0:04 Good evening, friends of money.it. We are ready for another live interview. This morning, we dealt with the more geopolitical side of the Ormutz affair, and we will do so shortly. Tonight, we also want to understand the energy aspect, and to do so, I would like to thank the Mostines Flores, who is back with us after a while. We can also give you a brief update at this point on the activities you are involved in. In the meantime, welcome to the Mostines. Thanks for the invitation, Fabio. Welcome back! So, De Mostren, who is in charge of energy at CER, which is the European Research Center, is also a contract professor of Geopolitics of Energy at the University of Padua. And we would also like to point out that he has also reactivated his
0:52 YouTube channel, which is called De Mostren's Floor. Therefore, those who want to learn more and follow De Mostren's activities can also go directly to his YouTube channel. So Demastri, I would start with these alarms that now seem to have subsided a bit. Today there is also a press conference, so we need to look for international sources. But in any case, in the last few weeks, in the last 10 days, there has been a lot of talk about the risk of an energy lockdown, of plans, to possibly start in May. We have started talking again about turning down the air conditioners, MAPA, smart working, MAPA seems like the type of emergency communication that we saw almost at the beginning of the COVID period has come back,
1:39 obviously for other reasons. So I ask you if from your point of view, the risk has been averted or not. Well, from my point of view, Fabio, The situation looks like this, which depends on how long the conflict will last and how long the Strait of Hormuz will remain closed. Obviously, we can, the two things do not necessarily coincide. In fact, there is a possibility that the conflict could end. However, concurrently, the opening or more accurately, the immediate reopening of the Strait of Hormuz is uncertain.
2:27 The timeframe of this conflict, woe ne therefore, is crucial for understanding the severity of the crisis we're facing. Determining whether it will be truly severe depends on its duration. I basically identify three scenarios, a more optimistic scenario based on the three months from the beginning of the conflict, therefore from February 28, 2026. This first scenario, which will not have dramatic repercussions on the economy of Italy, the European Union, and the world as a whole, is however coming to an end. It's important to remember that even if the conflict were to end this coming Monday,
3:14 the complete reopening of the Strait of Hormuz, with the resumption of both inbound and outbound traffic of all vessels, not just oil tankers, would likely necessitate a period of several days, possibly even several weeks. This first scenario, however, is unfortunately coming to an end, and I do not see, at the moment, the possibility of the conflict ending in a few days. and therefore the risk is that of moving towards a second scenario. In the medium term, Eich, which could see the conflict continuing and the closure of the strait until this summer, the end of this summer. The effects on the worldwide economy, naturally, would be considerably worse. and the International Monetary
4:05 Fund itself is already cutting down its global growth projections in an especially substantial way. If, on the other hand, this is a hypothesis and it is obviously the worst case scenario, if it were to continue beyond the end of the summer and therefore even a year or 10 months after the closure of the Strait of Hormuz, Well, then the situation would become even more serious and there would be a risk of recession and at the same time inflation, which in technical terms, economists call detachment. So I would suggest three scenarios and at the moment we are still, so to speak, moving within the first one.
4:53 With what data, Fabio? The figures show that global oil supply was reduced by 7.5 million barrels in March. Remember that world consumption is around 103 to 104 barrels of crude oil per day. In the initial 10 days of April, a noticeable increase in supply reduction was observed, reaching a daily average of 9 million barrels. However, Early projections from OPEC, the International Energy Agency, and the U.S. Energy Information Administration anticipate a more significant shortfall, a reduction of 11 to 12 million barrels of crude oil per day within the next few weeks.
5:45 It is therefore clear that the more days pass, the more conflict continues, and the strait remains closed, the worse the situation will be. I mentioned oil first, A, but my point applies to natural gas as well. This includes, most importantly, liquefied natural gas, a significant portion of the fossil fuel trade that passes through the Strait of Hormuz. However, the Strait is not solely used for fossil fuels. There has also been much talk about this, Dahl. Perhaps it has been simplified a bit online. That is, Dahl. It has been said that a 20% share of oil transits through Hormuz.
