Daniel Davis Deep Dive

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Episode Transcript

Speaker 1 (00:00):
See the talk station, a thirty fifty five KCD talk station.
A very happy Tuesday to you, extra special as always
when we get to hear from Daniel Davis with the
Daniel Davis Deep Dive. That's the name of his podcast.
Find it where you get your podcast, and tune in
every Tuesday at this time to hear what Daniel Davis
has to say. Retire Lieutenant Colonel Daniel Davis, Welcome back
to the Morning Show. I missed you last week. I

(00:21):
understand you were traveling. Yeah, I did.

Speaker 2 (00:24):
I get run into some travel nightmares that it had
plagued a lot of the Iris of the country.

Speaker 1 (00:28):
Awfully sorry to have missed. That's okay. I was waiting
for your thoughtful analysis about where we are. Things don't
seem to have changed since last week, but apparently right
now we are in the low keying it negotiation standpoint
with the Iranians. It seems like every day or if
not weak passes. Now the Iranians position seems to get stronger.
Now they're demanding reparations from the United States in addition

(00:51):
to all of their other seemingly untenable demands or I mean,
we're gonna completely withdraw from the area. We're never gonna
send a ship ever through the Strait of Horror moonvees.
We're gonna pull all of our military out of an.
I mean, their list of demands seems to be crazy,
but Donald Trump suggested, now we are in not a
kinetic stage of the war, but maybe an economic warfare.
Is this sort of a battle of attrition.

Speaker 2 (01:11):
We're now in, Daniel Davis, you know, I think it's
more like we don't know what to do next because
all those new demands you're talking about, actually none of
them are new. They're all from the fourteen point Memorandum
of Understanding that we signed. But one of the big
big differences is that now Iran is saying we will
get all of those things up front, everything that was

(01:33):
in it, all the categories you mentioned in a couple
more before we'll open the straight of horror moves. The
first time it was will lift the blockade, you'll lift
your blockade, you'll do the United States was supposed to
do a couple of things with sanctions and releasing frozen funds,
and then everything else is going to be negotiated. Now
then they're saying, because in their interpretation, we didn't abide

(01:55):
by the terms, especially paragraphs one in five. They're saying, now,
then four will do step one. You're going to do
everything else on the list now. I think that probably
that's because they realize that they have the leverage. They
realize that everything that we have with our military has
not worked. We've tried two rounds of kinetics with the
forty Day and then the thirteen Day, and the same

(02:17):
missiles firing at the same targets of which are basically
granite mountains, aren't going to have a different outcome, and
they know it. So they are being hurt by the
way from our blockade. There's no doubt about that. A
lot of the things that are claimed are accurate, but
it's not something that the Iranian side can't handle for
an extended period of time. But we are facing some

(02:37):
real problems, and one of the most acute right now
is jet fuel because like forty percent of the world's
jet fuel comes out of the Middle East or is
produced out of products from there, and by some estimates
I was looking at just last night, we have three
maybe four weeks at current rates of usage before the
airline industry, especially in Europe, they're going to be the

(02:58):
hardest hit is going to have to start cutting back
flights because they simply don't have enough fuel to operate.
It's not even a matter of how much. It's of
course higher, but then diesel will be right behind that.
So we can't go in this this situation much longer
without having dramatic economic implications for the Western world, which
will eventually hit us too.

Speaker 1 (03:19):
Of course it'll hit us, and obviously it's hit us
all ready to a certain degree. But I suppose, first off,
ken Iron manage these economic hardships, and they are pretty
damn significant that the people are struggling under. Can it
manage those economic hardships indefinitely? I mean, just ignoring November
elections and what's happening with the Straight of Horror moves closed, open,

(03:40):
doesn't matter, just the whole economic situation they're facing. How
long can they hold out with that? Yeah?

