annual steak fry. watch the polk county, iowa steak fry live on c-span, c-span.org, or listen live on the go using the free c-span radio app. host: here to talk abt security of the global oil , old newsbrian scheid senior editor for s&p global platts. thank you for being here. guest: thank you for having me. host: tell our viewers what exactly was struck in saudi arabia and how it impacted supply. guest: sure. oil marketk ago, the was in a general malaise, there was an oversupply situation. there was not a lot happening with prices. it was a volatile market. a few weeks of stability, if you will, before the crisis. then saturday morning, there is field,ck on the ad quake

then the coup rayfield, the in saudirgest field arabia. there is still debate on what happened during the attacks and who is to blame. the u.s. is already putting blame on iran. but what happened with the crisis is this knocked out 5.7 million barrels a day of production, roughly 60% of the global supply. supply the biggest applie disruption in the history of the world, and it happened in an instance. this happened when global oil markets were closed. we had to wait until sunday m to reopen,r the and s&p global analytics estimated about $75 p barrel. there is a new risk premium, obviously. it could go eventually to $80. we saw a massive increase, 19% increase. by the end of monday, the oil

price settled. it went down -- it went up, excuse me, $69, a massive increase for this market. yesterday, the new saudi energy minister comes out and says we can have production back, you know, this is a massive loss, significant loss of production, but we can have everything pretty much back to normal in two weeks. prices came back a little bit, , still four dollars above where we were last week, but at the same time, a lot of analysts i talked to said we are not out of the woods yet. global platts have a risk premium based on something geopolitical like this going forward. that is what analysts believe. we do not know what will happen next. host: that risk premium, does that stay, then, on the price

going forward? guest: yes. host: when, if ever, does it get removed? guest: that is the expectation, and you saw president trump hinting at -- will there be a military response? increase obviously prices are you have an ongoing situation with the strait of hormuz with iran. and then i think just the size thehis event is what has oil market so weary of the moment, because 5.7 million barrels per day was taken off without warning. it was not like something we could see coming down the road. this was always sort of a wildcard to analysts, something that might happen, modeled as a maybe. now that this happened, there are all sorts of new wildcards that can be looked at, not just attacking a single pipeline, confiscating a single vessel. 6% of are talking about

global supply can be affected, 'realking about attacks on full oil fields. there are a lot of unknowns going forward. i should say, against all of this, the backdrop is u.s. oil production. , we have increased about 3.5 million barrels per day over the past three years, a of their host sten that is very surprising a de ago from what you would expect. the increase over the past few years has been 3.5 million. put that into context. that is more than the country of kuwait produces. you look individually to the states, north dakota is now producing more than libya. you have new mexico now producing more than venezuela. and you have taxes, taxes, which is competing with the entire country of iraq, so the u.s. oil supply is really balancing out

what could be seen as this major rift. platts analytics 4%, 5%, butiv that is the supply. if thehat would it be u.s. was not producing at the rate we are producing? runt: you would see another up beyond $100 a barrel. we could even be looking at more. the big take away, i think, from this event if it could have been a lot worse in terms of pricing. i say worse, you know, there are winners and losers, no matter which direction price goes in the market. we could have been looking at five dollars gasoline. we could have been looking at $150 barrel oil. there were some analysts who said this is such a major event, we could be looking at, you know, $100, over $100 a barrel. time, there was

this glut, if you will, of supply. this has been a market that has been oversupplied for months, so that definitely did balance out the severity of the incident. host: how did the president reacts to the attack, to adjust, and didn't have to -- did he have to tap into our reserves? guest: on sunday night, before the asian markets opened, president trump tweeted out "i have authorized the release from the strategic oil reserves. in case the viewers do not know, the u.s., since about 1975, and stored a lot of crude oil in four separate sites along the gulf coursed. there's two sides in texas, two sitses in louisiana. about 34ently have

million barrels between those two sides. after 9/11, there was discussion, maybe we should go to one billion barrels. that narrative has really flipped with the shale revolution, and they have been selling off a lot of of that crude, so now we are at 644 million. president trump says i am willing to sell up some of the it isfrom the spr, and going to be coordinated with the rest of the world. think you could argue, didn't dampen this incident, as far as prices. even though there is this glut of u.s. supply, a release from the strategic petroleum reserve still does bear some weight. not releasing anything, saying last night above air force one, the impact was not so bad, the saudis announcing we will be back to normal in about two weeks. what i am hearing from sources is it is no longer really being considered, but it does stress

this idea of what purpose these strategic petroleum reserves serve now in the u.s. when we do have this record-breaking production going on. do we still need to store hundreds of millions of barrels of crude oil when we are producing at this rate? host: we want to get our viewers involved in the conversation as well. your questions or comments about the global oil supply and the market. that 748-8000 for those live in the eastern part of the country. (202) 748-8001 for mountain/pacific. let me ask you -- also, let me tell viewers, you can also text us at (202) 748-8003. we have a text here from mickey in milwaukee. really think that iran has the capabilities to destroy saudi oil facilities with such precision and no human casualties?" perhaps we cannot answer that

question, but this next 1 -- "who benefited from the attack? which is trying to pull us into a conflict with iran?" perhaps we cannot answer that, but who could this benefit? as toi will not speculate who caused the attack, but secretary pompeo is blaming iran. i will say the main beneficiaries of the attack are u.s. civilians. they are now producing at this record-breaking level, and there are a lot of questions, this decline in capital spending. ishere too much? are we over supplying? those were questions before the attack. now they can continue to produce at record-breaking levels with an increase in prices. the other thing we should point out, at the same time all of this is going on, this sort of happened, this come close of events, there is a new saudi oil

