How Bad Could the Iran Oil Crisis Get?

24:25And so a country like China used more coal instead. But if you were a lower to middle income country like Pakistan, Bangladesh, you struggle to afford any energy at all. And they really did start to see significant economic impacts to shut down economic activity, to not be able to get around. We're seeing in Pakistan now a huge cricket tournament, and they're telling people to watch on television rather than go in person. India, oil spending is about 3 % of GDP. Thailand, it's about 5%. Fossil fuels overall in Thailand are 7%. These are very large shares of the economy that are spent on fossil fuels, and nearly all of which is imported.

25:03And these are countries that don't have the fiscal space to pay more. And we haven't, again, even talked about the fact that the Strait of Hormuz is a critical choke point for fertilizer. And if fertilizer has trouble getting to the market, you're going to see potential impacts on food and food prices. And that puts enormous economic strain on countries that are already struggling to afford these essential products in the first place. So you've mentioned that a lot of the world's oil, and obviously it's not just oil or even primarily oil coming from Iran, goes through the Strait of Hormuz. Much of it doesn't.

25:33If the world began turning to other geopolitical actors for supply, who has the capacity to increase supply? And in a situation where this war kept going and there's much more pressure to adapt, what might those adaptations look like? Well, it would take time. So, you know, there's not many countries, Saudi Arabia is really the only one, maybe a few others, that hold so-called spare capacity. They have invested and spent extra money so that in an emergency, they can quickly bring oil to the market that they otherwise could produce, but they hold it back in case the market needs it. They consider themselves the sort of central bank or federal reserve of the global oil market.

26:10But by the way, that Saudi Arabian spare capacity can only get to market if you can put it on a tanker and send it through the Strait of Hormuz. So it's not so helpful right now. Other people who have the potential to increase production, and the United States is one of those now with the shale revolution. Shale supply is able to be produced a bit more quickly than more conventional oil. But you're talking about six months, 12 months. It's not something that happens in a crisis. You mentioned the shale revolution a few times, which I think many people probably don't know what that is. Can you just give me the brief overview of U.S.

26:44energy production from 1990 to 2025? What happened and how different is our position now than it was then? We're still part of an interconnected market, so we still feel higher oil prices. But it is hard to overstate how dramatic the transformation in the U.S. energy position has been in just the last 10 to 15 years. 20 years ago, the U.S. was producing about 5 million barrels a day and importing 60 % of its oil. We'd been, since the Arab oil embargo, year after year, we had presidents, George Bush and his State of the Union, warn that America was addicted to oil and high oil prices were bad for the United States, and we needed to get off of Middle Eastern oil.

27:28And within just a couple of years, oil producers figured out new technology, what's known as hydraulic fracturing. You could fracture rock and you could extract oil and gas from the geology in ways we didn't quite know was possible or economic before. And it started with natural gas and then it extended to oil. And it just really has taken off this extraordinary increase in U.S. production. But that's starting to peter out now. The growth is not happening in the same way it used to. And so these big oil companies were already saying, where's the next increase in production going to come from? And they were looking at places like Iraq and Libya and going back to some of these geopolitically risky places.

28:05And I suspect people might be rethinking a little bit of those plans now or at least assigning a bigger kind of geopolitical risk premium to those investments. What about Russia? One of the things you mentioned early on in this that I think will sound strange as a sentence is that one of the moves the Trump administration has made is to de-sanction Russian and Iranian oil. And gas. Now, to the extent I know anything about our current foreign policy, it's that we have been trying very hard to sanction Russian and Iranian energy exports. So what is going on there? You know, I think we are showing in this conflict the limits of the willingness of the American people, the American government to bear pain in energy markets, pain at the pump to pursue foreign policy objectives.

29:01That has always been the case. In 2022, after Russia invaded Ukraine, we did not use every tool we had in our toolkit to put pressure on Putin. We had some efforts to deprive it of some oil revenue, but we did not impose full sanctions to try to prevent Russia from selling all of its oil to the global market because Russia just exports too much. And you would have sent oil prices through the roof for all of us if we had tried to do that. I worked in the Obama White House when the original sanctions were put on Iran. And the big question was, how do you take Iran's oil off the market? That was on one and a half, two million barrels a day.

