caroline: i am caroline hyde. romaine: i am romaine bostick. sonali: i'm sonali basak. caroline: tech stocks leading losses. investors concerned about the persistent threat of high inflation. commodities soaring to an all-time high. today we are going to focus on the energy crisis felt around the world. romaine, we start with oil. opec maintaining its slow and steady oil production increases that many thought would be

doubled. romaine: you take a look at this, it started with opec and expectations that they were going to do more. they are basically sticking to that schedule. we will talk to ed morris and this took a lot of people by surprise. nobody was factoring that in. now the question becomes, ok, if they stick by that plan, what do the other producers do? do you see a reboot of shale? and what about the demand-side? sonali: the demand side of the equation. we do not know what will be made of next year as well as some supply chain issues start to either wane or get worse. romaine: let's bring in atlantic council global energy sector senior fellow. you probably know her of a great book she wrote a few years ago, saudi inc., basically about the creation of saudi aramco and really everything we deal with today when it comes to opec-plus and trying to divine the tea

leaves of were oil prices might go next. i want to start with opec and opec-plus, whatever you want to call it. this alliance and its commitment to maintain those current production targets, even in the face of a lot of evidence they should loosen them up. >> they have really shown they having incredible discipline and unity in the face of changing market conditions to stick with their plan. several months ago back in july it almost looked like the entire group might fall apart over an inability to reach a decision about what to do about increasing production. it does seem like since they reached that decision that they have been able to stay the course and maintain. i think they are prioritizing that in some ways above reacting to the market condition of the month. caroline: what was so fascinating was at the same time as we are hearing this study as

we go coming from the opec-plus, we heard saudi arabia saying we are seeing production rise phenomenally. half a million barrels more per month than previous because of issues in the gas market. how much do you think that is solidly there? how much does opec-plus want to dine out on higher prices, or would shale come on the u.s. if they do not restrain themselves? ellen: there's definitely pressure among the opec-plus producers to take advantage of these higher prices. you look at the kind of revenue that saudi arabia is bringing in, it's done a complete 360 from last year. so they have to be pretty pleased with that. you have other opec producers that could really use the money. it will definitely start to overproduce and not adhere as closely to the agreement.

when it comes to shale, all eyes should be on that region because they have been incredibly disciplined. we have seen a little bit of increase in production but nothing like a lot of people were expecting. that really has to do with their commitment not to return to this gross above all else. as prices continue to rise there may be pressure on them from some funders to get back into seeing at least some growth. although i do not think even what we are hearing from the companies we will see anything like these 13 million barrels a day that we hit in february of 2022. sonali: to take a little more of a long view into 2022, what do you make of the forecasting of any potential oversupply early next year, or rather, the building of inventories? ellen: opec not really say very much. they did not have a press

conference or anything to explain their decision. but we did hear that through the concern was with increasing production at this point was due to the fact that they are forecasting that come q1 of 2022, we may see oil stocks begin to rise. some of that may be because some deficits we are seeing now is due to backlogs at various ports and they expect that will clear up. they may be anticipating the fact that seasonally, oil demand tends to decline at that time. but because they are meeting every month, they will have an opportunity to correct this if the forecast does change by november 4. romaine: the saudi's and opec right now are dealing with still relatively short-term issues. there are longer-term issues on the horizon. i am wondering what the future of saudi aramco is, what the future of saudi opec-plus is?

a good portion of us are using recyclable packaging or using power from alternative sources that do not necessarily rely on the fossil fuels we have relied on for so many years. we have seen the u.s. already try to address this shift and even to a certain extent have seen saudi arabia try to acknowledge this shift. is opec going to acknowledge the shift? ellen: opec is acknowledging there is a shift underway. however, their conception of what the shift actually looks like is a bit different from the way the western world is conceptualizing this shift and they see immense potential for growth. in the developing world they believe, and this is exactly what secretary general said last week, he said they believe it is their duty to provide power to countries and to people who, at

the moment, do not have reliable power. romaine: i am curious, is the idea that opec-plus is now writing off the west and focusing much more on emerging markets in asia that the growth will be there if for some reason the west continues to move down much more renewable type of road? ellen: they certainly believe there are issues with the energy transition in the west and we are seeing some of those now. renewables are not a baseload power source. if the wind is not blowing and the sun is not shining, there is a need for fossil fuels. so they absolutely see this and want to be able to provide, but in a sense they are saying there is not a huge amount of growth essential available necessarily in the west whether eac -- west but there is in the east. if you are going to talk about renewables and not invest in new fossil fuels, then we are going

