 2: Very different sized markets as well. I think that's a
[32:52] Speaker 2: big thing to take from this. As a small pond,
[32:55] Speaker 2: big fish, it is key for everything, right, and we've
[32:58] Speaker 2: seen this big build out of day centers that's impacting
[33:01] Speaker 2: power across the world. It's impacting gas across the world,
[33:04] Speaker 2: it's impacting coal even across the world. Right. Obviously a
[33:07] Speaker 2: key ingredient in building a data centers the wires, right,
[33:10] Speaker 2: So there's a huge amount of copper that goes into
[33:12] Speaker 2: these which is driving a shortfall that's already been driven
[33:15] Speaker 2: by delayed minds coming on sanctions and tariffs around the world.
[33:19] Speaker 2: Things like EV's taking off, which again use a lot
[33:22] Speaker 2: of copper, great infrastructure copper. It goes on and it
[33:25] Speaker 2: goes on all those offshore wind farms. They've got to
[33:28] Speaker 2: get power back to land somehow. So there's just tons
[33:30] Speaker 2: and tons and tons quite literally of copper going into
[33:33] Speaker 2: this transition. And it's a delicately balanced market, i would say,
[33:37] Speaker 2: and it takes a long time for new supply to
[33:39] Speaker 2: come online. You could be looking at for a greenfield
[33:42] Speaker 2: project in a really mining friendly country maybe ten to
[33:45] Speaker 2: twelve years. So we're already really behind if we think
[33:48] Speaker 2: about any of those forecasts or projections that you see
[33:51] Speaker 2: around wind build out or EV take up or data
[33:53] Speaker 2: center uptake or miles behind. And even if you want
[33:56] Speaker 2: to just expand a brown field or an existing mine,
[33:59] Speaker 2: could be five to seven years by the time you
[34:01] Speaker 2: get the right policies in place and the permis that
[34:03] Speaker 2: you need in order to get that out of the ground.
[34:05] Speaker 2: The problem there is then that goes up in price,
[34:08] Speaker 2: right because there's a shortage, and that could slow down
[34:10] Speaker 2: other technologies developing, or you'd need to find a replacement. Right.
[34:14] Speaker 1: Interesting. I mean, if we were to use the high
[34:17] Speaker 1: school movie analogy, Copper is like that kid that nobody
[34:22] Speaker 1: ever noticed, and then all of a sudden they're in
[34:24] Speaker 1: high demand and everyone wants a piece of them. But
[34:27] Speaker 1: they need to make sure they play their cards right,
[34:29] Speaker 1: because the world might decide, oh, you know, copper is
[34:32] Speaker 1: too difficult to work with, we'll move on. We'll find
[34:34] Speaker 1: something else. But if copper rides this wave, it could
[34:38] Speaker 1: be suddenly the coolest kid in school.
[34:40] Speaker 2: Yeah. I think that's a fairly fair assessment. If not
[34:45] Speaker 2: a mean girls are into it, well, let's take it.
[34:48] Speaker 2: It's just an interesting market. We've also seen a bunch
[34:50] Speaker 2: of external factors impacting the price over the past few
[34:53] Speaker 2: months with sanctions and just how the market's price it's
[34:57] Speaker 2: really old, old school. It's assessed via warehouses and specific locations.
[35:02] Speaker 2: So we see sanctions last year or tarist from the
[35:05] Speaker 2: Trump administration leading to a ton of copper being imported
[35:09] Speaker 2: into the US, and then the rest of the world,
[35:11] Speaker 2: where a lot of those pricing warehouses are more than
[35:14] Speaker 2: in the US have a shortage. The price spikes, even
[35:17] Speaker 2: though actually supply demand, it's probably fine. It's just about balance, right,
[35:20] Speaker 2: So it's a quirky market and we've seen lots of disruptions, right, so,
[35:23] Speaker 2: but it is the one to watch, is what everybody's
[35:25] Speaker 2: paying attention to. You've seen a lot of news headlines
[35:28] Speaker 2: over the past few months, so yeah, let's see twenty
[35:30] Speaker 2: twenty six will be interesting because it'll be the first
[35:32] Speaker 2: shortage and it's a key ingredient and a lot of
[35:35] Speaker 2: these exciting things that we talk about.
[35:37] Speaker 1: Right Well, Enriquez, this has been fascinating, and I mean
[35:41] Speaker 1: you're you weren't wrong. There's a lot of tipping points
[35:45] Speaker 1: happening in these various different commodities in twenty twenty six,
[35:49] Speaker 1: So there's going to be a lotle to watch. So
[35:50] Speaker 1: thank you for joining and framing this all today. David,
[35:53] Speaker 1: thank you for being here. Thank you, and Enrique, thank
[35:56] Speaker 1: you for being here as well.
[35:58] Speaker 3: Yes, thank you.
[36:07] Speaker 2: Today's episode of Switched On was produced by Cam Gray
[36:10] Speaker 2: with production assistance from Kamala Shelling.
[36:13] Speaker 1: Bloomberg NEIF is a service provided by Bloomberg Finance LP
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