29:33And not send oil prices skyrocketing in the process. How do you impose the pain on them, but not impose it on us? And so we've always been reluctant. And Iran is realizing that now. They know that. That's why they're doing what they're doing in the Strait of Hormuz. Because we're part of an interconnected global oil market, our options are limited to pursue foreign policy objectives targeted at big oil producing states if the result of that is you send oil prices through the roof and impose pain on ourselves in the process. So because oil prices are going up so much, the administration is looking to pull every lever it can to find some relief.

30:07And one of the sources of relief is Russia has produced a lot of oil that is sitting, floating on the water, so to speak. It's in tankers looking for a buyer. It was having to discount that oil a lot to find a buyer because people don't necessarily want to touch sanctioned oil. You have to use a sort of shadow economy to do it. And they're saying now, please take those barrels as fast as you can, get them into the market to bring prices down. And now they're done the same thing for at least the next 30 days for Iran, which is, as you said, a bit odd to be pursuing a military campaign against Iran.

30:38And one of the tools we have to take to deal with high oil prices is to let Iran sell more oil, not just to sell more, but even more importantly, to get a better price for the oil that may have otherwise been sold in that sort of shadow economy. Okay, I'm sorry, but that's insane.

30:54Just as a 30 ,000 foot that we are bombing the country into rubble, that as we speak right now, threatening to destroy their power plants and de-sanctioning their oil. like it really shows something here was unplanned for or or is off and also that if we're at a place now where we are waiving sanctions on iranian oil for 30 days so that they can put that oil in the market as fast as possible it probably would have been sold eventually anyway but let's do it faster and again they're going to get a better price for it we may be running out of good options And we could talk about what some of the other options are to bring oil prices down.

31:39And I just think, again, this is why oil has always been such a key geopolitical weapon and such a key geopolitical vulnerability. Let's talk about energy as a weapon for a moment. You and Megan O'Sullivan published late last year in Foreign Affairs a big piece called The Return of the Energy Weapon. What's the energy weapon? Well, there's nothing new about energy being used as a weapon. Lord Curzon in World War I famously said the Allies floated to victory upon a wave of oil and the ability to cut off the supply of oil for the military in World War I, World War II. These were key sources. I mean, one of the reasons Japan attacked Pearl Harbor was it had lost access to oil supply before that.

32:25Didn't Stalin attribute the victory in World War II to cutting off Hitler's access to certain oil fields? Yeah. Yeah. So trying to go after energy supply has always been central to that. It was why Winston Churchill famously moved the British Navy from coal to oil, which was a much more efficient fuel. The Navy could be faster, but it also exposed it to new vulnerability because you had a lot of coal in the UK up near Newcastle, but now you needed to depend on places like Persia for your oil. So geopolitics of energy became an issue that in a way it hadn't been before. We wrote that piece because I think that the idea of energy being weaponized, which of course was a national trauma in the 1970s, particularly after the Arab oil embargo, lines at the gas station, really, it did have a long-lasting effect on energy policy in the United States.

33:13And the way we think about energy has been framed by that trauma that energy, particularly in the Middle East, could be weaponized. But the world has changed a lot in the half century since then. The United States is now the largest producer of oil in the world by far. And generally, we've had this multi-decade period of relatively cooperative and copacetic geopolitics, economic cooperation, globalization, bringing other countries into the fold through the World Trade Organization and in other ways. And so I think we generally became a bit complacent with risks to energy security, viewed them as largely a thing of the past.

33:49We had this unprecedented increase in U.S. supply that comforted markets a little bit and provided ample supply, kept prices low. Power demand was flat in the United States and Europe for the last 20 years. Of course, now it's surging again with data centers and other things. But the most significant shift is the global order we knew seems to be collapsing beneath our feet. And we're in a new world of conflict and competition and rivalry between great powers. And in a world that is in disorder like that, a world where there is increased risk of conflict and competition, there's no reason energy would not be a key weapon and a key source of vulnerability.

34:27And we're starting to see that play out. Obviously, what Russia did to cut off the gas supply to Europe after it invaded Ukraine or even China last year restricted rare earth exports. And that really shook up the foreign policy community in ways that sent shockwaves through it. And in ways it made us back down quite quickly from the trade war that Donald Trump had begun with China. You used a lot of passive voice in that answer. You talked about risks to energy security, global risks to energy security. You talked about the collapsing of the global and international order. But we chose this, right?

