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We've spent a couple of weeks trying to get him in here. He's with Heart Tree Partners. Edward Morris's absolutely definitive on hydrocarbon. Think of Daniel Jurgen's surprise. Ed Morris shows up about page twenty three in the prize from a few years ago. Definitive at City Group and of course now with Hart Tree Partners. When was the first time you were in Riod.
It was in the late nineteen seventies.
With Faisal, with King Faisel.
Yes, but I didn't see him at that point in time.
What is the sharp okay, fine, but what is the strongest difference now between the Royalty of Riod Is they look out at this Maelstrom versus our stereotype of Saudi Arabia.
So the saudiast have come a long way. They're looking at how to keep public happy. They are trying to diversify their economy as quickly as they can, and it's looking to the future rather than building on the present or the past.
What is their relationship with Russia? This idea of opek plus is it a what's the distinction of that relationship.
The relationship is kind of critical. Think about where the Saudis are where Opek is. The Saudis have a production capacity today between eleven and twelve million barrels a day. That's what they had in nineteen eighty. Nineteen eighty was a long time ago. OPEC's production capacity then was around thirty two to thirty three million barrels a day. Today it's thirty five thirty six million barrels a day. The oil market was then sixty million barrels a day and
today it's one hundred million a day. So they discovered that they could not on their own balance the market, They could not put a floor under prices, and they needed to expand, and they had the opportunity to do so in the middle of the last decade, when we had volatility across the planet, and a lot of that volatility was the result of the two fastest growing oil producing countries in the world, Russia and the United States.
They were looking in the middle of the last decade, actually around twenty thirteen, just at the time before Russia had his first invasion of Ukraine, and they saw that the production growth was a million barrels a day in both countries. If you look back a couple of years and they decided to bring prices down. They thought if they could bring prices down to around seventy dollars a barrel, they would lose. They would see the world lose two million barrels a day of oil. And it didn't happen.
Paul, I want to mention this. Everyone was looking for one hundred and it was a lone voice at City Group, a big chrizzled I mean Edward Morris, you know, a bit older, saying well, maybe not he nailed the move to seventy.
So ed how do you think about Russia as a global supplier these days, because it seems like just in the last few days, things are changing. When you think about the Trump administration how they're viewing Russia. Do you expect Russia to be a bigger global supplier. I'm not sure where that oil went.
You know, it all depends on when you're talking about what your horizon is and what could possibly happen. And you have to remember that it wasn't that long ago. It was twenty nineteen when Putin visited Russia, visited Saddi Raby right after the attack on the app cake facility. And said, listen, we're going to be cooperating with you through your Ramco IPO, and then we're going to be out on our own. And section the CEO of Roznev said right after that IPO, we're out on our own.
We are going to be growing oil production at home and abroad. They have right now the Vastok field in northern Siberia, and that field can produce its schedule to produce two million incremental barrels a day. They are a wash in oil and they need to do something about it.
So President Trump says, drill, baby, drill, and we don't waste time on that. But what we can state with Edward Morse is oil a weapon for the United States in our geopolitics.
Oil is certainly an important part of the foreign policy in the country. It cannot be weaponized other than the degree to which you can put sanctions on a country. I don't know what weaponizing it means. I don't know what we're going to pursue. Energy dominance means. I know what it means as a soft, powerful instrument of policy. And let me give you an example. We have become
the largest exporter of energy in the world. The largest exporter of ellain that LNG export growth enabled the United States to replace every drop of Russian energy, but particularly natural gas going into Europe, and it did so at a time when it was able to globalize a gas market that had not been globalized. We have made oil because we don't allow destination restrictions. We've enabled natural gas to be global and the price of it is based at Henry Hubb in the United States. That's kind of
soft diplomacy. We have an ability to expand LNG globally, but it's a soft ability. We have an ability to say multilateral lending institutions ought to be pushing natural gas. They ought to be backstopping regasification. It's cleaner than coal, it's helpful to the global economy. But that's soft diplomacy. It's not using it as a weapon.
So talk to us about the demand side of the equation, and know, when you think about some of these commodities like global oil, you really have to have a call on demand. What do you think demand?
Is brilliant question, but even more brilliant, do you drive an EV?
I got to tell you I did drive an EV until we moved back to New York. Full time, and then I discovered that it was too expensive to have a car and to deal with actually the rush on garages right at the edge of the zone from where New York didn't want to go south there.
Coming up on the congestion text, Paul, continue with your.
Good your demand view here of the next year or two.
