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00:00Take a look at the tick by tick a brand. It was a brutal week below its 2 100 day moving average. Take a look at the tick by take a what happened first. You got the new trade tariffs from the US overnight on Tuesday that kind of started this slide down . Then you wind up having Libya removing the force majeure another leg lower then you end up having Iran waivers. We may see a little bit of wavering coming from the US maybe not as harsh as we thought when it comes to Iran and then even the really bullish EIA data that we got yesterday 10 30 could not save the oil price. Rob what did you make of what happened . Yeah you know really the fundamental question for the second half of the year is how is the global supply going to be met . Right. So we've had this global oil glut that's gone right . We've had an undersupplied oil market really for the last 18 months. So there's no more excess inventories let's say. So now we move forward and we say OK demand is accelerating in the second half of the year globally for oil and the supply if it stays the same. We're gonna continue to be undersupplied. That is a bullish sign we think for oil prices here at tortoise. But we do think there are remedies for that and we're start to see some of those this week with the increase in Saudi Arabia to production potentially more Russia production and of course the U.S. will play a really big role as well. And in the global oil supply for a long period of time. Yes so let's delve into that because part of it is the macro in terms of how much Iranian oil is going to be taken off the market. That's the backdrop that's really going to matter to whether you're a bull or you're a bear . What do you think that result's going to be. Yeah that's that that is a very difficult question to answer. I would. I would say you know if you look at last time when the sanctions were introduced no Iranian oil production or I've run in exports were down about one point two million barrels a day. So you can probably gauge that as your starting point if it gets worse it could be as much as two million barrels a day in the short term that could be a real challenge for the global oil market . That's the biggest key. It's not that we're running out of oil we're we're kind of in a new era of oil we have plenty of oil . It's just time you need time to produce more oil and to have the infrastructure in place to transport that oil out of places where it's being produced to places where it's being consumed . Fair enough. And that's sort of the medium term bullish outlook but short term we're still struggling here. And Richard Matheson of energy aspects is joining us from London and let's get your take on that. You can see that bullish medium term outlook. If you look at time spreads the one to three month WTI versus the one to three month Brent timespan which actually slipped into contango because our future prices went up slipping below its TV spot prices slipped below future prices. Richard what do you make of the short term weakness versus longer term strength. Well I think there are a few factors here. Saudi Arabia other countries already started adding production in anticipation of those losses from Iran. You've just been talking now but also in the last couple of days we've had a big recovery or big announcement of a recovery in Libyan production . And I think that's just since really nervous shudders through the market even though the outlook and looking ahead is quite bullish. People are worried that it's not right now there's too much oil particularly in the European market. So Richard as if you were an investor how do you deal with that. I mean how you can't sort it. You can't go along at the same time. I think it puts people in a really difficult situation. And furthermore I think when you look at the biggest factor and you've been talking on it the Iranian losses you know so much here depends on what does the White House do exactly how hard does the US push. We've had very strong signals you know go down to zero by November Dax what State Department officials are telling Asian buyers but now we've had a few comments that people are interpreting as maybe a slightly soft line. We don't think there's been a change. But for anyone who is trying to take a position in anticipation of that tightness at the end of the year and into 2019 that really really leaves them nervous about any positions that go on. So Rob you're the investor. What do you do with this. You buy equities when equities can you buy on that backdrop. Yeah and if you look at oil producers you know we still think that you want the lowest cost producers in the lowest cost base and so if you look at companies like Occidental Petroleum a large oil producer produces all all around the world . But it is increasing its investment in the US thinks it's got a great opportunity to really grow its cash flow out of the Permian Basin. There's some nuances going on in the Permian Basin that Occidental can really take advantage of. And we think that will flow through their results. You know other producers outside the Permian Basin her are attractive ways to go as well. Continental Resources doesn't have any hedges. So if you think oil prices are going higher it's a great stock to invest in cash flows will go up and that should result in higher prices for Continental Resources as well. And Richard that's really key because as the IEA warns that the Saudis are not going to have enough spare capacity to make up for all the losses and you can see that we've a great chart which shows Saudi production versus the losses from Venezuela and Angola . Not even when it comes to Iran. What's your base case as for how much to get taken off what countries will pare back. How much of their imports. Well we're thinking that Venezuela continues to decline. It's about one point three million barrels a day. Now it probably heads down towards a million barrels a day by either the end of this year or into 2019 . Libya seems to be fluctuating maybe it stays at a million barrels a day once it's recovered. We think that Angola is really struggling. Heavy declines there but the big one will be Iran we're penciling in about a million and half barrels a day of losses in exports and that's going to translate into supply losses but only really coming and becoming visible in Q4. So it's this Q3 period that's hard to deal with it maybe oversupply but you've got a lot of very supportive factors towards the end of this year and into 2019 .

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Trade War Sends Ripple Effects Through Oil Market

Commodities including oil have taken a hit in recent weeks as President Donald Trump intensified his trade war with China, imposing tariffs on $34 billion in goods from Asia’s top economy last week and following up with a target list for levies on a further $200 billion. Rob Thummel, managing director at Tortoise, which manages $16 billion in energy-related assets, and Richard Mallinson, co-founder of Energy Aspects, talk with Bloomberg's Alix Steel about how trade is affecting commodities. (Source: Bloomberg)

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