35:05This didn't happen to us out of nowhere. The global order isn't collapsing out of nowhere. I mean, we're not the only ones. Russia certainly bears its share of responsibility. China has had its violations. But Donald Trump has been lighting the global international order on fire, deposing and capturing presidents of other countries, launched a war with Iran with no consultation functionally of anyone, except maybe Israel. And the risk to energy security here again was us. We chose to put energy security at risk. We seem to have done so without any real planning for what it would mean. But it reflects something, I think, which is sort of odd, which is when you think about the conversation that dominated this in the 2000s, we needed to get to a point where America had energy security, where we couldn't be squeezed by OPEC.

35:54And we actually did quite a lot in that direction and became a net energy exporter and had this amazing shale gas revolution and began to work on decarbonization. and then in just the past couple of years i mean trump has destroyed the solar and wind subsidies is trying as best he can it seems to me to set back our work on decarbonization and electrification and at the same time has executed a series of moves in foreign policy that have created a lot instability in the global economic and political order. It has been, we have chosen volatility that we have not planned for in a way that is very strange.

36:42Yeah, it's hard to disagree with what you just said. But as you said, it's been like coming for some time and there's a number of actors, you know, some of your listeners will recall this speech former National Security Advisor Jake Sullivan gave at Brookings, where he tried to explain why this order was changing. And part of it was China wasn't playing by the rules that a lot of people thought they might two or three decades ago. But clearly, when you threaten trade wars against your allies, threaten to take other pieces of territory by force like Greenland, that really did traumatize Europeans also and lead to a level of concern about dependence on the United States.

37:17I wrote after some of these big international meetings like the Munich Security Conference or Davos, one of the questions I was getting the most was, are we misguided, being Europeans, to swap dependence on Russian energy for American energy? Are you a reliable supplier? Or is that going to be weaponized against us in coercive ways as leverage to get a concession for something else? What did you tell them? I think it's probably not the case, but I understand why they might be concerned about it. I mean, I think U.S. energy exports are probably pretty reliable, but we are seeing an administration that is looking for looking for leverage, looking for ways that it can sometimes use coercive tools to extract concessions from others.

37:56And it seems like that's part of what the strategy with the liberation date tariffs was. But I think what that tells us now is there's energy risk all around, right? If you go back five years ago and talk to people about the need to have an energy transition, they would have said, okay, that's good, but we don't want to be dependent on China. If you want solar panels and batteries and critical minerals and electric vehicles, now we're dependent on China for all of our supply chains. And I think one consequence of this conflict and everything that came before it, the weaponization of energy, I mean, literally not just sanctions, but a physical military blockade to prevent Venezuela from selling its oil as part of what we did to oust Maduro, Russia cutting off supply.

38:34People, obviously, if you're in Europe, you're not looking at Russia the same way, again, as a reliable supplier. Now you might not be looking at the Gulf the same way. And maybe you have your concerns about the predictability of U.S. energy policy with policy swings back and forth. By the way, it was, you know, the Biden administration that put restriction on new permits for export of natural gas. So there's been lots of signals that might make people a little bit concerned. So now you're looking at the whole world and you're saying there's energy risk all around. What do I want to do? I want to insulate myself, right?

39:02After the 1970s, one of the main things we did to increase energy security was actually more cooperation and more interconnectedness. We created the International Energy Agency for Diplomacy. We had 30 or so countries that agreed to hold strategic stocks together in case there was an emergency and release them together. And we created this well-functioning market we talked about before. So we were all interconnected. If there's a supply shock halfway around the world, market forces can reallocate supply. I think in this world of collapsing geopolitical order and competition and risk, countries will increasingly say, we need to take care of ourselves.

39:37We need to think a little more in an autarkic sense, focus much more on the domestic production of energy, reduce imports and reduce interconnection to other parts of the world. And I think that has significant implications geopolitically and for energy prices. It is very expensive if you want to make all your solar panels or do all your mining and refining and processing of critical minerals within your own country.

40:25Tell me about the role and positioning of China in this moment. I think in the immediate moment, obviously, it's painful for China to pay much higher energy prices. China gets about half of its oil through the Strait of Hormuz, about a third of its liquefied natural gas, and they're paying more for it just like everyone else. I do think they're as well or better prepared than many to deal with that. They've built up a huge strategic reserve of oil of about a billion and a half barrels while the United States has been selling ours off because of a misperception on both sides of the aisle that the shale revolution makes us insulated from all of this stuff.