6:33 It has been pointed out by many that, oh, if this issue affects only 20%, then how can it lead to such a severe disruption of energy supplies, particularly for Europe? Perhaps we could explain this point more thoroughly, specifically emphasizing the true significance of ORM. For those unfamiliar with the subject, and let's be frank, those who didn't regularly follow this type of news, its emergence as a crucial and pressing issue was undoubtedly a surprising and unexpected development. Yeah, it's a bit like the TTF, the European natural gas market, you know, the one in the Netherlands from a few years ago, that unfortunately everyone has become all
7:20 too familiar with. So first of all, Fabio, let's start by saying that 20% is not a small amount at all. A 20% loss, a truly substantial amount, is a significant blow. Fortunately, we're not seeing that level of loss yet, but the impact of an 8 to 10% reduction is still considerable. This results in substantial issues regarding our supply chain. although the full extent of the supply problem won't be felt for several weeks, and it also has a significant impact on our pricing structure. The matter of pricing, on the other hand, has a direct impact on us. Consequently, the 20% figure representing, as you correctly pointed out, the volume of
8:07 crude oil transit through the Strait of Hormuz is a highly significant value. After that, in my opinion, we need to highlight another aspect that is occurring at the moment, which is perhaps creating a bit of confusion, and that is the price to which the brand is referred, as well as, so to speak, the paper price, brand futures that indicate a certain price, and instead the so-called brand dated, which instead refers to physical exchanges. Concrete Exchanges Well, these two prices are usually very close, while at the moment we are seeing
8:54 a particular situation that is difficult to analyze and interpret so that the brand dated, that is, the real exchanges, the physical exchanges, the supply and demand, indicate a brand price that is $30, $35, even $40 higher than the brand, that is, the futures, the paper price, so to speak. This demonstrates what? demonstrating a drop in supply and particularly high demand. Now, for a smaller quantity of raw material. Now the problem is trying to understand why the futures market has such a particularly significant discrepancy
9:40 from the physical market. And I have to say that the analyst colleagues I've spoken with seem to be avoiding this question, which admittedly is quite difficult, but they confine themselves in quotes to pointing out a certain kind of market manipulation. Now, I don't know if there could also be market manipulation behind it, a role of speculation, I would prefer to put forward another interpretation and I must say right away that I sincerely hope I am wrong in my interpretation. Namely, the higher prices of the dated brand, that is, of the physical one actually requested, are such that is, they
10:28 are much higher than the paper ones because in all probability the latter is, um, discounting the arrival of an economic crisis, which will therefore evidently determine a destruction of demand. hence the lower prices. Now, I want to emphasize that I really hope my interpretation is, how shall I say, mistaken. If not, it implies we're staring down a very serious economic crisis, one affecting not only the European Union, not only our nation, EFACSA, but the entire global community. With regard to Italy, let me clarify one final point. I've encountered reports suggesting that our country would be
11:19 largely unaffected by this situation, as our crude oil imports from the Middle East are comparatively low. That is not exactly the case. First of all, we import 13% of our crude oil from the Middle East, in particular from two countries, Ili, Saudi Arabia, and the United Arab Emirates. That's a considerable sum, and... To put it in perspective, up until 2022, prior to the Ukrainian crisis, our crude oil imports from the Russian Federation were approximately slightly more than 10% of our total consumption. The Russian Federation was, at that time, a major supplier. In
12:05 the present situation, we're therefore discussing a level of production that considerably exceeds the quantity we previously imported from the Russian Federation, and which presents significant challenges in terms of replacement. And it's even more obvious when you consider that, ah, with production and supply both declining, everyone is naturally rushing to secure the limited remaining supply. And here comes a second problem, which has to do with the types of crude oil quality. In fact, there are different types of quality without going into too much detail, and the qualities of crude oil must be, how can I say, matched with the type of refinery and the refining system, which varies from country to country. As a
12:55 result, every crude oil, as you can see, in a very simple way, suits its own refinery, and this is a second issue. Subsequently, I think our nation has a third issue, stemming from our heavy reliance on natural gas within our energy structure. This reliance, however, is also incredibly beneficial in numerous respects. The quantity we utilize is, for all intents and purposes, the same as that of oil. Approximately 80% of our primary energy consumption is oil and natural gas. They are met almost equally by oil and natural gas. Yes, The closure of the Strait of Hormuz has posed a significant challenge for us. This impact is evident not only in the quantities and, at present, the pricing of our crude oil imports, but also in the disruption of our liquefied
