I'm Daniel James and you're listening to seven AM. The fighting may have temporarily eased in the Middle East, but the fallout are still moving through the global economy. Shipping through the Strait of Horror Moves remains disrupted, fuel markets are unsettled, and Australia is exposed. Now. Anthony Alberizi is in Singapore trying to secure a supply as the opposition presses the government over how prepared the country it really is.
Today Energy and Climate Change Senior Fellow at the Gratton Institute Tony Wood on the state of the Strait and the ongoing risks for Australia and the politics taking shape around another global shock. It's Saturday, April eleven.
Okay, Ellie, I have to pause because I'm just hearing a may hear that the President has agreed to start bombing for two weeks.
Control Room, do you have any more information.
Around the forumst so confirming the reopening of the critical streets of four Moves during this season five period, Tony. This ceasefire has raised hopes that the Strait of Homus could reopen, but there are still reports that ships need permission from Aram's navy to pass, and that shippings at a knee stand still. So, firstly, is homus actually opening in any sort of meaningful.
Sense half open, half close, like I think, it's obviously just reflecting a lot of the tension that's still both sides of the conflict negotiating their position. Chris Barron said it accurately. It's not a bit too carried away that it's all going to reopen, but it is heading in a better direction.
Obviously.
We hope a cease fire takes hope and becomes the permanent arrangement, obviously, and the sooner that happens, the better it'll be for field prices around the world. If you're asking me to say, with a great deal of certainty to predict avens in the Middle East coming days, in which I'm not going to do that because it's a fast moving situation.
But boy, this could easily tip either way. I still think about what's going on. So what that means is that the things that the government's been doing almost have to continue on the basis that nothing has changed.
Shit, if it's not really open, what would companies need to see before traffic starts moving properly again?
I think there's two things. What is the actual shipping If the strait is open and there's no other impediment, then that was simply could start pretty quickly. When there's a whole lot of ships basically sitting their way to go, there's a debate going on about whether or not they run like apparently as evidence, they've already tried to change some sort of toying fee to use Australia. That would be something everyone's going to react adversally toned any fuel
that's already on the way. This is an issue that government had our government in Australia had already been concerned about. But if people were buying fuel at one hundred and ten hundred and twenty dollars a barrel, but with the time the ship to Australia the price has dropped from eighty dollars a barrel, you can see there's a bit of a commercial exposure there and the government had looked
to even underwrite that risk. And then the other one of their courses, has there been any significant physical damage to the resources, to the facilities in the Persian Gulf, because there certainly has been to the L and G reduction from the gas field in their Katari field, and so that's a big problem because that's going to take people have said more than three to five years to get some of the effects. Now it's not the whole thing,
but that would be a problem. So it's a been out of clear whether they our physical strange on that. And then you've got the fact that it takes a long time to fill up a global supply chain, so it's not going to have it over night. But you know, the prices react very quickly, and we've seen that already, up and down, up and down, and I think we'd see some improvement in price pretty quickly if it became clear that the stroke was going to effectively stay open.
Just to give us a sense of how important Australia is tony. When it is open, what does it mean in market terms? And when it does properly reopen sometime in the hopefully not too distant future, when will we start to see sort of any real impact here in Australia in terms of our fuel security.
Well a couple of week. Firstly, about twenty percent of the Wills oil crude or comes through the straight now only a modest proportion that is Iranian oil Iran, together with Saudi Arabia and Venezuela have the big resources globally of oil. Most of what Iran has exported has been able to China in recent times. But what has been prevented by the australiaanmus problem isn't Iranian oil. It's oil
coming from Kuwait, Saudi and those sort of places. And just the oil, by the way, it's also things like fertilizer. So that's been the big problem. Now if that opens up, then you would start to see that flowing. Now, what Australia has been doing, we've depended upon companies like Singapore and Malaysia to a smaller extern Japan for our finished products and also for our crude or that goes through our two refineries. We already diversified that a fair bit
over the last twenty years as we shut down our refineries. Obviously, this is giving us a reason to even think about for more so and maybe the relationships with some of those countries can we see as strong long term energy partners,
will mean we'll get more from them. But also recognize that companies like Singapore and Malaysia themselves they depended upon getting the crude which they refine in products from places like the Middle East, and so I think this complex global supply chain of liquid fuel products is going to change a lot, and what people we depend upon of those we don't depend upon, is going to change a lot. And at the same time, we are and will be and should be looking forward to. Okay, now what do
we have to think of? You thinking about almost at the same time to ensure that we don't become complacent if things return to something like normal.