41:04And China for decades has been pursuing a strategy to electrify more of its economy. That's why half the cars sold in China are electric. A much higher share of their overall economy is electrified than in most of the rest of the world. That's more about energy security than it is a clean energy transition or climate change. And then they want to produce that electricity from domestic sources. For them, that's coal and renewables mostly, some nuclear. So I think in the long run, the question is whether other countries, say, if you're import dependent in Europe, and you say, look, we can't go through this again.

41:39We went through it in 2022 with Russia. Now we're facing an energy shock again. We really need to produce our energy at home and we need to electrify more. What does that mean? It means you got to buy a lot of stuff from China, all of the batteries and electric vehicles and all of those critical minerals and solar panels. And I think that China in the long run could end up a bit of a winner here in the sense that they're the ones supplying all of that. And they have long been trying to position themselves as a reliable commercial partner, while the United States is the source of geopolitical instability.

42:09And this conflict doesn't make it harder for them to make their case. I want to talk about the two countries' strategies here for a moment. If you had just been watching China and the U.S. for the past couple of years, and particularly since Trump came back in for a second term, I think what you'd see is the U.S. seems to be making a bet on being something in between a petro-state and a petro-empire. A petro-state in that Trump has been gutting the wind and solar subsidies and making permitting harder, and as best I can, trying to retard the clean energy transition, but going all out on fossil fuels.

42:46But in addition to that, he has been trying to expand U.S. influence and to some degree control over the fossil fuel reserves of other places. So Venezuela is the most obvious example here where we functionally took over that country and government and said completely explicitly that we were taking over their oil. And I think Trump's view of how Iran was going to go was that either he was going to cut a deal with some deputy level in the regime that would be friendlier to the U.S. in order to not have their head be the next one on a pike or not have their home be the next one hit by a missile.

43:29Or there was going to be a bottom-up Iranian revolution, and they'd be so grateful to him that the resulting regime would be friendlier to U.S. interests and would sort of deal with us on better terms. And in either case, you now have America with its tremendous energy exporting potential, Trump's incredibly close relationships with different Gulf state countries like Saudi Arabia, and then you'd add in Venezuela and Iranian oil, gas, etc. And that would give us a lot of power. And China has been, as you say, electrifying at a really torrid pace, but developing functionally dominance over the clean energy supply chain.

44:06It is very, very hard to beat what they can do on cost. The Biden administration put huge tariffs on Chinese electric vehicles and Chinese solar power components and so on. But practically as America becomes a less viable partner for many countries that want to have a clean energy transition, I think they are rethinking and in some cases have actually changed course. And so China seems to be betting a lot on becoming the supplier of the global electrostate. So first, I want to see how much in that rendering of the two major energy strategies you disagree with. And then second, given, you know, where as an energy expert, the world looks to be going to you, how you would think about those two strategies?

44:46I think it's exactly right. And as I said, this conflict might give a boost to China in the sense that it was a big concern before for countries that were thinking about moving much faster toward electrified economy, toward clean energy. The constraint was, do I want to be heavily dependent on China? I mean, I've been thinking for the last couple of years, as problematic as I think it was to roll back significant parts of the Inflation Reduction Act, the biggest risk to a faster clean energy transition was how policymakers, particularly in the US and Europe, come to perceive the risk, supply chain risk of dependence on China.

45:21Because it's different to buy a solar panel. We're not buying electricity from China. We're buying products and technologies that are necessary to do that, like a battery or a solar panel. If it is perceived as an unacceptable risk, That's a large amount of sand, not a small amount of sand in the gears of the clean energy transition, because it takes a really long time and a lot of money to build those supply chains elsewhere. I think people are going to look potentially a bit differently at relative risk when you look around the world right now and you say, well, there is a concern about dependence on China's dominant position in some of these clean energy supply chains.

45:53but there is risk all around. And the view of the United States, certainly at least the Trump administration, as you said, has been to double down on petro-state dominance. If you're the largest oil and gas producer in the world, why are we buying all this cheap, clean energy from China? Energy security comes from being self-sufficient, producing more oil and gas than we need. And I think today's conflict is a reminder that in an interconnected global market, there's a limit to that. So like, who would you want to be right now? I think being a BYD dealer, the Chinese EV maker in Brazil, is like a pretty good place to be because people are going to be a bit concerned about what might come and view oil security in a way we haven't seen before.