13:42 natural gas supplies. We previously relied heavily on Qatar for these supplies, a country that had stepped in to replace the Russian Federation as a key supplier to both Italy and the European Union. More precisely, ARI. Qatar supplied 10% of our consumption until 2025. Here too, 10% is not at all insignificant. Of course, at the moment we have to go and ask for liquefied natural gas from other suppliers. There are few of them around, and they sell at particularly high prices, starting from the price of the United States of America and U.S. liquefied natural gas. Here too, it is worth remembering that Qatar and the United Arab Emirates albeit to
14:28 a much lesser extent, contribute approximately 25% of global liquefied natural gas exports. So the loss of this significant amount is, of course, a considerable problem for countries such as Italy. They must, at this time of the year, gradually rebuild and replenish their energy reserves to ensure adequate supplies for the approaching winter months. In terms of Italy, we have two pieces of positive news. The end of the cold season saw us with fuel stocks averaging higher than the European Union average, particularly compared to Germany's situation, which is a definite advantage. This represents
15:14 a positive development for our country, as does the positive global outlook concerning the anticipated increase in global liquefied natural gas production capacity by 2026. This increase effectively mitigates, to some extent, the reduction in production capacity stemming from the United Arab Emirates and, particularly, Qatar. This reduction in capacity is expected to last for a considerable period, not just a few days or weeks, but rather several years, given the apparent destruction of Qatar's liquefied natural gas production facilities. In short, and here I conclude, the risk I see is that Europe, on the one hand, and the European Union and therefore also Italy and Asia on the other, will have to compete to grab the liquefied natural gas in circulation.
16:03 This will most likely result in higher prices during a specific time of the year, specifically the spring and summer months, a period when the price of natural gas is typically lower due to lower consumption. Provided that Fabio doesn't decide, as the CEO of N.E. Descalzi has finally clarified, to reopen to the Russian Federation neither in terms of natural gas nor in terms of oil derivatives. The situation demands careful consideration of economic implications and geopolitical factors. In fact, that's precisely what I was about to ask you. Your thoughts on this particular stance. It's a stance that typically comes from those who have, shall we say, taken a dissenting view of the EU sanctions policies and the complete total closure in their dealings with Russia.
16:54 The fact that it comes from a technician, or at least from someone who represents any like Deskaldzi. So much so that Prime Minister Maloney herself said, I understand Deskaldzi. I hope there will be peace in 2027 because Deskaldzi says, without this Russian gas, there is even a risk of a blackout in Europe because there is a problem of costs and also a problem of quantity. So now the problem is also twofold. The fact that Descalzi has made this request raises the possibility of opening up a new discussion on this topic. Alternatively, is it something that, even from an academic perspective, we might anticipate or expect to see emerging within current discussions? But look, Fabio, let me first take a quick step back.
17:48 You see, less than three weeks ago, With the conflict already underway for several days and with crude oil prices already hovering around $100 a barrel, Claudio Descalzi expressed his opinion, asserting that, with every likelihood, such high prices would result in ENI increasing its dividend payments to shareholders. I voiced my open disapproval of Descalzi's statement because at that time, Although the situation may not have appeared so critical to Descalzi, even a month prior, I stated that I did not believe it to be a justifiable consideration, namely, the idea of prioritizing shareholder dividends. In this instance, we once again
18:37 confronted a critical situation. Consequently, it was likely necessary to explore a considerably different approach to both political and economic policies on the part of the government and ENI itself. This approach should be geared towards addressing the crucial needs of our nation's capital and labor factors, specifically the high energy costs affecting businesses and the escalating household utility bills. Let me reiterate, the goal is to directly address these immediate economic pressures facing both industry and families within the country. Three weeks or so have passed, and I've observed that Deskalzy, in a very interesting interview, has shifted his stance. His remarks now indicate an openness to engagement with the Russian Federation, a stark contrast to the consistently harsh and unforgiving attitude he maintained towards Russia after
19:25 2022 and until very recently. Yes, I find this change in position to be particularly interesting and positive, and I sincerely hope that the government and the parliament working together can duly acknowledge it. Fabo, honestly though, this isn't sufficient. In my opinion, there are actually two issues we need to address. The first is that, là-bas, since 2022, we have understood that we have entered a different context. The 2022 crisis has, at the very least regarding energy, which is increasingly important for the economies of our countries, left us at a point of significant rupture, a point of marked
20:15 discontinuity where energy itself has become even more central. So I wonder, is it not perhaps appropriate to rethink our country's overall energy policy? To do this, is it not perhaps appropriate for the government, parliament, and the Italian state not to take back control of a series of levers of economic and energy policy after the privatizations of the 1990s? I believe that it would be particularly appropriate not only with regard to ENI, but also with regard to INOL and others.
