NOW AS WE'VE HEARD THE UNITED STATES AND IRAN ARE BOTH CHOKING OFF THE STRAIT OF HORMUZ.

THE NEXT GUEST IS SOUNDING THE ALARM ABOUT THE GLOBAL ECONOMY AND NOTING HOW RUSSIA AND CHINA BENEFIT.

VICE PRESIDENT OF S & P GLOBAL.

>> THANK YOU AND WELCOME BACK TO THE SHOW.

WE ARE NOW BLOCKADING THE STRAIT OF HORMUZ.

IRAN IS THINKING OF DOING IT IN THE PERSIAN GULF.

>> IT REMAINS THE LARGEST DISRUPTION OF WORLD ENERGY THAT EVER OCCURRED.

PEOPLE ARE CLOSING RESTAURANTS BECAUSE THEY CAN'T GET THE FUEL THEY NEED FOR HITTING.

IT IS STARTING TO BE FELT IN EUROPE.

WE ARE SEEING IT IN EUROPE AT THE GASOLINE PUMPS.

ONE AREA IS JET FUEL.

THAT IS GOING TO AFFECT TRAVEL.

>> YOU SAY THE BIGGEST WE HAVE EVER SEEN.

LOOK AT THE MARKETS.

THEY ARE NOT GOING TOTALLY NUTTERS.

WE ARE SEEING LESS IMPACT IN THE UNITED STATES BECAUSE THEY WENT FROM THE LARGEST IMPORTER OF WORLD TO THE LARGEST PRODUCER AND A MAJOR EXPORTER.

THERE IS A DIVIDED WORLD IF YOU LOOK AT THE FUTURES MARKET.

THAT IS WHERE YOU GET THAT $100 BARREL.

BEFORE IT BEGAN OIL WAS $60 A BARREL.

NOW WHAT IS ACTUALLY BEING SOLD IN ASIA, YOU GET PRICES LIKE $140 A BARREL COMPARED TO $60 BEFORE THE CRISIS.

IT IS AN UNEVEN IMPACT AROUND THE WORLD AND IN MARKETS THEMSELVES.

>> YOU SAID AT THE BEGINNING OF THE WAR WITH IRAN IT WOULD BE A NIGHTMARE SCENARIO IF THE STRAIT OF HORMUZ WAS CLOSED MORE THAN FOUR OR FIVE WEEKS.

>> IT SEEMS TO BE DAY BY DAY IF NEGOTIATIONS ARE HAPPENING OR NOT HAPPENING.

THE MIGHT THEIR SCENARIO IN TERMS OF OIL.

IN TERMS OF THE OIL MARKET, THIS IS 20% OF WORLD OIL AND LIQUIFIED NATURAL GAS.

CHECKS LIKE ALUMINUM, FERTILIZER AND HELIUM WHICH IS REQUIRED FOR THE MANUFACTURE OF SEMICONDUCTORS AND ALSO FOR MRI FINISHES.

THEY ARE MAJOR PLAYERS NOW IN THE WORLD ECONOMY.

THEY ARE EXPORTERS OF ANOTHER COMMODITY CALLED MONEY BECAUSE THEY HAVE THESE HUGE SOVEREIGN WEALTH FUNDS.

>> WHAT COULD THAT DO IF THE SOVEREIGN WEALTH FUNDS QUIT INVESTING?

>> I DON'T THINK THEY WILL.

YOU ARE TALKING ABOUT FUNDS WORTH TRILLIONS OF DOLLARS OR MORE THAN THAT.

BUT HOW MUCH OF THE INVESTMENT WILL BE SHIFTED BACK TO DOMESTIC REQUIRED TO REPAIR THE DAMAGE.

THIS IS NOT ONLY ABOUT THE STRAIT OF HORMUZ BEING CLOSED BUT THE MAJOR INFRASTRUCTURE SUPPORTING ALL THE INDUSTRIES BEING ATTACKED AS WELL.

>> YOU SAID A BIG CHANGE IS THAT THE UNITED STATES IS AN EXPORTER AND NET EXPORTER OF LIQUIFIED NATURAL GAS.