46:35That is, in fact, as I said before, the national trauma of the 1970s, where we really moved as a policy issue to increase domestic production, but also find alternatives to oil and use less of it. We were getting 20 % of our electricity from oil in the 1970s. And within a small number of years, you know, we brought that close to zero. So we looked for really opportunities to use less of that. And I think depending on how long this goes on and how large the economic shock is, as we talked about earlier, it has the potential to be something that causes that sort of long-lasting effect. I'm interested in what you think that could mean for the long term.

47:10So you go back to the oil shock of the 1970s and you have a major effort to find efficiency because there's not a straightforward and viable alternative for what energy you would use to run the global economy. And so you have Jimmy Carter telling the country to turn down the thermostat and put on a sweater. right now you you have been in this period where we've seen a tremendous transition to solar to wind to geothermal to to batteries to other kinds of things and you know it's 2026 in the last five years you've seen two tremendous geopolitical shocks to global energy flows so as somebody who studies clean energy transition which mostly we've talked about in terms of climate change Do you think this is in the long run an accelerant of global clean energy transition simply because it creates less dependencies on some of these traditional players?

48:10Or does it just create new dependencies like on China or on whomever you get your electricity piped in from such that that does not offer itself as an answer? I think, again, and we don't know yet how long this conflict is going to go on, how severe it will be. But as we were talking about earlier, the potential that we haven't seen anything yet with oil prices. And if this goes on for weeks longer, or if there's real damage that causes the infrastructure in the region to take years to repair, this has the potential to be a kind of shock more like we saw in the 1970s than anything I've seen in the 25 or so years that I've been working in energy policy, geopolitics, national security issues.

48:47And I think that would be a significant accelerant and, frankly, a more powerful one. I mean, although I would like climate change to be even a stronger concern for policymakers than it is, if something is a national security issue and it's top of the agenda in the situation room, it's going to move policymakers in a way that the urgency of climate just doesn't today. So you have the potential now for an even more powerful motivator to move toward electrified economy. And you get a lot of that electricity from domestic sources for places like Europe. That'll be renewables and nuclear in particular, which can move you in a lower carbon direction.

49:22It is more complicated than that. And I want to say coal. For a lot of the world, a domestic source of pretty cheap, reliable energy, if you're going to try to say we want to be less dependent on imports, can also be coal. And if you're in Indonesia or parts of Southeast Asia or other places, you know, you're seeing a lot of that. So it doesn't always cut, you know, necessarily in one direction. And the impact here is not just we want less fossil fuels, hence the comment about coal. It's we want less interconnectedness. We don't want to be exposed to these volatile global markets that are exposed to geopolitical risk.

49:58And we want to reduce imports. That, I think, is what the energy security conversation in much of the world will be coming out of this. And the way you respond to that is going to look different in different places. A country like Europe, I do think it accelerates a move toward a clean energy and electrified economy. it might look different in other places. And how about Iran itself? Right now, as we're speaking, it does not look likely to me that Trump and Netanyahu are going to succeed in their initial goal of regime change. And if you are the Iranian regime that survives this, under whatever conditions that might be true, it's not going to be a disarmed regime.

50:42We're not going to have the boots on the ground that would be necessary to make that possible. You think about the weaponry that Hamas was able to smuggle into Gaza when it was encircled by Israel. And there's going to be no level of control over Iran that is anything like that. If you're that Iranian regime, it seems to me what you have learned is that your best defense, aside from eventually getting a nuclear weapon, is your ability to close down the Strait of Hormuz. That you want to be putting a huge amount of your effort and national defense strategy in figuring out how to threaten the regional energy supply through, you know, attacking the energy systems of other Gulf states and through closing down the strait.

51:35And so in sort of forcing Iran into this position, you might have really forced it into a position where it is going to figure out how to make sure they can wield the energy weapon even more effectively in the future, thus creating better deterrence against its enemies. I'm curious how you think about that from an energy weapon perspective. I think that's right. Right. I think it's true for Iran. It's true for others as well. Iran has, at least for a 30-day period, it's temporary, secured greater sanctions relief from the United States by cratering the global oil market than it did through years of negotiation about how it might adjust its posture toward its nuclear program.

52:27And we've learned how asymmetric that weapon can be. It just doesn't take a lot to not even physically close it, but create the risk perception that you could close the Strait of Hormuz. And so the thing about the energy weapon is it is quite asymmetric. You don't need a massive military and battleships to wield it. You can do it in a much more targeted, lower cost way. And I think that is a lesson that Iran is learning from this. And I fear other countries might learn as well. Are there lessons the United States should be or is learning from this? I think there are lessons we should be learning.

