How big is the energy shock from the Iran war?

Josh, just give us. a short overview. of what the impact is. of the energy supply shock. we've seen to date. It doesn't look like. the supply through. the strait is going to be resumed. anytime soon. in anything like the numbers. that it was before. This is 15% of the world's oil supply, and that's even net of the tankers. that are rerouting. But it's actually worse than that. because we're also losing about 20%. of the world's. liquefied natural gas. That comes from Qatar. and they've shut down. their production for now.

I think the consequences of that. are being felt particularly in Europe. because only very recently. Europe has weaned itself. off Russian gas. and onto LNG. So these two things. happening at once. are kind of reverberating. around the world's energy markets. Gregg, clearly a huge gap. between what markets are expecting. and the reality. From your position in Riyadh. talk us through. how people see things there. But secondly, how quickly, even if the security situation improves,

how quickly can production start? How quickly. can things begin. to get back to normal? So the sense in the region. is very much that this is. going to be a continued disruption. And it's not just because. of the security situation. It's because even if. the strait reopens tomorrow, even if the war ends. and there is safety for vessels. passing through, there are going to be. physical constraints. to restarting production. and getting oil and gas moving. If you look at the oil industry.

there are in Kuwait, for example, and some other countries. in the Gulf, firms that are. starting to shut down. their oil wells. because they're running. out of storage for the oil. they're pulling out of the ground. So they're doing. what's called “shutting in their wells”. Once you do that. it can be difficult. to get them restarted, it can take time. In some cases, especially with older wells, you might not be able. to get them restarted at all. So there might be. a lasting disruption. to energy supply. And then similarly. with gas liquefaction in Qatar, if you think of it like your refrigerator.

that's been turned off. after a long blackout, when you plug it back in. it takes time. for your refrigerator. to cool down again. It's the same thing. with gas liquefaction. You have to get that gas down. to something like 160 degrees. below zero. The whole plant has to be cooled. to that temperature. Once you turn it back on. that doesn't happen immediately. So we're looking at, in terms of physical disruption, probably a month or more. before we can get back to. pre-war levels. of oil and gas output.