The energy shock imposed on the global economy this year has been substantial. But many experts expected crude prices to go even higher than they have so far. After all, the shuttering of the Strait of Hormuz blocked off a fifth of the world’s oil and natural gas from reaching its destinations. So, what happened?
I put that question to Daniel Yergin, the foremost energy guru and historian. Yergin is the author of The Prize, which won the 1992 Pulitzer for general nonfiction, and the vice chairman of S&P Global. He also organizes CERAWeek, the energy industry’s premier annual event.
According to Yergin, Saudi and Emirati pipelines were able to bypass the strait to get some of their oil on the market. But the biggest surprise came from China, which was not only able to suppress internal demand but also drew on what is widely believed to be the world’s biggest reservoir of crude reserves. Has Beijing become the world’s main shock absorber for energy? What will that mean for the future of the trade of energy and related commodities?
I spoke with Yergin on the latest episode of FP Live. Subscribers can watch the full discussion on the video box atop this page or download the free FP Live podcast. What follows here is a condensed and lightly edited transcript.
