tv Inside Story 2019 Ep 259 Al Jazeera September 17, 2019 2:32pm-3:02pm +03
of some outrun borneo which have already burned of 830-0000 hectares of land the smoke has spread to neighboring countries sparking a diplomatic route over who is responsible and the nation police have arrested more than 200 people accused of contributing to the disaster. we shouldn't need a meeting like this every year it should be automatic before the dry season starts everything must be ready but this time we've been negligent again so the smoke has gotten bigger and a runoff vote is expected intimacy is election since the arab spring revolution 2 outsiders are in the lead nor professor. and imprisoned media magnate in the bill curry so far about 2 thirds of the votes have been counted neither candidate is close to the 50 percent threshold. as the headlines the news continues here on al-jazeera after inside story station from so much about the.
how high will petrol prices go because of the attacks in saudi arabia the world's biggest oil exporter is scrambling to repair the damage and try to fight as in yemen are vowing more attacks with a threat for severe think of all the thirst for saudi oil this is inside story. the welcome to the program. saudi arabia is trying to reassure the world that it will quickly recover from saturday's attacks on his oil plants of the reassurance failed to stop oil prices soaring 19 percent the highest increase in 30
years prices have since eased by concerns remain about the 50 percent current for the world's biggest crude exporter especially because houthi fighters in yemen are vowing more attacks to quit posada's economy satellite photos of the damage have been released and donald trump warned the u.s. is locked and loaded to respond and ready to release emergency oil reserves if needed while iran but jackets u.s. accusations that it's involved. let's have a look at who has the biggest reserves of oil or member states of the international energy agency have 90 days of emergency stockpiles in case of crisis the us holds the world's largest to teach it betrayal reserve followed by china japan and south korea almost 80 percent of the world's proven oil reserves are in opec member countries saudi arabia but as well are and iran top the list.
now over to our panel in amman. and nanny jordan's former deputy prime minister as well as foreign minister he's also an economist in barron switzerland cornelia mayer an economist as well as an oil and gas specialist at the financial advisor firm mayer resources in london bill or journalist and i notice on gulf affairs welcome to you all mr and any of the increase in oil prices which was about 19 percent perhaps the biggest percent to percentage spike in 3 decades is this an indication of a panic. or a deeper economic crisis here well i think that it is mostly panic because there was no reason for oil prices and the normal circumstances drive increased that fast in one day so it was
a complete response to the act. of the bomb being of the of the facilities well facilities in saudi arabia. and despite all the. ideas and their pronouncements of president. trump and as well as the minister of and secretary of energy in the states to come to market and also in saudi arabia is the collaboration that they want to use their reserves but people still panicked because they don't know how much time it would take the saudis to repair those facilities and how much to what would happen to their actual usage of reserves they have not started to preserve so they are in a way if there is complex there is a complete absence of specific information or is speculative. is it mostly because of the absence of further information from the saudi
government. and that it was saying about the scope of the of the damage the whether saudi arabia will be able to get its act together with output in a time so that is creating the panic that we're seeing across the global markets. i think it's 2 things it's 1st of all markets always overshoot they always overshoot and there. and then people didn't do the numbers when you look at how many reserves we have and yet also how many strategic how many resources saudi aramco have saudi aramco can between 30 and 45 days of saudi production they have reserves across the globe so people weren't really doing the numbers and i think now what will be really important is how fast can call you know get the. cake processing plant back up and let's mind that not speak clear processing plants are not like like switches it will take time to get it up so we have
information need and then we need to differentiate there is steet current shortfall because of the of the of the attacks and then there is also suddenly analysts realized oh there is a risk premium and geopolitical risk premium that had been all but gold and so in that sense we have to see how that will pan out but in the end oil markets still you know up until saturday everybody said oh we're so over supplied and once one steel plant is out to get up and running again we're still basically oversupplied bill reconsider the risk premium for future deals is this something that is just related to this particular incident of the things is something which is going to be taken into account for a longer term. i think that the response to her is not simply related to this particular incident as severe as it is the risk factor will will build in the fact