IS THERE A SILVER LINING FOR THE AMERICAN ECONOMY HERE?

>> I THINK OVERALL NOT.

I THINK OBVIOUSLY PRICES GO UP TEMPORARILY.

THAT BENEFITS THE SECTORS OF THE ECONOMY.

BUT YOU HAVE HIGHER GASOLINE PRICES.

THAT HITS LOWER INCOME PEOPLE THAT HAVE TO TRAVEL SOME DISTANCE TO WORK.

YOU WOULD PROBABLY SAY THAT IT KIND OF BALANCES OUT.

THERE WERE ALREADY A LOT OF INFLATIONARY PRESSURES BUILDING IN THE ECONOMY.

WHAT WILL THIS DO FOR OTHER ENERGY SOURCES LIKE RENEWABLES?

I THINK THAT, YOU KNOW, THE SECRET OF ENERGY SECURITY IS DIVERSIFICATION.

NOW I THINK THAT PEOPLE ARE DESCRIBING RENEWABLES, WIND AND SOLAR I KNOW ONE PROJECT THAT WOULD DMEND ON LIQUIFIED NATURAL GAS IN VIETNAM NOW SWITCHED TO SOLAR.

YOU KNOW, OVER 90% OF THE NEW ELECTRIC GENERATING CAPACITY INSTALLED LAST YEAR IN THE WORLD WAS WIND AND SOLAR.

HOW ABOUT CHINA?

HOW ARE THEY TRYING TO INFLUENCE THIS?

>> CHINA DEPENDS ON THE GULF FOR 45% OF ITS OIL IMPORTS.

CHINA HAS REPLACED THE UNITED STATES.

THE U. S. USED TO BE THE LARGEST IMPORTER OF OIL.

CHINA IS TODAY.

75% OF THEIR OIL IS IMPORTED AND A BIG PART FROM THE MIDDLE EAST.

CHINA HAS BEEN THE MAJOR RECIPIENT OF THE SANCTIONED IRANIAN OIL.

I THINK CHINA WANTS TO PORTRAY THEMSELVES AS A STABILIZER IN THE WORLD IN CONTRAST TO HOW THEY PORTRAY THE UNITED STATES AS UNPREDICTABLE.

THEY ALSO BENEFIT BECAUSE THEY ARE AT THE FOREFRONT OF RENEWABLES.

IN PARTICULAR, 80 TO 90% OF THE WORLD'S SOLAR PANELS COME FROM THEM.

CHINA BENEFITS FROM THAT.

>> YOU TALK ABOUT PETRO DOLLARS AT TIMES.

COULD THIS REDUCE THE USE OF THE U. S. DOLLAR AS THE CURRENCY AND MAYBE HELP CHINA?

>> THAT IS A BIG QUESTION THAT GOES BEYOND THIS CRISIS.

WILL THE DOLLAR RETAIN THERE ARE TWO COUNTRIES THAT WOULD LIKE TO END THAT.

ONE IS RUSSIA.

THE OTHER IS CHINA AND IRAN.

THE CHINESE WANT TO PUSH THEIR CURRENCY.

IRAN IS SAYING THE TANKERS THEY ARE ALLOWING TO GO THROUGH THE STRAIT OF HORMUZ, YOU KNOW, WE NOW HAVE A BLOCKADE.

THEY WOULD BE PAID IN THE CHINESE CURRENCY.

THE QUESTION ABOUT THE DOLLAR, THE CHINESE WOULD LIKE TO DISPLACE THE ROLE OF THE DOLLAR AND DISPLACE THE ROLE OF THE U. S.

>> DO YOU THINK CHINA WILL SUPPORT IRAN MORE IF IRAN IS INSISTING THAT THE CHINESE CURRENCY BE USED?

I THINK THEY HAVE HAD A STRONG RELATIONSHIP WITH IRAN.

ONE QUESTION, YOU KNOW, WILL CHINA TRY TO PLAY A ROLE TO END THIS HOSTILITY.