21:03 Then there is a second, more political, if you like, political diplomatic problem. De Scalzi changes his mind and turns to the Russian Federation. Yet nowhere does it specify that the Russian Federation may respond favorably to our requests, meaning I naturally hope that could happen. De Doran. But there's no guaranteed commitment from their end. A month ago, immediately after the events of February 28, that is, the beginning of the conflict, Vladimir Putin had expressed himself in this direction. I observe that, over the last few hours, his spokesperson Peskov has expressed himself with a somewhat colder tone. He openly stated that the Kremlin will assess Europe's demand for natural gas,
21:49 and determine whether sufficient quantities will remain to supply them as well. This assessment is made in light of the current influx of continuous requests from Asian countries for their gas resources, including both conventional natural gas and liquefied natural gas, encompassing a full spectrum of petroleum-derived products. Therefore, I repeat, This new positioning by Descalzi is welcome. It is positive, but it is not enough. Instead, it would be necessary to reopen a political debate in Parliament on the role of the state, and therefore also on the role of ENI, for a real energy policy that has a simple and clear objective, the sovereignty and energy sovereignty of our
22:40 country. What does this mean in the 20th century? Yes, it is reminiscent of when you go, I don't know, to a city years ago where there was a certain shop, right? You go back there after years and you take it for granted that the shop is there. Show that it has what you need, right? I have this thing about gustia, right? Perhaps it is a bit like the fact that we go there anyway, forgot that it depends on us. That when we feel like it and want it, ea, we go and ask them to sell it to us. Ea, maybe instead the things, or they sell it to us at the usual price. Ea, Maybe over time things may change. There has been a lot of alarm about kerosene, therefore in the particular air transport sector.
23:28 Again today, the chief of the IEA commented, Europe still has enough fuel for aircraft for six weeks. This shortage could start at the beginning of May if tankers don't start traversing the Strait of Hormuz. So is the aviation fuel sector more particular than everything else? Yes, let's call it jet fuel, and I believe that this warning should be taken into particular consideration, Fabio. And there are problems on the supply side. There have already been, and not just today, but for almost a week, several airports in our country that have made this problem explicit. I'm talking to you, for example, about Bologna, and Bologna
24:17 Marconi Airport is one of them. It was initially five Italian airports, airports belonging to our nation, that came to light with a considerable number of difficulties. That is to say, Pani, they quite openly stated, I have to say, that within the next 34 weeks, they would experience significant difficulties in assuring flights with durations under three hours. And in the event that they had to choose, Whether or not to allow flights with a flight time of more than or less than three hours to take off, they would have given priority, SPEA, obviously, 1E, to special flights, such as those concerning health. They would have given priority to flights longer than
25:05 three hours. Thus, I think we should seriously consider this warning, because there is genuinely a problem concerning jet fuel availability for flights now. In the meantime, today's news, at least according to Trump's words, even if it indirectly concerns the issue we are discussing, namely the Israel-Lebanon truce. President Trump announced a 10-minus-day ceasefire, effective tonight beginning at 11 p.m. in Italy, he stated. So we should also address the conflict. Let's call it a conflict, even if it is clearly a unilateral conflict. Israel and Lebanon have a 10-minus day
25:53 truce. Now, oh, back to the initial topic. The discussion has included comparisons to the oil crisis of the early 1970s with the attendant measures such as car-free Sundays, the odd-slash-even license plate scheme, and other similar initiatives. It's a fair parallel. That is, that crisis, although different, is perhaps similar to this one in terms of causes. Are there any differences in how do you see this? And this is a particularly interesting question and first of all we would like to clarify to those who are following us that we are facing the eighth energy crisis, let's say, E-chain to Psi-A-am, from the post-war period to today and it is always difficult, E-mys-nai, Fabio, I-A-E-chain to Psi-A-y.