that the saudis shown themselves incapable of protecting their most crucial and valuable asset and after all this attack hit the heart of the saudi aramco it was a pinpoint attack it was very destructive we don't know how long it's going to take to get that facility up to speed again and and as your other commentators have noted that is a huge question because the longer it takes the more damaging it will be to the saudis and most particularly to the saudi economy so there's a lot of a reason for people to be concerned and i would think that the appetite for example for the around go i.p.o. will be weaning somewhat certainly on the international front because of this attack. the host is said that the flu 10 jones to can last this daring attack of the heart of saudi arabia do you think of this is something that could potentially change the dynamics to have shaped global energy markets well
until we come to grips with the fact that the horses it was the horses who did it probably there may have technically and logistically helped by other forces of all the outside forces like iran but still that means that we are you know we have turned the page and this is a new phase in the war so in a way the question remains in as far as future tensions are concerned whether the saudis and their allies would retaliate in order to restore the what we call might call a deterrence balance order or they might. if they don't do that then they feel that they have a go shifting position has been weakened so in a way while they are worried about. further retaliation by the whole with is. aiming at their oil facilities which would aggravate the situation saudi arabia i
think that because of the surgical procedure which the 1st of the last one the friday morning raid was carried i think that now we have a new dimensions to contend with and i believe that. the saudis will retaliate eventually and that may invite further retaliations or counterfeit televisions from the horses and there if that continues without an interference and trying to bring that to all parties to the table to sit down and discuss then we may be in for a big and the along. with the fact that the war that only god knows how it will end clearly it's either the same. bodies have been consumed treating their processing plants in one particular area and this explains why after the attack almost a half of their output has been severed do you think this is something that will
take the saudis or will or weeks and weeks in the future to be able to contain well who did this thing is it isn't one in one part because the largest oil field you know it's in the eastern province where the oil is so obviously the biggest processing plant is where the oil is so in that sense but i think we've responded to the former prime minister i totally agree with him and one of the things we need to look at this also what lessons has steve sowed the defense apparatus learned because clearly saudi's to 3rd largest procurer of. weaponry of arms so in that sense you know day to day we'll need to proof that they will really look at their at that that they can it's not that they're not just going off to after airplanes but also off the drone so day will need to prove that they have to they have to equipment they have will have to prove that they know very well how to
use that equipment bill will it when you look at the of this particular case which is the attack targeting the oil fields in saudi arabia i think it's exposer underscores in a way or another the vulnerability of the oil production facilities in the middle is this something of the should be taken into consideration by key players in the future. oh yes i think so it it it he usually underscores the vulnerability and you'll recall that the who he said previously hit the oil pipelines doing really minor damage this this particular hit as i said straining at the heart of saudi aramco will send shock waves i think throughout the middle east of whom most particularly in saudi arabia because after all it's not just the infrastructure of saudi aramco that is potentially vulnerable it is also. desalination plants that could potentially be civilian targets really this this new technology that either
the who these or those who are assisting the who these are suggestions these attacks may have come from iraq from the us to xabi the shia militias in retaliation for an israeli attack in august that that that this kind of situation can can rapidly escalate and and i think as as as the former prime minister said it could lead to something that could be potentially a war of enormous and really quite. horrible consequences so what we're seeing now analysts talking about and and governments also raising the issue of tapping into cities ixtoc bias to be able to mitigate the risks and also stop in a further spike in oil prices is this when i agree that i just go is this because of the confusion which has been spreading all over the world about what's happening as i was arabia. no i think you know or at the beginning i agree with with with cornelia that at the beginning you know there were there was
completely people will believe yes there's a detailed information of 1st of all you know saudi arabia itself is a large consumer of oil production but saudi arabia right now is producing 10000000 barrels roughly of which 4000000 they use 12 so i know where their capacity to export is about 6000000 barrels a day if they lose 5.7 that means that does not leave them with much oil to export so in a way the saudis need to do something that will impact their budget and also impact their g.d.p. growth and their diversification program on the other hand i think that if they do offer for 4 for a television in order to change the whole thing is not to repeat the same experience without severe consequences then they have to do it to hit back and mostly that will be many civilian casualties such casualties will cause
