[CC may contain inaccuracies] Let me start off by just getting your initial thoughts on that decision from opaque. Was it a political statement or was it a
statement of economic reality. No it was a political statement and it's a statement that
they've sustained for the last few months. You know three months ago turning back they would have said hey we're the central bank
of the oil market. We're going to be providing liquidity when it needs it. We're going to be withdrawing liquidity when it needs
it. And now all of a sudden the argument is the regulator and the regulator is doing something to stem volatility. Actually
they're increasing volatility by what they're doing. So it's gone. It's a it's a combination of really funny factors. The
funniest of which in a way is that they did what they did what the U.S. and Japan and China and India did not want them to do.
They held steady on the output and prices went down not up. And Ed what does this mean when it comes to. First of all demand
when you expect demand to actually start peaking. What does that mean for the price of oil. Well it depends on what you mean by
peaking. So you know OPEC has said that and this was a precursor to a decision that this week last week they said that demand was
going to be very slow in growing. We've got the pandemic ahead of us. Actually the reverse is probably more true. We're seeing
an uptick in demand and particularly an uptick in air travel particularly starting in November. You just have to look at when
airlines have schedule that they were not scheduling in October. And the recovery from the pandemic has been quite robust. We
actually think that demand has been on a par with GDP growth about 1 to 1. We think it'll be a little bit lower next year.
But still pretty high in terms of history demand. Is that really the ultimate issue. The ultimate issue in the longer run might
be demand but the ultimate issue in the short run is where that balance between supply and demand is. And the world is really
drawing down inventories and they're at a very low level. And we expect prices to continue to rise in the fourth quarter to get
to a high level after whatever the financial sector is done to have to have this sell off right now.
And so your outlook then on prices and also part of I guess that projected I also wanted to get your thoughts on if we do get to
a point where the world needs more oil can opaque plus or opaque plus have that capacity to get that oil to the market equitably
across their members. Well it depends on what you mean by equitably. The majority of the members can meet their their
quota. They you know they've lost their production capacity. They haven't invested. There are just a few countries that can
expand but they can expand a lot. They include Saudi Arabia UAE Kuwait Russia. They all have an ability not to grow by 5 million
barrels a day overnight but certainly in a three to three and a half million barrels a day range that we think next year is
going to be a very big surprise upward in terms of not OPEC's production including from the U.S. I mean they'll peak has been
in many ways given this position by the very sharp decline in U.S. really sharp decline in U.S. production. But U.S.
production is ramping up and it's going to be bigger in terms of growth next year than anything we think we're going to see from
any individual back country. Wow. And a brings DAX question of what the U.S. can do because they did talk a little bit more
about how the consequences of OPEC's not ramping up output could lead to big implications for the global economy. But I have to
wonder in terms of the U.S. perspective there's a likelihood now of them tapping into their oil stocks. How likely is that and
what sort of president does that. That's so suggests that it's going to have it could actually have a bad president.
I'm not sure what kind of precedent it sets. There have been Republican and Democratic administrations in many autumn periods
of time that gasoline prices are rising. And they said it's OPEC's responsibility to put more oil on the market. This is an
embarrassing moment for the U.S. government U.S. government under the Biden administration which has been not looking at
fossil fuels. We've had the U.S. production falling from a peak of 30 million barrels a day gone down. But if we look at what's
really happening right now Permian the biggest area of shale production in the U.S. has gone back to preprinted pre pandemic
levels. It's producing as much as it ever has. And we think it's on the verge of a big explosion for lack of a better word on
production going into next year. So we think while the U.S. production went from a peak of 13 million barrels a day just
crude oil if you don't exclude if you exclude natural gas liquids and a bunch of other things down to a below Lebanon one
period of time they're back at eleven and a half eleven six million barrels a day. And we think year on year liquids
production is going to grow by one point four million barrels a day and a minimum next year. That will be the largest slug of
things of all producers in the world. And I think I mean ironically I think if we look forward to a year from now the
issue is going to be what OPEC is going to do. And is it going to be restraining production again to find what might otherwise
be a 20 dollar lower price. It brings to mind also obviously that what would cop 26 and the
reminder that maybe we hadn't invested enough in oil or maybe we shifted away too quickly without really a sort of reliable Plan
B. I mean we're just getting some lines out of Indonesia. They're coming out with their GDP numbers and they are talking
about the global recovery and commodity prices going into that number. I'm wondering then you know as we always close out a
banner year not just for oil but energy producers in general. Where do you think they're going to use all that profit. And
what sort of CapEx do you think we're going to see in these next five years. Well so you've topped. You've touched on a bunch of
interesting topics. One of them is the energy transition. And certainly this has been one of the things that Prince Abdulaziz
had been so much said in that statement that you had an excerpt. One of the things he said was you know this is not our problem.
This is there is in the making. The Russians have that same view. The Russians have their biggest gas and oil market in
Europe. And Europe has sworn off from fossil fuels. And who are these people. They think who are these people to complain about
there being time Marcus when they're the ones who have gotten rid of their ability to use fossil fuels and power generation.
They're the ones who are saying we've got to get off of this. So there is no attention built in here between the producers of oil
and gas and the biggest importers of oil and gas and the movement a cop. Twenty six right now where the energy transition
has been fairly critical issue. Now what the other question you raised is what a what a company is going to do about about the
profits and not have them now having. And you didn't say it exactly. But oil was at the bottom of the S&P 500 a year ago and
now it's risen higher than any other sector in the S&P 500. Oil is the darling of the investment community despite what our
people are saying about about the anti fossil fuel movement. What are they going to do with this. So certainly they're going
to retire debt. Certainly the bigger the company that there is they're going to be returning
profits to shareholders. The smaller the company that it is they're more likely to plow this back into into investment.
We've seen companies in the U.S. that have been quote disciplined. The discipline is yes they have maintained 50
percent of their cash flow going into capital spending but the cash flow is more than double. So the capital spending has more
than doubled. They haven't done it. Maybe by all of them increasing their drilling activity but they buying other
companies and those other companies are really ripe for increased drilling which is why we're thinking about oil
production out of the US out of Canada and Brazil being pretty robust next year.
Doesn't ask you about China. The power shortages seem to have eased somewhat there. What impact do you think it's going to
have on energy prices. It's had an impact. So if we look at whether what's driving most of the energy price increase is
power generation in the world got cut short probably by weather conditions in the northern hemisphere over the summertime
including in China which which had a combination of drought and and a lot of rainfall. All all of the major consuming countries
in the northern hemisphere China the U.S. Canada and Europe have had drought conditions so that hydropower are really some very
low levels. They all had very high temperatures actually record temperatures over the summertime. And air conditioning demand
electricity demand in general was at record levels. So there was not an ability to to store natural gas and other fossil fuels
needed. And there was a lack of ironically in the middle of CAC 26 solar and wind in various parts of the world. So it really
was a crisis of the energy transition. Then countries including China went into the autumn with very low level of inventories.
The Chinese have done is very antique up 26 but very much in what they're capable of doing. They started mining coal and
they're now mining coal to be banned. They're adding like two million tons a day to their inventory. And coal which went up
300 percent has fallen by 55 percent in a two week period of time. And as that falls natural gas for gasoline it can
penetrate market place and then the edge on the oil side. One of the reasons oil has actually gone down is because of all of
these other fuels for power gemstone ban and the switching from coal or natural gas. Oil has stopped also.