26:44 To draw parallels and comparisons between historical periods that are so distant from each other and with specificities. You are referring to the 70s. We were in the midst of the Cold War in a geopolitical context that is completely different from today's. Now, in my opinion, in order to answer this question, we would need to make an assessment that takes into account three variables. And the three variables are obviously how much prices have changed, have they risen at that time and today? And obviously we need to do it in real terms.
27:35 Well, the second variable that we should compare refers to quantities, that is, more, how much production was reduced 50 years ago or more compared to today, and last but not least, the duration of the conflict at the time and the duration of the conflict today. So we face these are the three variables from which to start in order to be able to draw a minimum of a parallel and obviously with the price differential then we would understand ask but it would take a few more months ask also the increase in the inflation rate. Now as far as the price increase is concerned I must say that at the
28:22 time prices in real terms increased much more significantly compared to what we have recorded today, because at the time we had increases of 300%, even 400% at certain times, while today we do not have a situation of that kind. In contrast, the current reduction in quantities is notably significant. In relative terms, DAH, this reduction is gradually starting to surpass the decrease observed 50 years ago. However, we're not yet in a position to offer any definitive information regarding the duration of the conflict, the length of the interruption to the Strait of Hormuz, or a comparative analysis of the current crisis with that of 50 years ago. This is due to the fact that today's crisis remains ongoing. Fabio While that's true, I
29:13 think a mere comparison of these variables is insufficient. This is a common practice among many analysts, and, I want to reiterate, it's a valid approach. but I do not believe it is sufficient for a very simple reason, and that is, in my opinion, there is a fourth variable to which we should trace the previous three and which refers to the International Division of Manufacturing and Labor. What do I mean, Fabio? I mean that at the time, despite the crisis, Wash everyone was aware that once the crisis was over, the center of the world economy, the center of world manufacturing, even if in a world different from the current one, would still be located on both sides of the Atlantic. Today, however, the situation is particularly different,
30:02 with the two sides of the Atlantic, the United States on one side and the European Union and the Eurozone on the other, no longer being the beating heart of the planet's manufacturing sector. which has instead shifted to Asia and its center, evidently China. Therefore, the repercussions of the current crisis, both in terms of prices and unfortunately also in terms of quantities, will have an impact, above all, on the European Union and the Monetary Union, which in my opinion will be much more serious than those of 50 years ago or potentially much more serious than those of 50 years ago. Actually, I'd like to draw your attention to a significant point regarding our country, Italy. Industrial production declined by 6.1% in 2025 as compared to the figures from 2022.
30:53 This figure, of course, cannot be explained solely by the cost of energy. That's quite improbable. However, I strongly believe that the cost of energy plays a very significant role in this decline. So this last aspect, which we could summarize as a sort of deindustrialization process of the European Union and therefore also of Italy, is what worries me the most. So it is not enough to simply compare today with yesterday's crisis regarding certain energy variables, strictly energy related, but we must, in my opinion, make an effort to place them in a broader context that, from an economic point of view, no longer sees us expressing a balance of forces similar to that of 50 years ago, but rather
31:40 a much smaller one, which risks becoming even thinner. I have one last question for you. If this whole situation can push forward on two fronts, meaning it can lead to a renewed focus on the green agenda, the green agenda as understood by the European Union in recent years, then paradoxically we could try to electrify even more, while at the same time recognizing that electrification also requires a specific type of energy, and we can thus promote nuclear power once more. So this is a debate that has clearly already been reopened, but also, the other day Minister Piquetto Frattin said that the government is moving forward on its own path, RAFO, So much so that they are also trying to identify areas for waste that
32:27 no one wants, raffle, clearly in the territories. So can it push this situation forward with the emergency, uh, the contingency, uh, to make people digest what has not been digested in recent years? Well, I will answer the second question first. Well, the government can certainly push in this direction. Oh, there is no doubt about that. Well, right or wrong, it is the right of the current government to raise the issue of nuclear power. I would, however, like to emphasize that even if our nation were to re-initiate the production of nuclear energy, this would not resolve the issues we are facing.