a great deal of of panic but the word like only like. said has yes has for about 4100000000 barrels of reserves these are these are the statistics from the international energy and there's g agency i.a.e.a. and accordingly and the united states has 727000000 barrels which belong which are for the government in saudi arabia their reserves are about bit of a range between $180000000.00 to $200000000.00 those are distributed all over the world but also consumer can large consumer countries have all of their own reserves but they don't like to see their origin to drop to critical limits so they eventually they may use probably 40. percent or 50 percent of them are then if they think that this war is going to drag they will have to start by olga need new
sources of supply and we cannot rely on reserves and on so. for this particular reason why are we southerly particular over the last 24 hours in all these talk about the need to tap into emergency oil inventor is to maintain stability. well i think part of it is you know donald trump is not a detail man right so he did probably didn't do quite the numbers speak for that so before he made his point his is point and it is part of you know we want to calm the markets people want to calm the markets because you saw at the beginning off today it was 20 percent up the oil price now it's about between 8 and 9 percent up so it came down considerably so so this is may need to to come to markets and to say look there's enough there's enough oil there bad them as as both women said it's really the issue is where from here and this is not just saudi arabia it is
also do you a you know the u.a.e. is also in that coalition against the who with this and then the u.a.e. you know they have also processing plants so so the whole region it did g.c.c. it's always been that that island of stability in that sea of unrest and strife that is the middle east so this brings this brings to cheese sisi and especially saudi arabia one step closer to the ramifications of that strife and it will be very important i think for everybody that cooler heads prevail because if we have too much to it for tat then he can really get out of control bill if you look at the map of the region you have 2 hot spots here you have war in yemen and then we saw the aftermath of the war basically attacks targeting oil facilities in saudi arabia but at the same time you have the showdown between the iranians and the american over the straits of homeowners potentially we're talking about what could
potentially become a huge crisis in the world if southerly you have a disruption in the strait of hormuz and then you have a disruption in saudi arabia. yes so we shouldn't forget also that iraq a the the war in iraq against isis the dire she is not over and in fact that that remains that threat iraq is still a very fragile in a very fragile situation and you're right i mean there are a couple of things that could go simply wrong that could lead to a major confrontation that's the concern and and and it is important that everyone step back and calm down i mean it's interesting don't truck us taking a lot of flock from american commentators because that they that tweet in which he said i'm waiting to hear from the saudis before i decide what to do why is it as some wags of said why is the saudi crown prince dictating american foreign policy and whether we're whether or not we go to war but the fact is that i have to
say that that probably is a sensible thing to say because the last thing that we need now is any further escalation of the rain eons are playing a very clever gain here they're pushing and pushing will lay have the sense to drawback i did think they will but if the americans for example did hit this did hit iran that would take this thing the no whole new orbit and a very dangerous or of its oh i think we do need to have this locus pause and you it the fact is that oprah aces did draw up quite dramatically as when he has said that they went they started a 20 percent the now down below 10 percent so there is that calming factor at play join one of the what does this quantities mean full big eve pool to china india japan of other countries well you know if means that they probably would like to diversify their sources of oil in the future and 2nd i think it may.
invite also other issues like using pipelines instead of shipping because shipping into the war esque areas and continues gets brought directed i think the. marine shipment of oil might be the 1st victim of such of such a development so therefore the cost of insurance the cost of transportation of oil will become an important factor in determining how far prices could go so in a way i look at the future and i say that probably they may look for other sources and they may also resort to constructing long. pipelines the 2nd issue is that you know vulnerability of china and india in particular because each imports about $10000000.00 barrels of oil every day and they constitute about
20 percent of total world demand so in a way that that that is a very important thing for them to take into account as busy an interruption of oil would mean that their economic growth will be even even squeezed further so i believe that you know here if saudi arabia must be extremely careful about maintaining the same supplies and having the same contracts with both countries japan and south korea as well in order to guarantee that those clients would not seek other alternatives and would continue to deal with saudi arabia korea we would be talking about the geopolitical implications or implications of the crisis but then let's talk a little bit about the impact of this crisis average people of of the world because usually spike at all. prices are more about people having to pay more at gas bombs decline in spending and decline in economic growth is this something that is going
