A softening economy will hit crude oil demand next year, says Again Capital’s John Kilduff

John Kilduff, Again Capital founding partner, joins ‘Squawk on the Street’ to discuss the oil and energy outlook for 2024, the impact of the Red Sea crisis, and more.

>>> WELCOME BACK TO SX”SQUAWK O THE STREET.” THERE IS SERIOUS PRESSURE, WTI AND BRENT COMING OFF THEIR BEST WEEK SINCE OCTOBER. JOHN KILDUFF JOINS US NOW. HAPPY HOLIDAYS. GOOD TO SEE YOU. >> SAME HERE. GOOD TO SEE YOU. >> THANK YOU. 75, WHERE WTI SITS TODAY.

WHAT’S YOUR OUTLOOK FOR THE YEAR AHEAD? >> THE YEAR AHEAD WE’LL SCALE SOME HEIGHTS TEMPORARILY BUT THERE’S BIG HEADWINDS HERE IN TERMS OF THE ECONOMIC OUTLOOK. THE REASON THE GLOBAL CENTRAL BANKS ARE CUTTING RATES IS NOT JUST BECAUSE THE INFLATION SITUATION HAS POTENTIALLY BEEN

TAME, BUT ALSO BECAUSE THE ECONOMIC OUTLOOK IS SOFTENING. THAT’S GOING TO SPEAK RIGHT TO CRUDE OIL DEMAND AND ENERGY DEMAND FOR THE NEXT YEAR AND WITH THE UNITED STATES DOING WHAT IT’S DOING IN TERMS OF RECORD PRODUCTION, SKY HIGH EXPORTS IN CRUDE OIL AND REFINED

PRODUCTS, OPEC PLUS CAN’T CUT ENOUGH TO SUSTAIN A PRICE MUCH ABOVE WHERE WE ARE RIGHT NOW ACTUALLY. >> DOES IRAN REMAIN THE BIGGEST WILD CARD IN HOW WE NEED TO THINK GEOPOLITICALLY, WHETHER IT’S WHAT’S HAPPENING AS WE SPEAK IN THE SUEZ OR, OBVIOUSLY,

THE SITUATION IN GAZA? >> IT DOES. IRAN IS SORT OF THE AFTER THE HOLIDAY DEAL FOR MTHIS MARKET. THEY KEEP TRYING TO MAKE TROUBLE, WHICH THEY’RE EFFECTIVE AT, BUT THAT’S THE LIMIT OF IT. IT’S SOME TROUBLE. THEY ARE NOT GOING TO BE BLOCKING THE STRAIT OF HORMUZ

ANY TIME SOON AND CAREFUL ABOUT WHO AND WHAT SHIPPING ASSETS THEY TARGET AND TO THE EXTENT THEY MAKE TROUBLE FOR THE OIL MARKET IN A BIGGER WAY, THEY WILL HAVE PRESSURE, MAYBE NOT FROM THE UNITED STATES, THEY WON’T LISTEN TO US, BUT THEY

WILL LISTEN TO CHINA WHO WILL PAY A DEAR PRICE FOR ANY SUPPLY DISRUPTION EVENTS THAT WOULD BE ENGINEERED BY IRAN. WE’RE HARDLY ALONE IN TERMS OF POUNDING THE TABLE AND TELLING THE REGIONAL ACTORS TO CALM IT DOWN, AND IN TERMS OF THIS RED

SEA, THESE RED SEA ISSUES WE’RE HAVING IN THE SUEZ CANAL MY MONEY IS ON THE FIFTH FLEET TO KEEP THE NAVIGATIONAL WATERS OPEN. I THINK THAT’S THE SMART MONEY BET. FOR THE FEAR AND EVERYTHING THAT GETS SOAKED INTO THE MARKET FROM TIME TO TIME THE REALITY IS JUST

THAT, THAT WE’RE ALREADY SEEING MERSING AND LLOYD WILL RETURN TOMORROW AND AGAIN, IT’S JUST THE — >> ITS APPEARS TO BE GETTING WORSE IN SOME PLACES EVEN IF BETTER ON THE SHIPPING CHANNELS. THE IRANIAN BACKED GROUPS ARE LAUNCHING DRONES AND ATTACKS AGAINST AMERICAN TROOPS IN

PLACES LIKE IRAQ. PRESIDENT BIDEN ORDERING SOME AIR STRIKES NOW AGAINST THEM. WE’VE A HAD THE IRANIAN FOREIGN MINISTRY ISSUING A BIGGER THREAT TO ISRAEL SAYING TEL AVIV NEEDS TO CALM DOWN AFTER ONE OF ITS COMMANDERS WAS KILLED IN SYRIA. FEELS LIKE IT’S MOVING IN THE OTHER DIRECTION.

WHAT NEEDS TO BE FACTORED IN HERE AS FAR AS THE ENERGY EQUATION FIT GETS WORSE? >> I THINK THE WORD IS PERSPECTIVE. EVERYTHING YOU MENTIONED IS, OBVIOUSLY, TROUBLESOME. NO DOUBT ABOUT IT. BUT WE ARE SEEING HORRIFIC, YOU KNOW, FRONTS TO VARIOUS COUNTRIES OVER THE YEARS.

THE HOUTHIS LAUNCHED A ROCKET MISSILE AGAINST THE SAUDI ARABIA EXPORT FACILITY IN 2019. THE MARKET DIDN’T BUDGE. WE HAD — THERE WAS THAT ASSASSINATION OF GENERAL SOUL LA MANNY FROM IRAN, NOTHING HAPPENED. SO AGAIN, THESE — WE WILL HAVE THESE PINPICK EVENTS.

THERE MAY BE SOME BOOST IN THE OIL PRICE THAT YOU’RE SEEING TODAY, PLUS IT’S A TRADED MARKET SO THEY’RE GETTING THAT ADVANTAGE, BUT IN TERMS OF THIS ESCALATING AT SOME POINT IN TIME THE IRANIANS WILL CROSS A LINE THAT WILL GET THEM PUT BACK IN

THEIR BOX OR THEIR AGENTS, LIKE THE HOUTHIS. I DON’T EXPECT THE HOUTHIS TO RUN FREE THROUGHOUT THAT REGION WITHOUT CONSEQUENCE, LIKE YOU SAW IN NORTHERN IRAQ OVER THE WEEKEND YOU REFERENCED IN TERMS OF U.S. MILITARY STRIKES, SAME THING WILL HAPPEN HERE.

THE SHIPPING LANES WILL BE KEPT OPEN, THE OIL WILL FLOW AND TH