to focus our efforts elsewhere. caroline: talk to us about the innerworkings of opec-plus right now and why are getting such consensus, why are we getting record-setting quick meetings as we had today. what's happened in terms of previously the bones of convention between russia and saudi arabia? ellen: exactly. they were often at odds and it does seem a lot of that has been resolved as they have moved away from constraining supply to gradually increasing supply. also remember now both of these countries are making a lot of money from selling oil because the prices have moved up here with everyone making a lot of money is much easier to get along. it seems earlier over the summer that the biggest contention was actually between saudi arabia and the uae over how fast to increase production. that is certainly something that we could see flare up again, though it does seem those

conflicts were resolved within the scope of the current agreement. though when that agreement does expire or come to an end in the middle of the spring, we could possibly see some of this reemerge. sonali: it is interesting reading the tea leaves between saudi arabia and russia, but what is the place where the u.s. in this broader conversation, especially with such humongous investor demand for greater energy? ellen: exactly. it seems kind of odd. we have heard from the white house that they are pressuring saudi arabia to produce more oil in order to alleviate high gasoline prices that we are seeing in the u.s.. if you compare the price of gasoline in the u.s. to prices that other people have, it is actually quite low. but it is definitely an issue. there is a lot of confusion as to why the white house is not looking to domestic production. there is certainly more room.

why are we looking towards saudi arabia? essentially it seems like saudi arabia is saying to the u.s., you are not the most important customer anymore. we are much more concerned with china than we are with the united states. caroline: the ongoing tensions never end. ellen wald, great to have some time with you. a truly global conversation. we are going to keep on talking about the truly global nature of the fuel prices. we are going to hear from fiona, head of commodities and real assets. stick with us. this is bloomberg. ♪ ♪

romaine: today we are focused on energy, a global energy crisis. we heard a lot about what was happening in the u.k., it was a mess. natural gas prices hitting record after record. it got to the point where your prime minister talked about sending in. caroline: fascinating moves happening in the u.k., which of course there's a perfect storm going on in terms of certain outages. the reasoning dependent on renewable fuels. if the wind is not blowing as much as anticipated. a big take on bloomberg today, talking about why brexit is vulnerable and running on fumes pretty a lot of that coming into the story of gas and oil.

one thing you have kept a close eye on, the fact that a developed nation has dropped in an army over oil and gas. sonali: it is truly amazing and a good reminder this transition is not an easy one or a fast one. and will not happen unless more countries get involved. as we heard from our last guest, who is the final buyer of oil. caroline: talk us through what you are seeing in terms of investments and this energy transition as we see it. as smooth as anticipated? how is s&p, dow jones looking at commodity record highs and pressures of supply chain issues within that? fiona: what we are seeing here in the u.k. at the moment is illustrative of that energy transition that is a long-term goal.

there are going to be bumps along the road. we have a real confluence of factors. whether that be cool prices in china, gas prices, electricity prices here in europe, crude oil prices at their highest since 2014. this is a manifestation of a global energy crisis. romaine: i want to talk a little bit about the natural gas issues we saw, specifically in the u.k. and really throughout europe overall. we had natural gas prices here in the u.s. almost double but they were nothing like what we saw over there. why the dynamics were so much more severe there than in the united states? fiona: it is a great question. it is not just one factor. we have seen issues with supply out of russia. they are meeting their requirements but not sending in the more natural gas -- anymore natural gas then they said they

would into europe. we are seeing some weather-related issues, be it wind, the impact of the hurricane season in the u.s. just an enormous demand for -- they are paying more for lng than your. there are a lot of factors. sonali: i'm glad you brought up that point about europe paying more. where does that leave the u.s.? especially on something like gas, where you see there is more production. but perhaps less in terms of what people are willing to pay on the demand side. fiona: the u.s. is pumping out natural gas like it never has before. a lot of that additional gas is actually leaving the country as lng. and natural gas prices, the index up a bit over 100% year to