>> YOU SAY CHINA IS ONE OF THE BENEFICIARIES.

THE OTHER SEEMS TO BE VLADIMIR PUTIN AND RUSSIA.

ARE THEY BENEFITTING FROM THIS SITUATION?

>> YES.

I SAW A CLIP OF A KREMLIN NEWS CONFERENCE WHERE VLADIMIR PUTIN LOOKED SO SMUGLY SELF CONFIDENT SAYING THAT YOU CAN COUNT ON RUSSIA AS A RELIABLE SUPPLIER OF OIL AND NATURAL GAS.

HE BENEFITS IF SANCTIONS ARE LIFTED OR THE OIL THEY DO GET OUT IS SOLD AT HIGHER PRICES.

HE BENEFITS BECAUSE IT HELPS TO FUND HIS WAR.

IT RAISES QUESTIONS IF THE SHORTAGES PERSIST WILL THE SANCTIONS ABOUT NOT SUPPORTING RUSSIAN ENERGY BE SELFERED OR PUSHED BACK?

THE UKRAINIANS KNOW THAT AND ARE LOBBING MISSILES AND DRONES TO IMPEDE THE EXPORT OF RUSSIAN OIL AND GAS.

>> HOW WILL THAT AFFECT THE WAR IN UKRAINE?

>> FIRST IT HAS TAKEN ATTENTION AWAY FROM THE WAR IN UKRAINE.

THE OTHER SIDE OF IT, NO COUNTRY NO KNOW BETTER HOW TO FIGHT DRONE WARFARE THAN UKRAINE.

THERE IS VOLODYMYR ZELENSKYY MAKING DEALS WITH SAUDIS AND OTHER OTHERS TO PROVIDE THEM WITH ANTI-DRONE IES.

RUSSIA, PUTIN CAN'T STOP HIMSELF.

YOU LOOK AT IT AND SAY WHAT DOES HE GAIN FROM THIS.

HE MADE RUSSIA A CLIENT STATE.

BUT THE WAR GRINDS ON.

>> IF THE U. S. LIFTS SANCTIONS ON RUSSIAN OIL, DOESN'T THAT HELP HIS WAR IN UKRAINE?

>> ABSOLUTELY.

YOU KNOW, RIGHT NOW HE NEEDS TO SHIP EVERYTHING THROUGH THE SHADOW FLEET.

THE U. S. HAD A WAIVER.

I THINK THE WAIVER EXPIRES ON SATURDAY.

WE ARE GOING TO SEE THE WORLD NEEDS TO MAKE UP THE MISSING SUPPLIES.

THE OTHER THING, PEOPLE AT LEAST IN THE U. S. SORT OF STOPPED TO FOCUS ON THE WAR IN UKRAINE.

THE EUROPEANS ARE THINKING THEY HAVE A DIFFERENT ATTITUDE TOWARDS RUSSIA THAN WASHINGTON DOES.

>> EVEN IF TRAFFIC RESUMES THROUGH THE STRAIT OF HORMUZ, AND FROM THE PERSIAN GULF WHICH MAY ALSO BE AFFECTED HERE.

HOW IS THIS SITUATION GOING TO ALTER WHAT YOU CALL THE NEW ENERGY MAP?

>> THE WORLD WILL BE DIFFERENT WHEN THIS IS OVER.

HOW DIFFERENT DEPENDS ON HOW IT WILL END.

FIRST OF ALL, IT WILL TAKE MONTHS TO UNSNARL ALL OF THE DISRUPTION OF SUPPLY CHAINS.

IT MIGHT TAKE YEARS IF NOT MONTHS TO REPAIR THE EQUIPMENT AND IT WILL BE THE SENSE OF WHAT SENSE OF SECURITY IS THERE IN THE REGION.

I THINK THAT A LOT DEPENDS ON HOW IT ENDS.

YOU KNOW, YOU STARTED BY TALKING ABOUT THE NIGHTMARE SCENARIO.

THERE WILL BE A RETHINK.