Speaker 2 (03:46):
Probably a long long time, much longer than we too.
And here's the reason why Iran is basically a self
contained country. They have all the natural resources. If their
entire borders got sealed off, all of them land and sea,
they would be able to to survive because they have
all the food they need. They have the water they need,
and they have the petroleum products that they need and
the ability to refine them, so they can contain themselves

(04:09):
set centered, even though you know they won't be getting
any external money, so that's going to cause a big
problem with their economy. But then lack of the Russians
did when we put all those sanctions on them at first,
and especially on everything they had connected to the West,
they retooled and then figured out how to do it
with other assets. Now they have eight I'm sorry, three
thousand miles of land borders with other countries, so they're

(04:30):
not shut off just because the Strait of Horror moves
is shut off. So they can retool. But they've also
done this for forty seven years. They've learned how to
live underneath economic hardshipped imposed by the West, whereas we
have had uninterrupted flows from all the oil and everything else,
and there's not as many workarounds for us in that
jet fuel. That's the long pull in the tenth that

(04:51):
could be the most important failure on our side that
we can't mitigate.

Speaker 1 (04:56):
Well, we all know markets are not static. You know,
we had peak LOA at one time, and then we
figured out how to frack which opened up all kinds
of oil reserves, and Scott sent secret Turbercent noticed it
the other day and he made a commentary. Iran has
mistaken a tactical threat for a durable advantage by repeatedly
signaling its willingness to disrupt the Strait of Horror moves.
Tehran hasn't strengthened its hand, it's accelerated the market's exit.

(05:18):
And then there was an analysis about the United Arab Emirates
building out its bypass, the new pipelines that are being built,
the slow moving away from the even needing the Strait
of Horror moves, much like Iran cut off any need
for anything involving the rest of the world self sustained.
As you just pointed out, it's a lesson I think
we needed to learn from COVID. Guess what, we don't

(05:39):
make anything here anymore. We might want to start reshoring
that so we have some independence from the rest of
the world and its disruptions. So over time I can
see a move away as it's happening real time right
now with the Strait of Horror moves. Is there a
day down the road when we won't need it? Anymore.

Speaker 2 (05:56):
Daniel Davis, Well, there's I don't think you'll get a
place where you don't need it because even the workarounds
UH rely on on other means to get things out
UH some overland some over poplines, et cetera. That but
that the issue is, you know, it takes considerable amount
of time. But the shortness, the short sightedness of that

(06:16):
that idea UH unders or fails to consider the fact
that even if you have these bypassed routes and these
other pipelines et cetera, the pumping stations and the fields
are still there. You haven't moved them. So if if
Ron wants to say, hey, you you know, if something happens,
they're going to say, hey, we're not gonna worry about
you know, the ship that can pass or not pass

(06:37):
through will go after the pumping station. So there's still
a risk to it that you can't get away from
because of its proximity to the region. And it's of
course it takes a long time. And I'm for that.
I think that that does make sense because if you
minimize the centrality of the of the straight of Horror
moves over time, then that does less than their strategic value,
there's no doubt about that. But do we have the

(06:57):
seven years or so that it's going to take to
get that on. That's not going to help us now,
even if it might help us later.

Speaker 1 (07:03):
No, I it's a reason I brought it up in
the context of how long Iran can go under the
economic problems they're struggling with sanctions, et cetera, versus how
long it's going to take for you know, the market
to catch up with the reality of the straight upward moves.
Isn't a great place to be? Is there a workaround solution?
And obviously there are because people they're working on them
right now. So you know who's going to win that.

(07:23):
I suppose over time again markets doing what they do,
they'll try to avoid risk and they'll try to go
something that's better, more stable, less prone to well, they're
assets being removed pivoting over. Can you give my listening
audience kind of a recap of where we are for
the last couple of weeks vice of you, Russia and Ukraine.