to take some time or is just going to be a shorter term impact of the crisis that we see in. well it's a shorter term impact of the crisis and what has always notice instead whenever your price goes up its immediate you pass through. to the consumer however when it goes down it's not that immediately passed through to the consumer which is so which is which is how if you're an amount every if you're an international oil company you make your money or part of your money. the thing to do to really be clear here yes it will pass through and we will have to see where we go but let's not forget the backdrop up until friday night last week we were all worried about oversupply and ever fording oil prices still pick and it's 10 allied to nations opec plus took $1200000.00 barrels out of the system we thought we needed to put in in december when they meet they can take out another 1000000 barrel or
500000 barrels so in that sense let's look against the backdrop yes there is a spike it has come down but we really need to look a little bit a how quickly how quickly this facility comes up again you know how saudi arabia is able to a swatch to the analysts and the global markets and let's give it 2 weeks to see really how much did the consumer is going to be hit at the pump ok bill southern arabia has been using for almost 60 or 70 years to for its political and financial leverage worldwide knol people are saying that this mineral longer be the case because even if they go for the initial offering public offering for our own cause there's absolutely no way they're going to get any closer to $1.00 trillion dollars they were hoping to achieve does saudi arabia have to redefine his ferocity in the near future given the strings of attacks he has faced over the last 2 months
. well i think this is represents a huge setback for mom did some on the crown prince as you say he wanted to do this i.p.o. this sale of shares of saudi aramco initially it announced it was going to happen in 2019 it was postponed why because buyers are saying well if you're going to sell you've got to be transparent you've got to tell us open up the books and show us where the money is going well of course that's something the world family the ruling family the house is sowed does not want to do because a big chunk of that money goes directly into their pockets and there are many many pockets to be lined the saudis have reshuffled for example they replace the energy minister a highly respected minister and of and have put in brother half brother mama been solomonic to to run and to run the strip down situation around go they put someone else in charge as a chairman of around cause
a big shift going on just at the point that this attack hits and and as i said investors are looking at this and thinking well you know is this really a safe bet because there is a huge risk factor here and and who's to say that the saudis showing themselves really incapable of that of preventing such a terrific terrific and powerful attack who's to say another one couldn't happen again so we have lots of questions that our lives are non is facing he needs this money from the the i.p.o. i don't think he's going to get it and as i say the longer this thing stretches out the more damaging it is to him the more damaging the saudi economy the less he's able to fulfill some of his dreams of altering the way in which that economy functions. for sure through how to leave it there because we're running mates will just say one think please very briefly if you don't mind me just say one thing please. very briefly very briefly dick did new oil minister prince
scepter lessees he may be a half brother had but he has for the last 30 years been a fixture in the oil ministry and in iran course one of the most highly respected people in pick so i ate it he didn't just put. aside and took some nobody in there that guy really is speed if he is to go to a large part mr oil in saudi arabia absolutely no doubt they were talking about extraordinary times delicate choices facing the saudi government in the near future canaria manzo out our nanny below thank you very much indeed for your contribution to the program and thank you too for watching you can see the program again any time by visiting our website as you know dot com for further discussion go to our facebook page that's facebook dot com forward slash a.j. inside story you can also join the conversation on twitter our handle is a.j. and so i started from the house about what are the hot in here by phone and.
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documentary on al-jazeera. i'm sammy's a dan in doha with a look at the headlines here now dizzy and now at least 30 people have been killed in 2 separate bombings in afghanistan just 11 days out from the presidential election the taliban says it was behind the attacks afghan security forces were the targets says the 1st bombing hit an election rally for president a show vanny in part of one province $24.00 people were killed but only him self was unharmed and 2nd near the u.s. embassy in kabul killed at least 6 people were mcbride is live for us in kabul so what is they are smart and. well that's right well this hour sami the hospitals
in provinces still dealing with the casualties from that bomb blast and in fact just in the last few minutes the death toll has gone up to 26 killed with $42.00 injured and we're told around a dozen of those. people in critical condition the interior ministry says 4 of those killed were soldiers so once again the vast majority of these victims are innocent civilians now the taliban has claimed responsibility has said it was a taliban fighter on a bike a suicide bomber who had gotten targeted the presidential bodyguards and special forces that may have been the case or it may well have been that these security guards intercepted the bomber on the way to try to get into this rally and try to get close to president ashraf ghani whatever the case it does seem to be part of the taliban's threats being carried out to target these campaign.