33:17 In the sense that, unless there is an investment of this kind, but frankly there is no money to do so, to reach a level of production similar to that of France, which covers 36 to 38% of its primary energy consumption through nuclear power. I repeat, it seems to me to be a frankly science fiction hypothesis. Well, if we need to understand that one thing is to reopen to nuclear power and therefore diversify the sources of our energy basket, me it, and this can also be done. It is a political decision that a government has the right to make. but it does not solve the problem at its root. This must be absolutely clear, otherwise we risk sending a message to those who are listening to us and
34:04 who are in favor of nuclear power, but even if they are against it, monhe, that it is absolutely wrong. The situation is different in other parts of the planet. I am thinking in particular about Asia, where, first of all, Investments in nuclear power never ended. This is because, as we know, our country has had a unique history since the referendum of 1987. In contrast, other Asian countries haven't faced a similar political climate. And consequently, they have consistently pushed ahead with nuclear power development. In the coming years, or rather even today, I am talking in particular about China, but I am also talking above all
34:49 about the growth of India, They will certainly make increasing use of the nuclear issue thanks to the technology and infrastructure of the Russian Federation and Rosatom, just to be clear. Well, regarding the first question, which is a good question, that is, basically the attitude of the European Union towards the Green Agenda. Now, I frankly hope that the European Union does not repeat the same mistakes that were made after 2022 for the umpteenth time. It is now clear to most people that the timescales for the European Union's Green Agenda
35:36 are not those that the European Union had envisaged. They inevitably involve considerably longer timescales. This is due to the fact that these timescales are associated with particularly significant costs and also with objective limitations inherent to renewable energy sources. We have, regrettably, not yet been successful in addressing or resolving these limitations, even from a strictly technological perspective. And so from this point of view, yes, the European agenda needs to be revised, but in the opposite direction to, let's say, post-minus 2022. I repeat, nah, the timeframe needs to be extended, nachu, the costs need to be
36:21 spread over years, nachu, decades. 2050 is probably not the right target. We definitely need to increase this time horizon. Some statements issued by the European Commission over the past few days and weeks, I believe, indicate a shift in their perspective on this matter. And that is, of course, Absolutely essential. However, Fabio, we need to get to the heart of the matter because this is not just about longer time frames and significant costs. It's essential we acknowledge and confront the undeniable, real-world limitations we face, irrespective of our personal feelings.
37:11 These limitations force the European Union to seriously consider the issue of its renewable energy supply chain, a chain we must call the supply chain, I apologize for the Englishism, and its considerable shortcomings. So what does this mean? This entails that if the European Union is serious about pursuing this course of action in a manner significantly different from its past practices, Considering both the timelines involved and the allocation of costs over a considerably extended timeframe, it must concurrently strive to cultivate robust collaboration with those who are not facing these specific challenges. And I am thinking of both rare earths and technology.
38:02 Here, China's presence and capabilities are clear to everyone. So either it opens up politically to close cooperation with China, on green issues, environmental issues, or else in my opinion, it will not be enough to even move the time horizon forward. This poses problems. It certainly poses contradictions. Fabio certainly poses a series of contradictions. But it is precisely the task of politics and diplomacy to address these contradictions that exist. They should not be put, so to speak, under the table. They should be addressed but they should be addressed right now. China is available from this point of view.
38:50 After our foolishly abrupt termination of relations with the Russian Federation, we're now faced in 2026 with De Scalzi's request for a renewed connection. This is particularly ironic, given that the European Union still anticipates a complete cessation of Russian natural gas imports in 2027. The situation is truly amusing, to put it mildly. Thank you. Thank you very much to the Mostines Floros for these analyses, which are, as always, very in-depth in helping us to better understand what is happening. See you soon. Have a nice evening. Thank you. M.