So as we know, there's been a difference of demand views between people in this country, between OPEK and the ia OPEK and the IAU. Demand is kind of very simple if you look at it. Historically, we've had a regular drop in the oil intensity of GDP around the world, starting at the really end of the post World War Two growth of road transport in reconstructed Europe, reconstructed Japan, and in the unterstate highway system in the US, We've had year after year a drop in the percentage of
demand growth per unit of GDP growth. Now, that doesn't mean that oil demand comes to an end. It means it slows down, okay. And to give you an example, if we go back to nineteen seventy seventy one, for every one percent increase in the world in global oil demand and GDP, there was a one point one one point two percent increase in oil demand. Today's about zero
point three to one. So if we have three percent global GDP growth, we have a million barrels a day on a one percent based on one hundred million barrel a day market of oil demand, and that's continuing to slide. So think of it as we're not going to have much more than million barrels a day demand growth.
We have thrilled out with us today, Edward Morris. Of course you know I'm from City Group at Heart treet Partners now definitive on the geopolitics of oil and also of course pricing of Well do you have at heart treater? Are you allowed to have a brent guess? Do you have an oil barrel guess? Or is it a folk spot?
No, No, it's not a problem. We live in the most volatile market the world has seen, based on things that are out of our control. We don't know what's going to happen here and there. It's a relatively evenly balanced market. But for the fact that Opek, going back to your first question, Opey plus has taken so much oil out of the market that it now amounts to eight million barrels a day. That's a lot of shut
in production capacity that can come on. And if we look at the volatility today, we have prices going up in part because of the drone attacks on the CPC pipeline coming out of the Caspi and bringing Russian and Kazakh oil into the Mediterranean. We have an announcement from Kurdistan from Baghdad that the pipeline from Kurdistan through Turkey into the Mediterranean is going to be revived next week. That's we've lost maybe three hundred thousand barrels a day
out of the CPC pipeline. We'll get perhaps three hundred thousand barrels a day out of Iraq unexpected by next week. So given that volatility, we think oil is in the range. The range is sixty eight to seventy eight.
I assume it's Ghosh, that's French ghoshe of you to do buy, hold, sell right now. I don't want to buy hoold sell in big oil. But how do you position big oil when I see Chevron announcing massive layoffs, massive restructure and you know it's weak double digit return over thirty years. Is big oil prosperous? Is it thriving? Is it the stereotype of our ute.
Well, as we know, some big oil is prospering and some big oil is not prospering. Maybe for some investments that they were making in the past, in the recent past, in the drive to go heavily into renewables and into things that weren't providing the same level of return. But look at the production growth of Chevron, the production growth of Exxon on a global platform based in part of
the United States. They're increasing their output. They're increasing their output of oil and gas in a world in which they're very competitive. Ed talk to us.
I'm watching the television show Landman at the life in the oil patch in West Texas, So I now consider myself an expert on global oil and gas. Here talk to us about the US. We're now a net exporter of energy. What is our role in the global energy market? Visav said, maybe like an OPEC pluster or something.
We have transformed the energy market, so the world, including the oil market. If you go back to twenty ten, we were a gross importer and a net importer, and our production base if you add NGLs and other liquids, was around eight million barrels a day the last month for which we have data. Our production of liquids was twenty three million barrels a day. We have moved from being the largest gross and net import of the world to being the largest gross exporter. We export sixteen to
seventeen million barrels a day of liquids. Nobody. That's more than the combined exports of Russia and Saudi Arabia. Our production is more than the total production of Russia and Saudi Arabia combined. And we've become a net exporter on the order of magnitude of four million barrels a day. So that has made the basic difference in the global market is a wild difference. Is what gives the US leverage.
I'd love to get you back in here in a six months three month basis, Doctor Morris. Let me ask you one final question, and it's sort of from sixty thousand feet in philosophical how bad did Angel and Miracle screw up? I mean within the arch of Edward Morris's tenure owning the high ground on this how bad did German leadership screw up? From abnaw or forward.
So my personal experience in it is dealing with the effort by Germany to become dependent on Russian gas. So I was in the State Department at the time that the servant.
Both Carter and Reagan.
And the US and France were the only NATO countries that said, hey, you've got to look at you Germany have to look at dependence. Yes you can import gas, but think about what it will do to your foreign policy.
Think about what leverage you've lost in terms of that dependency, your inability to say no. And we saw that over time, and I think Germany has really learned that lesson in terms of being very reluctant as they go through this election process this coming Sunday, Almost all of the parties are reluctant to do more than say we might consider importing oil on a spot basis, but not on a full contract basis.
Thirty seconds. Does Tesla have a future?
I think evs have a future. I'm not going to pick one versus another. But they're fun cars to drive, They're cleaner than other cars to drive, and they're getting more and more mileage. So if I were to buy a car again, I would certainly not hesitate to buy it.
Now. There we are the endorse that we need. Edward Morris, thank you so much. Thank you for joining Bloomberg and Bloomberg Surveillance today, doctor Morris. Of course, they are in the tumult, the maelstrom that is oil today,