Our Prime Minister has to fly halfway around the world to beg for liquid fuels, which is what he's had to do in this last minute flight to Singapore today. We should instead have been drilling for the last few decades. We probably would have found a new source of liquid fuels to replace the bats straight just a generation of is all.
Of this tony? As the opposition is suggesting a case for more domestic refining, bigger reserves, and different trading partnerships. Were all three, but.
Going through the trading partnerships makes a lot of sense. I think the idea that we're going to rapidly find more oil and build more refineries is far more challenging. Its the history that's a very big ask and would acquire huge amounts of government effort because we already know the reason we don't have refineries because they are un economic.
So building new refineries for a market it's relatively small, like Australia with physically spread around a very large country with a small population is a really big hard thing to do. There's been some suggestions recently that there's a potential new oil and gas resource in Queensland. Premier has been talking it up. I think it's very very early days just where that's real or not and is it
a the size that would justify the enthusiasm that we're seeing. So, you know, it seems to me that looking for a more oil be our process in ourselves is going to be a really long term hard challenge. There are better things we could be doing. One of them forces to really continue to push our acceleration of electric vehicles to risks. What is because it reduces our dependence upon the sort
of problems we've been talking about. And secondly, it also is consistent with producing our impact on climate change, and it means that we can do both. That would seem to be a double benefit for going down that route. At the same time, probably looking to increase the level of stories we have on shore. And also probably this is a little bit less clear what the government's be talking about to produce biodiesel rather than fossil diesel.
Coming up, What Albinize's flash trip to Singapore help Australia's fuel problems.
This is a relationship of trust and of mutual interests as well. We know that it is in both of our country's interests to engage with each other to make sure that we are both reliable suppliers and our word means something.
Tony Anthony Abenezi has flowing to Singapore to meet with his counterpart Prome Minister Lawrence Wong. You've touched upon it, but why is Singapore so important to Australia's fuel needs?
Well, we get three finished products we're important we use. One is petrol, one is diesel. What is aviation field? Now you know people who have been carrying up that bowsers know that there's a couple of variations on that, but fundamental that's what we're talking about now. We buy about half of our petrol or Singapore big refineeries they've
got there very important for us. The other side of why Singapore is interesting is because Australia in this part of the world is a globally important supplier of LERG and now even more so with what's happened to the Kata, And so Singapore has some very important challenges because they produce most of it ninety percent of electricity from gas, so they need us if we need them. You can see the opportunity for reciprocal roadment. Now, Governments do not
do commercial deals. Governments do not threaten each other with unless you do this, I'm going to do that. What they do is so let's work together and see if
we can find some solutions here. They're going to be better for both of us, clearly in both countries have got a very strong common interest and that's what I think Prime Minister of Australia is trying to shore up with the Prime Minister of Singapore, for example, not doing commercial deals, but making it very clear that the government is not going to intervene in ways to adversity affect Singapore and looking for assurances the Singapore government won't do
the same thing. Remembering that Singapore produces more fuel than they need. How they allocate that will be important for us.
So in purely political terms, what can Alberdas realistically achieved during his visit Tony.