53:01And the first is kind of the myth of energy independence. There are no doubt economic and geopolitical benefits that have come from moving from importing 60 % of our oil two decades ago to being the largest producer of oil in the world and a huge net exporter. But that doesn't mean we are independent. It doesn't mean we are isolated and insulated from what happens halfway around the world. and the best way to protect ourselves would be to use less oil in the first place. So we were less exposed to these geopolitical shocks, not just to produce more of it. I should note it is different for natural gas.

53:36I mean, the price of natural gas in Europe and in Asia has soared to 15 or$20 per million BTU. In the US, it's three. And so the price of natural gas here is disconnected. We do not have a natural gas crisis right now in the same way that Asia and Europe do or did in 2022. Yeah, it's going to make our allies quite thrilled with us. Well, they're turning to us for our energy. I mean, that's what Europe did after 2022. They did more renewables. They did more efficiency. But they moved incredibly quickly for all the difficulty building energy infrastructure and discussion of permitting reform that you've written about as eloquently as anyone.

54:14Somehow, Germany was able in months to build four import terminals to get more natural gas from the United States. Because when you really have an energy security crisis, policymakers jump through hoops to figure out how to do something about it. Building is a policy choice. So it seems to me that there are now two pathways for Donald Trump in this war. One is in the quite near term, in the next days or week or two, to simply say, my goal here was to reduce much of the regime's offensive capability to rubble, to destroy their navy. we've done it, we're done. But that will leave in place the Iranian regime.

54:57They will declare victory as well. They will build back up their military, their capabilities, now having done so with the knowledge of what the vulnerabilities of America and its allies actually are. And so it would be a sort of declaration of victory that I think markets would be very happy with and actually the American people would be relieved by, but also be seen as a kind of failure. And remember, we had a bombing campaign against them not that long ago, said their nuclear capabilities were obliterated. And then a year later started this campaign because now we say they were only, you know, weeks or days away from a nuclear weapon.

55:34So apparently our ability to bomb them into sustained powerlessness is not what one might have hoped. The other pathway forward is this war goes on for quite a bit longer and possibly including ground troops to take the strait to have actual operational control of the strait and more control over what happens in Iran. And if that happens, then we're going to have an extended crisis in energy supplies. If we end up in that world, what are Trump's options for trying to maintain some semblance of stability in American energy prices such that he and his party don't get annihilated in the midterms?

56:21What might he try in a world where this war has a month, two months, three months, maybe even more than that left in it? There is not a policy tool in the policy toolkit large enough to deal with the loss of something like 10 to 15 million barrels a day of global oil supply. So there is no way to prevent oil prices from going through the roof if the Strait of Hormuz remains closed. We've already seen policymakers pull some of the strongest levers they have. the largest ever release of strategic stockpiles through the International Energy Agency, 400 million barrels. And the day that was announced, oil prices went up, not down, because it was perceived as there wasn't a lot of detail around it, but it's just not enough.

57:03And what matters is not the total number. What matters is in a 10 to 15 million barrel a day per day disruption, how much you can get into the market every day, and that's maybe two or three. And then you're going to see some other ideas thrown around, like waiving this law that makes it hard to move fuel between two U.S. ports, waiving some environmental standards. All of these are a few cents at the pump at most. There is really not much that can be done. So I think you're going to have a real energy crisis and we're going to have to, I think that's going to be a major constraint on the administration that might cause people to need to pull back much more quickly.

57:40That's what the market's betting on. That's where we started in the beginning and why oil prices are not much higher than they are today. And we should remember that most of the energy infrastructure in the region has not yet been damaged. So it can start to operate again relatively soon. If you really start to see tit-for-tat escalation where you go after Iran and they've signaled they can come right back at us and other Gulf states, then you're talking about months or years, not weeks to months to try to get things back to normal. Walk me through, I don't know if it, I want to say the nightmare scenario, but one of the more concerning scenarios there.