minister. two weeks ago,t opec and allies have just reaffirmed their commitment to this massive production, 1.2 million barrels of production per day, and that happened before in abu dhabi. there were a lot of analysts who viewed u.s. production as slowing down now, and then the abqaiqon happened. there have been more changes than i can count so far. host: i guess review with our viewers, what is opec? also, what you said about this deal to cut production, and why were they talking about that in the first place? what is the impact of it? guest: so the organization of petroleum exporting countries, led by saudi arabia,

unofficially, mostly middle east producers, but venezuela is in there as well. they get together couple of times a year and basically decide -- where should our production be? it has a lot of criticism on capitol hill that they are manipulating the price. nopec bill that has been making the rounds in congress are several years. it has not gained much traction, but we will see if it might, if the oil prices continue to go up. so they announced that they are cutting production, basically because they were are getting production. it was getting tough to compete, and prices caps on thing. we're not seeing $100 barrel oil anymore. week of seeing a plan to cut about 1.2 million barrels per day of their collective supply,

and that we would get a little boost, which i think it has. and you could see this, you know, $55 and $65 brent oil price range in the futures contract that lasted several weeks. and like i said, this is a very volatile market. i think you were seeing this period of very steady prices, where, you know, they could, you know, have well above breakeven prices for opec countries. so that cut continues. it is going to continue. at the moment, it is scheduled to continue until about march 2020. again, we will see how does this abqaiq attack impact that at the moment. i should point out opec has not declared an emergency meeting or anything, which is something we would have seen a few years ago. host: brian scheid here to take your questions about the global oil market.

again, if you live in the eastern/central part of the country, (202) 748-8000. mountain/pacific, (202) 748-8001 . also, text us at (202) 748-8003. let's go to bill, who is in junction, pennsylvania. good morning. [no audio] good morning. caller: good morning. i understand the impact has been so great, but gas prices in western pennsylvania have shot up over $.20 a gallon overnight area yet nobody addresses what i see to be gouging. is stillpply relatively level, why have gas prices shot up so much? host: ok, we will work on your audio. pricesll is asking is have shot up 20% -- caller: $.20.

$.20. host: i am sorry, $.20. what is your question about it? caller: that is the question, if oil is relatively stable, why have gas shut up $.20 overnight? prices canline become located and can be regional, if you will. nathan hamilton, who is an excellent petroleum analyst with the u.s. energy administration, had a couple of tweets yesterday explaining what the impact would be of abqaiq, and he typically follows oil prices and it is usually 80% of the oil price is good when oil prices go up $10, 80% of that increase will be baked into the change in gasoline prices. the other thing is it takes weeks for the impact in the oil market to have an impact on the retail gasoline prices. sees gasoline

prices going from about $2.60 to the moment, i cannot speak to the increase. it could be a variety of factors, but it could have been two weeks ago. this incident has not had much of an impact on gasoline prices. host: let's listen to what president trump had to say when he was in new mexico about the u.s. energy position. [video clip] pres. trump: the united states and natural gasr one producer anywhere in the world, and this means more jobs, higher wages, energyrican independence, which is what we have. [cheers & applause] pres. trump: you know, a few years ago, if we had a problem, like we saw today's go in the middle east, we would have been in a panic. although not if i were your president.

panic.ot want to pu whenever want to panic. but a few years ago, they would have been in a panic. today, we have a lot of oil, we have got a lot of gas. host: brian scheid, we are not in a panic. what does that say about the oil influence? guest: the relationship between the u.s. and saudi arabia has changed significantly, and i think the abqaiq attack very clearly shows that. we have seen declines in overall imports of crude oil, that we are still not a net exporter at all, and we still do import a significant portion of our crude oil. million barrels a day the u.s. produces, we still consume about 20 million barrels a day, so it is still a significant difference between those two, which means supply and demand. what we areing from the putis, last week, the eia

out their numbers and show that weekly imports of saudi arabia and oil to the u.s. fell to the lowest point in record, on record. our imports of saudi crude or falling to levels we have not seen since the mid-1980's. saudi oil,iance on at least u.s. reliance on saudi oil, is not as high as it once was. now, it still is there. afiners are still importing significant amount, basically a lot from the west coast and a lot of medium-type crude. there is still a reliance there, but it is not a total reliance. produce could the u.s. more? could the u.s. meet its own demand? guest: this gets into a sort of thorny topic of, you know, what type of oil the u.s. produces. the u.s. produces a very light oil, and a lot of it is in demand relatively in asian

refineries. at the same time, our refineries are geared toward processing more medium and heavy oil, so we still need to import those barrels. that is why the u.s. is part of a global market. there is this idea of -- previously, we had this idea, you know, u.s. oil independence. that is not even a remote possibility. now what is this idea of u.s. energy dominance. we can become the new saudi arabia. that is the thinking, at least. but i think more of what you are seeing is an integration into the global market, you know, we are seeing the u.s. refineries continue to import these heavy crudes. the u.s. producers continue to produce light crudes. >> we are going to leave the remainder of this "washington journal" conversation as the u.s. house is set to gavel in