I think the highest priority would be too thing. Firstly, we know s reciprocally what we're planning to do if things don't improve, And what I mean by that is that Singapore will not if they do decide they've got some real problems meeting all their customers requirements for the products they produce, that we won't be adversey affected by that. I mean there's no guarantees here, But equally, will they
be looking for the same thing. We won't do anything on the L and G side that would affect them. Now that's the political decision. At the same time, obviously there will be a lot of interest in the way
that will work out commercially long the term. What I think this does is absolutely supports a better long term relationship with Singapore, because if we are going to be dependent upon imported fuels for some time yet, and I think it's quite likely, then deepening those relationships with countries like Singapore and Malaysia and so forth makes a lot
of sense. And secondly, as we think about building our own onshore storage, that will also be important so I think there's two levels of arrangements that the Prime Minister's visit could bring to a future.
Beyond the Singapore trip. The government has announced a series of measures underwriting extra shipments, cutting exercise further with states, releasing twenty percent of the minimum stockholding obligation, changing fuel standards and backing some the refineries that we do have. So how would you rate the government's response to this so far?
Look, I only the government in terms of responding to is they leaded to situation has been developing where we refer it has been pretty good. Actually, they were trying to run a fine line between being too optimistic and two prisonistic. And so you know this idea that as soon as the government says Doug, panic, what does everybody do panic? Of course that's what happens, right, So the government was trying to assure people that and so far
it's been true. Overall Australia has not run out of fuel. What we have that is putting more for it. And secondly, because of our large country, we're on the end of the many of our many people in regional Australia are in the longer supply chains. When you start to see panic buying in those supply chains, then quickly you can get local problems. So I think broadly speaking, what my governments does been appropriate. But I think most Australians will say, Okay,
we understand this wasn't caused by Australia. We're comfortable what my government's doing. We all know we're going to if it gets worse, we're going to have to do our part. Let's get on with that.
A question you may or may not be able to answer, Tony, but it's something that's I've always sort of fascinated me since this thing broke out, is that during normal times, do we have any sort of idea of how many surveys would actually run out of petrol on a normal day. You'd like to big zero, wouldn't it look?
I think it does happen from time to time. And I've driven up the stud Highway from Adelaide to dar on a couple of times, and it's not that unusual to to come to one that is out of one particular feel like diesel or petrol or something like that, or a particular home lettered petrol or something. So it's
not off the planet at all. But I can recall when we did have more refiners in this country, it seemed to me that we had had more disruptions to supply because those in those days a very strong unionized workforce, and we have industrial disputation more than we have physical disputation, and so, you know, I think this is actually overall, our fuel supply has been pretty good, but I think it's important that we'd be thinking about what level of
insurance do we want to have against this thing happening in the future. And we've had pretty small spot relatively small stocks of fuel. I'm sure we may have to revisit that the need for that has changed a lot, because we're still produce crudeal or we used to also profine it ourselves. We didn't need to have the same amount of onshore storage as we probably do today.
And finally, Tony, a very simple question, really, what's the best case scenario here and what's the worst case scenario? And how long can we be feeling the impacts of this.
I think the best case would be if both sides don't remember there are three sides to this bloody thing. With Israel, I think its own very particular view, not necessarily on with the United states. They've got to find a way to back out of this withdraw, break it all down, get some serious negotiations going on. Very tricky, very sensitive. It only requires someone to say the wrong thing on the wrong media interview. It all goes to.
Hell, right, But be careful what you say, Taming bob On.
You've got it now. The worst case, obviously, is that doesn't happen. The most dramatically wordate worst case would be something like what Donald Trumkt was threatening actually happened. If we did fundamentally wipe out the physical infrastructure in a way that Trump was talking about, recovery would take a lot longer. The consequence will be a lot worse. That would be so bad that I don't think anyone a lot will be done to avoid that happening.
Well, Tony, we thank you for your insights and we thank you for your time. Thanks for joining us.
Thanks.
Jan seven Am is a daily show from Solstice Media. It's made by Adigus Bastow, Ariel Richards, Chris Dgate, Crystal Keller, Nicole Johnston, Travis Evans, Zoltanfecho and me Daniel James. Our theme music is by Ned Beckley and Josh Hogan of Envelope Bordeo. Thank you for listening to seven AM this week. Please have yourself a great weekend