58:16So let's imagine a situation where Trump doesn't decide to attack Iranian power plants, say. And the regime responds by unleashing drones and missiles on regional energy infrastructure. I mean, you've mentioned with the Strait that what's going on with the Strait is that you've closed a waterway. So if you reopen it, things can just start moving through it again. But if you damage a bunch of multibillion-dollar energy installations, You can't rebuild those in a morning, in a week. So what does that create as a possible long tail? I think people in their heads have the idea that the energy price disruption ends the moment, roughly, the war ends.

59:00What would a war look like where that would not be true? I think the main thing would be either that the risk perception is still there, which makes it harder for people to move through. The U.S. tomorrow could say, we've done what we need to do and we're leaving now. Thank you very much. You're not going to see tanker traffic restart unless Iran says, you know, Iran and Israel have a vote in this also, not just the United States. And so if Netanyahu says we're not done yet or Iran says we don't feel the same way, then you're not going to see tanker traffic go through. So you need to get to a place where people have confidence that it is safe to move through the strait.

59:33And then you have major pieces. President Trump a few days ago threatened to attack Karg Island, which is this major piece of energy infrastructure that is responsible for most of Iran's oil exports. If that were attacked, we know what Iran would do in response. They would attack an important piece of energy infrastructure somewhere else. In 2019, the Houthis attacked Abqaiq, this critical oil installation in Saudi Arabia. And it was remarkable how quickly the Saudis could get that back up and running, but the damage could have been much worse. And so if you do something like that, you could see millions of barrels a day of disruption that we haven't seen yet.

1:00:10By the way, Saudi was exporting about 7 million barrels a day before this, and now they're getting to four or five through a pipeline to bypass the Strait of Hormuz and send it to the Red Sea. There's a port called Yanbu in the Red Sea. That's vulnerable. And we saw what the Houthis could do to tankers in the Red Sea not too long ago. We haven't seen attacks there yet. So if that sort of energy infrastructure is damaged. Again, coming back to the attack on Qatar a week ago, the Qataris have said for the roughly 20 % of their project that was damaged, it's going to take three to five years to repair.

1:00:40Maybe they can do it in two to three, but that's not weeks or months. Then always our final question. What are three books you'd recommend to the audience? So given how much this conversation has been about the physical constraints and choke points like the Strait of Hormuz, I would recommend that people read an excellent book called Ed Conway's Material World, which is a really great reminder of how important things we never think about, like copper and sand, are to the global economy. We don't think about it until something breaks. And what that book makes clear, and what this moment is illustrating, I think in real time, is just how dependent we are on all of those materials that we take for granted.

1:01:19I'd put that alongside a book called More, More, and More by Jean-Baptiste François. I think I'm saying his last name correctly, a French academic and scholar, which explains why it is so hard to have an energy transition. If you go back over time, we have added clean energy at an unprecedented rate, and it's met most of the growth in global energy demand. But oil use, gas use, coal use, they are all still going up as well. And he nicely walks through history and shows things like we have this narrative, we think that the Industrial Revolution meant coal replaced the use of wood because we stopped using wood as a fuel, but then we needed all the wood to reinforce and build the coal mines.

1:02:00And we needed the wood for the little ties that go on the railways because the rails were what moved the coal. So wood demand went up because we ended up using it for other things. And it's really a reminder of why it is really hard to find ways to make things like oil demand go down. And then I'm going to end on something that has nothing to do with energy. But given how bleak this outlook about energy in Iran has been. I think it's worth making space for a little bit of joy in our world. And anyone who reads my weekly emails knows that I always find a way to work a reference to Bruce Springsteen into them.

1:02:35Because if you like joy, you should go see Bruce Springsteen live, which you can do again starting next week when he kicks off his new tour. So I would read Deliver Me From Nowhere, as good as the movie was. The book was even better, going much deeper into sort of the tension between who we want to be and what society expects us to be. Jason Bordoff, thank you very much. Thank you. Thank you for having me.

1:03:10This episode of The Oserocline Show is produced by Annie Galvin and Jack McCordick. Fact-checking by Michelle Harris with Kate Sinclair and Mary Marge Locker. Our senior audio engineer is Jeff Gelb, with additional mixing by Amin Sahota and Isaac Jones. Our executive producer is Claire Gordon. The show's production team also includes Marie Cassione, Roland Hu, Marina King, Kristen Lynn, Emette Keldek, and Jan Koble. Original music by Dan Powell and Pat McCusker. Audience strategy by Christina Simulowski and Shannon Busta. The director of New York Times Pending Audio is Annie Rose-Strosser.

1:03:49Thank you.