THE CRITICAL QUESTION DOES THE STRAIT OF HORMUZ FUNCTION AS AN INTERNATIONAL WATER WAY OR DOES IT FUNCTION AS AN IRANIAN CANAL WHERE THEY COLLECT THE TOWLES.

I CAN TELL YOU FOR THEM IT WOULD BE UNACCEPTABLE TO HAVE TO DEPEND ON PERMISSION THAT IRAN WHERE THE FUNDING THEY PAY FOR BOTH GOES TO FUND THE IRANIAN IRGC.

THAT IS WHAT THE SYSTEM THE IRANIANS TRIED TO IMPOSE.

>> DO YOU THINK THAT THE GULF STATES AND SAUDI ARABIA WILL EVENTUALLY WORK WITH THE UNITED STATES TO MAKE SURE THAT THE STRAIT OF HORMUZ IS A FREE PASSAGEWAY.

>> IF YOU LOOK AT THE WORLD'S INTERESTS, ASIA AND EUROPE'S INTERESTS YOU WOULD SAY YES.

IT IS SO MUCH IN THEIR INTEREST.

OTHERWISE THEY ARE DOMINATED BY IRAN ENDS UP AS A DOMINANT POWER.

IRAN MAY HAVE LOST WEAPONS AND MAY HAVE BEEN PUSHED BACK IN THE NUCLEAR CAPABILITY, AND THINGS CAN CHANGE IN A DAY OR TWO, BUT AT THIS POINT THEY HAVE WON SOMETHING IMPORTANT, CONTROL OF THE STRAIT OF HORMUZ.

THAT IS THE MOST IMPORTANT MARITIME CHOKE POINT IN THE WORLD.

>> A LOT OF PEOPLE THINK OF YOU AS AN ENERGY EXPERT, AND I THINK OF YOU AS A HISTORIAN.

WHAT COULD HAVE GONE DIFFERENTLY AFTER AUGUST 1978 SO THAT THE IRANIAN AND PERSIAN PEOPLE COULD HAVE REMAINED FRIENDLY WITH THE UNITED STATES?

IN THERE WAS THE REVOLUTION AND YOU HAD A BROAD COALITION.

THEN THE ZEALOTS, IN EFFECT IT WAS A SECOND REVOLUTION.

IF THERE HADN'T BEEN A SECOND REVOLUTION.

A LOT OF ACCIDENTS AND MISTAKES.

IF THE SHAW WASN'T ADMITTED TO THE UNITED STATES TO BE TREATED FOR HIS CANCER, THE SHAW OF IRAN.

WOULD THERE HAVE BEEN A DIFFERENCE BALANCE OF POWER?

THE SHAW, PEOPLE CRITICIZED HIM.

HE WAS AN AUTOCRAT AND HAD SECRET POLICE BUT NOTHING ON THE SCALE AND BRUTALITY OF THE CURRENT REGIME SHOOTING TENS OF THOUSANDS OF PEOPLE IN THE STREETS.

IRAN WAS POISED TO BE A SIGNIFICANT ECONOMIC POWER.

IRANIAN STUDENTS WITH Ph.

D. s IN SCIENCE AND AROUND THE WORLD.

THEY MIGHT HAVE BEEN ON A DIFFERENT VECTOR.

IRAN COULD HAVE BEEN A MAJOR ECONOMIC POWER LIKE WE HAVE SEEN THE ARAB GULF COUNTRIES OF SAUDI ARABIA.

BUT THEY WENT ON A DIFFERENT COURSE.

IT IS SOMETHING WE HAVE SEEN.

I THINK THAT IT MAY BE ONE OF THE SURPRISES HERE.

PEOPLE DID NOT UNDERSTAND THE EXTENT AND THE SCALE OF THE IRANIAN ARSENAL OF WEAPONS.

MUCH HAS BEEN DEGRADED, BUT MUCH REMAINS.

>> DAN YERGIN, THANK YOU SO MUCH FOR JOINING US AGAIN.

>> THANK YOU APPRECIATE IT.