Speaker 2 (07:41):
Yeah, there's there's there's some real problems over there for
for our side, because on the one hand, the Western
media has loved to highlight all of these additional and
longer range strikes by the Ukraine side into Russia. There
was more overnight. They hit another Wildberry's plant. I think
it's like the seventh one if I'm not mistake. And
they they also and I think the day before, hit

(08:02):
another oil refinement facility, et cetera. But we have to
understand the scale is so massive in Russia that they're
able to a lot of these that that that that
were hit other than the warehouses, but the fuel facilities
especially that were hit like three and four weeks ago,
most of which have already been repaired. So these things
are temporary kind of like they have been on the

(08:23):
Ukraine side over the last almost three years now. A
lot of the stuff that Russia hits, they they were
able to repair it and get it back up. Problem is,
Russia has a lot more missiles now and so they
can re engage and re hit them and knock them out.
And of course I think everybody's now aware that Ukraine
has effectively run out of interceptor missiles and which were

(08:44):
you know, didn't have a great intercept rate anyway, but
now that they have none, and so Russia has literal
free reign to hit anything they want anywhere in Ukraine.
And they've been really hitting heavy the ports in Odessa
and Microlive and Zapparigia overnight in this south and they're
hitting targets that have a real impact on the economy
of Ukraine. Stuff that's not easy to fix. And when

(09:06):
you're talking about a country that's massive like Russia and
relatively small like Ukraine, the target sets are a lot
more concentrated on Ukraine. They can't get into an attrition
warfare like this, It won't work out, especially if you
have literally no air defense.

Speaker 1 (09:20):
Yes, and you know, one of the things we learned
early on in this conflict, this war between Russian and Ukraine,
how plentiful the bounty of crops that come from Ukraine
historically have been. Are they back to working the farms
in Ukraine or has that area been hit? Is it?
Is it presenting a problem moving forward in terms of
food supply.

Speaker 2 (09:42):
It has been damaged in terms of just the physical farms,
just because a lot of the frontlight has now moved
into some of that bread basket area you're referring to.
But there's a whole lot more that has been But
the big problem is because Russia is taken out Odessa
and Makolaiev. That's where a lot of the ports where
these things were sent out, and that has been, if
not shut down, severely curtailed, like seventy eighty percent reduction

(10:03):
in the capability, and so they're not able to get
their product out right now. There's been some big problems
with that for the last month or so as the
Ukraine's struggled to try and repair the damage. But Russia
keeps coming back with these huge onslaughts and keep destroying
even more. And right now it's effectively shut down the
ports and I'm not sure how they're going to get
by this one, do you know?

Speaker 1 (10:24):
And for we Park Company, one last question on Ukraine.
Has there been anything have you read anything? Is there
been any studies on how the Ukraine's future economic future
will be impacted by well, the significant reduction in men
military age, men who are no longer going to be
able to be out in the fields working or farming
or manufacturing because they died in a war.

Speaker 2 (10:43):
Oh yeah, massive problems with that lot. A lot of
people are already saying listen that this the combination of
how many have been killed and severely wounded and how
many have left, likely never to come back. Is just
absolutely catastrophic there, you know, the replacement range or whatever.
I forget the birth rate. You have to have like
two points something to be able to maintain a country.

(11:06):
They're like below one right now because there just aren't men.
That's so many have left in here.

Speaker 1 (11:11):
Of late.

Speaker 2 (11:12):
I want to say it was like two hundred thousand
of the younger men were allowed to finally leave. And
so now that the younger guys that they're going to
need for their future bailed as soon as they had
the chance, on top of everybody that's already been killed
or wounded, and it's a pretty bleak situation that not
enough people in the West pay attention.

Speaker 1 (11:31):
To Daniel Davis. Deep Die. That's what we get every
Tuesday here beginning at eight third in the fifty five
Cassey Morning Show. Find his podcast where you get your podcast.
Daniel Davis, thank you so much for the analysis. Always
enjoyable talking with you. Look forward to next week and
do it enough. That's a great week. See you then, brother,