date. that compares to prices here in the u.k. which are up 300%. it is still a big increase. but i expect as we come into the winter and the heating season, and with stockpiles where they are, we could see increased pressure on the u.s. natural gas pressure -- price. caroline: having to have the country send the army in to petrol stations, that was a logistical nightmare because there are not truck drivers -- not enough truck drivers. is that something unique to the u.k.? how are things delivered everywhere and how will we see the infrastructure being improved to support that? fiona: it has been a logistical nightmare, but one that's a bit compounded by panic buying in the u.k. u.k. consumers love a good

queue, and we have certainly seen that around london this weekend. it's not a function of there not being gasoline, it is a function of it being in the wrong spot. a lot of that has to do with how it is transported in the u.k. and the fact we do not have enough transport drivers at the moment. some of that we are also seeing in europe, but it seems to be the worst in the u.k. romaine: talk about the reverberations into other commodity areas. because when we talk about natural gas prices being as elevated as they are, crude oil prices being as elevated as they are, that has a huge effect on chemicals, on metals, on soft agriculture, just things like wheat, corn, fertilizers and other ingredients you need. what are the ripple effects we have to do with? fiona: the ripple effects could be enormous. the big thing to watch and we are talking about natural gas is at what point do we see some of these big industrial users shut

down production and do that, because if they have a contract for natural gas it might be seller -- better to sell it back to the grid, which seems quite unbelievable but we see that happening. while that might be what breaks natural gas prices and causes the final spike higher, what did might also do is just transfer that inflation risk from energy into other industrial products. because if we are not producing those products, then prices for those will go up. and it reverberates into everything from poultry production to the making of aluminum cans. sonali: it is interesting because we talk about this in terms of inflation at the moment, but how do you think about this when it comes to weather and supply chains? when you think of all the factors disrupting prices at the end of the day, which of the factors are hardest for you to keep a handle on? fiona: oh, certainly the

weather. we're seeing some pretty unusual weather events the last few months. they have played into what we are seeing in all of the energy markets. the hurricane, the lack of wind in the u.k., storms cutting out pipelines. certainly as we come into winter, i think the market will be taking a particularly hard look at the weather forecast. romaine: fiona, really appreciate you staying up late for us in london. fiona boal, head of commodities and real assets. we got some breaking news on the vaccination front. southwest airlines requiring all its employees to become vaccinated. this would go into effect december 8 of this year. that means fully vaccinated according to this directive. southwest does say it anticipates all of its employees

will comply with the vaccination requirement. something we have seen from other airlines. not all airlines have jumped on board yet, but several have said they will be imposing mandates starting either next month or december. caroline: american airlines, jetblue, alaska airlines last week. detla has not decided yet. they has been looking as a cost issue. romaine: another interesting was jp morgan, basically saying they are going to ban business travel for their employees who are unvaccinated. sonali: it is truly interesting. different rules have to apply to different people. there is big hesitance among some employers to put in that mandate. romaine: wasn't this, a a lot of people talked about when biden made that big announcement, the idea is this puts pressure on the companies and maybe the companies could do with government was afraid to do. sonali: it was a biden

announcement but also the fda announcement. we knew this was coming. but you still see reticence among employers to truly make this required many are making it required to come in. caroline: ken griffin earlier talking about how they have 90% of citadel employees. they do not want to have an exception for religion. we will see how the rest of the airlines react. sonali: for southwest if you have a religious, medical or disability, you can be approved to not have the vaccine. romaine: we will be back in a moment. this is bloomberg. ♪ this is bloomberg. ♪

caroline: we have been discussing energy, whether it be supply-chain headaches, prices on the rise. throughout the markets, almost

dictated from a cross asset perspective. romaine: it was oil. oil hit the highest here in the u.s. since 2014. brent, which has been knocking it out of the park. you saw the energy stocks rise but the question becomes does that underpin a real long-term rally, or is it something short-term? this seems to be driven less by demand and more by supply. sonali: your point on how long this lasts, the longer it lasts of more ripple effects you have into other asset classes. romaine: i joke, we talked a lot about the u.k. while you were gone, because there are also issues that have nothing to do with supply and demand. it is how do you get gasoline on a truck and drive it to the thing, which seems to be an issue that has more to do with brexit than anything else. caroline: a self-made issue. romaine: an own goal. is that what they call it over there? caroline: politics, but also

data. tomorrow we get pmi data. how much being impacted by commodities and supply chains. bloomberg technology is next. romaine: have a great evening. this is bloomberg. ♪ this is bloomberg. ♪

>> from the heart of our innovation, money, and power collide, this is "bloomberg technology" with emily chang. emily: