We head into another new trading week.
The Middle East conflict is top of mind now.
Oil prices soared above $100 a barrel, barreling through 110 and $119 and this did come as major OPEC producers slashed output.
And as we speak, the G7 are discussing possible releases of oil reserves amid the Iran conflict.
Now Iraq and the UAE unable.
To move supply through the Strait of Hormuz and Iranian state media announcing that Khamenei's son will officially succeed his father as the country's next Supreme Leader.
It is a highly controversial transfer of power and a choice that President Trump has already declared quote unacceptable unquote.
Meanwhile, tensions between the US and the UK continue and joining me on this Monday morning to weigh in.
On what's happening is Patrick L.
Young, chairman and founder of Exchange Invest.
Patrick, good morning.
Thank you so much for joining us.
So all of us are keeping an eye on oil prices, both WTI as well as Brent, and this does come as both of those contracts topped $110 a barrel.
So Trump is saying this is a small price to pay for defeating Iran, but what is your take on this?
Look, in the background, what we've got right now is a very short term problem.
We've already seen at the weekend Iran starting to work its way back.
It's been saying it won't attack other countries unless they attack Iran first.
That's a step forward.
It's obviously trying in its desperate death throes of the Islamic regime to attack wherever it can.
They've closed the Straits of Hormuz.
That's obviously a problem.
20% of oil and natural gas goes through those straits at the same time, look what's happening on the other side of the world.
The USA is making unprecedented process and bringing online Venezuelan processing power, refining power.
Therefore, you're going to see somewhat of an imbalance over a few weeks.
But I think actually it's a very wise decision for the powers that be to be releasing strategic.
Stockpiles because actually in a month or so either the Iranian regime has gone and things get back to normal or Iran is going to be cowed in one corner and we're going to have a huge amount of supply coming on stream relatively soon in a course of a couple of months from Venezuela.
And don't forget the biggest single oil resource on the planet sits in South America around Venezuela.
Well Patrick, I do have to ask you this because Sunday evening here in the US we were keeping a close eye on futures prices and when we look at the reaction across FX markets, bond markets, global equity markets, we see where the concerns are and there are even talks of rate hikes with some central.
Banks given what we're seeing, but obviously this does does rely on what happens in the Middle East.
So do you think we could potentially see an energy crisis, one that could ripple through global economies, especially since we're hearing about potential stagflation here in the US As someone who was an incredibly incredibly small child, I can remember the oil crisis of the 1970s.
We're not going there.
Let's get this real.
What we're looking at at the moment is a squeeze over the course of perhaps a couple of months.
It may have an impact on driving season when that gets under way after the Memorial Day weekend in the USA, but we're not looking at a prolonged crisis.
Iran simply doesn't.
Don't have the capacity to fight that long.
Sooner or later, whether they opt for unconditional surrender or not, they're going to basically have to admit defeat in some way, shape or form to the vastly superior forces that are around it.
At the same time, what we're going to see is certainly we have been surprised by just how much oil prices have gone up over the weekend, perhaps not so much given the fact that effectively all the OPEC nations have shut down production just for the time being while they wait for the ripples to settle across their environment.
But nonetheless, an oil squeeze, yes.
An oil crisis, no.
It is not going to be a prolonged factual issue because there are alternative sources of supply.
We're going to get balance into the system.
It's just not perfectly matching, and that's always a problem with a massive technological globalized economy.
And speaking of which, Patrick, of course this is about geopolitics and I do want to get your take on what we're hearing coming out of the White House.
So on Friday, the US IDF Corporation announced plans to set up a $20 billion reinsurance program to help offset possible losses.
And keeping in mind that the Strait of Hormuz is effectively closed, that ship owners may be skeptical about how fast the agency can actually develop and offer insurance coverage, but what about what's happening between India and Russia and what are the implications here?
OK, I mean India, Russia, that's just essentially a degree of practicality.
India is growing incredibly fast.
It's starting to bite at the heels of the dragon of China.
They need a huge amount of oil to manage to develop for their 1.7 billion people population who are all looking towards better living standards and are working incredibly assiduously to a much better India.
So therefore, India needs oil.
India needs energy.
They're going to be looking at trying to buy more Russian energy because they don't feel that they've got a cat in the game in Ukraine.
So that's essentially just a mercantile transaction.
There's no particular feeling that the vegetarians of Gujarat are suddenly entirely in keeping with the meat eaters of Moscow.
That's not what's happening here.
Remember, geopolitics is a game where people will pragmatically do what benefits their nation.
They don't necessarily do it because they thoroughly agree or understand the Whole dynamics of the regimes behind them ergo what we were talking about last week between the fundamental difference between China, Venezuela, Russia, and indeed also Iran, none of whom have any particular ideological similarities.
What we're seeing therefore, there is pragmatic commerce after a fashion.
When we look at what's going to be happening with this oil industry, it's going to rebalance.
It's.
Just going to take a little bit of time.
That's going to have an impact.
Next week we'll probably be talking about shipping because there's going to be a lot of blockages in the world's shipping tankerage and that's going to give us some sort of a problem with the overall delivery schedule.
Now that might also cause some degree of stagflation worry in the USA.
At the same time, the fact that the central bankers are running in and saying, oh my goodness, we're going to have to raise interest rates.
That's more a statement of just how impotently useless central bankers have been in the economic picture over the course of the last 20 years because they're hanging on to a doctrine that does not appreciate the real world despite their efforts to quantitatively ease us into what they thought was going to be nirvana but wasn't.
Yes, and Patrick, while we're continuing our trek around the globe, we have to keep in mind that it is March and all of us are paying attention to what's happening between the US and China.
And for now, the president is expected to meet with Xi Jinping.
So what are your expectations for that gathering at the end of this month?
Absolutely no doubt it's going to be a cagey encounter.
Each party is going to be giving no quarter.
The same time from the Chinese perspective, they've seen incredible strength in the USA.
They realize that the American army, the American military forces are at the apotheosis of their strength and power at the moment.
Therefore, that's also helping feed.
What is any been a narrative behind the scenes for the last 6 months that effectively the Chinese are pulling back from threatening Taiwan for the time being.
At the same time Xi is going to be determined to try and make sure that he has the strength of trade links with the USA that he really needs because let's face it, the biggest export game in time for China remains.
The United States of America, Iran, Venezuela, even India, they're just minor players in terms of what China can achieve.
So there's obviously reasoning behind both parties wanting to appear strong, but they also want to be able to do deals that are going to play to their forehands with their domestic economy and also their domestic politics.
Yes, and last but not least, Patrick, before I let you go, I do want to ask you about the growing tensions between the US as well as the UK and also Trump has said that after Iran, Cuba is next.
So what do you make of those comments?
OK, first of all, I mean, the UK, US, it's simple.
The UK has a dysfunctional government, even by the low standards of governments have been looking at for the last 20 years.
Keir Starmer is a disaster.
His days are numbered.
Trump's just trying to push him out the door.
In that sense, he's doing the UK people a favor, although who knows what's going to come next.
It will probably equally semi appalling in terms of the strength of UK politics.
For those of us who've grown cynical over the years, Cuba, that is the next big play.
Remember.
The nuclear submarine George Bush sitting offshore.
It's been doing figure of eights around there.
Effectively Cuba's under economic blockade.
What are we looking for there?
We're looking for protests, Rey.
Where's it going to come from?
It's not going to come from youths on the streets.
Watch the mothers.
The mothers can't get baby milk.
They can't feed their kids.
They don't have enough electricity to keep milk in their fridges at the moment.
That's where it's going to be driven from at the same time.
You're talking about selling off stockpiles.
The taxi drivers with oil at above $10 a gallon.
It was even two weeks ago before we saw the recent soaring oil prices in the rest of the world.
Taxi drivers of Cuba are going to start selling off their oil.
They're close to meltdown.
The end, I believe, is nigh for what has been the Castro regime and those who came after it, and that's obviously going to be a huge victory for Floridian MAGA.
Well Patrick, we will have to leave it there as we are quickly approaching the opening bell here at the New York Stock Exchange as always great to talk to you.
Thank you so much for sharing your perspective and your insights.
