Oil To Collapse To $30/Barrel After Iran War Ends? | Doomberg
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The war against Iran is creating a global oil shock, both in price and supply.
How serious and long-lasting is this likely to be?
And what will the knock on effects be: for future oil & gas flows, for other conventional fuels like coal, and for the future of alternative sources like nuclear energy?
To discuss in depth, we're fortunate to sit down with the green chicken himself, the energy expert Doomberg.
#oilprice #iranwar #oilandgas
00:17 – Introduction & Main Topic: The War Against Iran and Global Oil Shock 02:17 – How Big a Factor Is the Iran War on Oil & Gas Markets? 02:57 – Why Oil Hasn’t Spiked as Much as Expected (Government SPR Releases & Counterparty Reality) 04:50 – “After Hormuz”: Punctuated Equilibrium in Energy Markets 05:15 – The Emerging Split: Petrodollar vs. Petroyuan World 06:09 – Regional Oil Production & Consumption Shifts (2000–2024) 07:16 – Long-Term Outlook: Oil Price Collapse to $25–$30 After the War 09:48 – If This War Doesn’t Send Oil to $150, What Will? 11:48 – Doomberg’s Three Commitments During Wartime Coverage 13:12 – Evidence of New Production Coming Online Elsewhere 15:17 – Why Natural Gas Prices Haven’t Spiked Like Oil (Co-Production & Regional Dynamics) 17:10 – Negative Natural Gas Prices in the Permian & LNG Market Nuances 19:56 – Shale Activity Ramp-Up in Response to Higher Oil Prices 21:41 – Source Switching: Will the World Reduce Dependence on Persian Gulf Oil? 23:19 – Post-War Restocking, Storage Expansion & Logistics Matter 27:32 – Acceleration of Fuel Switching (Oil-to-Gas, Coal, Lighter Hydrocarbons) 28:07 – Ending Oil Burn for Electricity & Engine/Flex-Fuel Opportunities 31:29 – Impact on Nuclear Energy Ambitions & Risks in the Middle East 33:56 – Gasification, Home Drilling & “Fortress North America” 36:34 – Venezuela, Argentina (Vaca Muerta) & Removing Political Constraints on Supply 39:33 – Will Oil Become the Backup Fuel? Long-Term Price Implications 42:13 – Demand Destruction, Inventory, and Why Oil Can’t Stay at $200 47:30 – Investment Opportunities: Volume, Midstream, Diversification & Fuel Switching Tech 49:40 – What Will Be the “Next Shale”? Technological Breakthroughs Ahead 51:38 – Closing Thoughts & Where to Follow Doomberg _____________________________________________ Thoughtful Money LLC is a Registered Investment Advisor Promoter.
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Doomberg argues that the Iran-Israel war will ultimately cause oil prices to collapse to $25-30/barrel once supply returns, driven by fuel switching, alternative energy adoption, and overcapacity in non-Middle Eastern production, despite near-term price support from government intervention.
- All shortages lead to gluts; the long-term real price of all commodities is lower as supply responds to scarcity
- Oil's share of global energy fell from 50% in 1970s to 30% today, reducing demand elasticity and pricing power
- Shale and emerging production in Guyana, Suriname, Argentina, and Venezuela will flood markets once the war ends and infrastructure damage is contained
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Investors should focus on volume-based exposure rather than price-based exposure because prices are highly volatile and will likely fall, whereas global energy consumption will continue growing, making volume growth a more reliable long-term bet.
“the only caution that we would say is is try not to be leveraged to price as much as volume. Um because prices are so much more volatile and likely to fall, whereas the human endeavor this constant unrelenting struggle against entropy requires ever more energy, and the easiest bet in the world is that global energy consumption will continue to go up and to the right. So if you can hitch your dollars to that wagon, wow, this company enables fuel switching. This company enables more oil production outside of the Strait. This company enables those on the other side of the Strait to diversify their exits.”
Markets are valuable sources of intelligence in an era of AI-driven psych ops, disinformation, and misinformation—they represent genuine aggregation of distributed information unavailable through media analysis alone.
“Markets are pretty good. Um very valuable source of intelligence in an era of AI-driven psych op disinformation misinformation um online.”
The current situation does not represent a 'nothing burger' for markets but rather an 'either fire or ice' scenario where distributions are bimodal (either significantly higher or significantly lower) rather than normally distributed around a stable mean, making average-return arguments misleading to investors.
“It's like I've got if I've got one hand in a boiling pot of water and one hand in a freezing pot of water, well, on average it's room temperature, but my hands are experiencing very different uh situations. And so, you really do need to say, "Okay, look, yeah, average it's it's no big change, but it's much more likely to be either fire or ice. And so, which one am I going to prepare more for, fire or ice?"”
Rather than forecasting prices, a better strategy is to use 'systems and techniques that don't try to anticipate but adapt'; monitor markets in real time and respond to signals rather than bet on predictions.
“We prefer to use systems and and techniques that don't try to anticipate but adapt. Right?”
The bifurcation of global energy markets is underway: the petrodollar versus petroyuan fight, with the Western Hemisphere (US, Canada, South America) becoming energy self-sufficient exporters, while Europe and China remain dependent on Middle Eastern imports, fundamentally reshaping geopolitics as China backs Iran and Russia while the US has surprised itself with how the war has evolved.
“the petrodollar versus petroyuan fight is going on right before us. And, you know, much of US foreign policy going abroad in search of oil and fighting wars wherever you find barrels, that was pre pre-shale. And the US is now energy self-sufficient. It doesn't need the Middle East. You know who does need the Middle East? China. And who's backing Iran right now? China and Russia.”
Oil's share of global energy consumption declined from approximately 50% in the 1970s to just above 30% today, meaning each percentage point of price shock now affects a smaller fraction of the global economy, reducing the shock's macroeconomic impact even if nominal price spikes remain severe.
“everyone says that this is the worst oil shock since the Arab oil embargo. And I agree, probably is. What's different between then and now? Well, one of the things that's different is as a percent of global energy supply um oil used to be around 50% in the 1970s and now it's just above 30%. Um will it be less going forward because of this? Absolutely. Has to be.”
Strategic petroleum reserve (SPR) releases are being structured such that refiners receive oil from the SPR as a loan, not a purchase, and must return barrels plus 20-25% interest at a future date; Chris Wright has stated that the net effect will be an SPR that is more full after the war than it would have been otherwise, which requires no congressional approval because no money changes hands.
“Um, you give a million barrels to a refiner, they're not paying the US government cash for that. They're committing to return those million barrels plus, I think, 20% or 25% at some point in the future. And so, Chris Wright has been saying, although few people are listening, that, um, the net effect of this release will be an SPR that is more full when this is over than it would have been otherwise and they don't need congressional approval to do this because there's really no money changing hands.”
Markets are increasingly ratio-priced with more inventory buffers compared to the 1973 Arab embargo era, meaning supply rationing is conducted by price rather than by government dictate, so countries unable to afford oil at spike prices are simply excluded from supply rather than sharing an artificial shortage, concentrating burden on poorest nations.
“there's an awful lot more oil in inventory. We have a much freer market. Um the rationing of supply is being done by price and not by uh the dictate, you know, um by central planners mostly. Um And so countries that can't afford it, sad to say, aren't going to get it.”
Production can be squeezed 1-3% everywhere at once by trying harder, drilling more, and being more aggressive; there is also significant inventory around the world being worked down by trading future production for today (as happens through SPR releases, where refiners don't pay cash but commit to return barrels plus 20-25% in the future).
“Could you squeeze 1, 2, 3% everywhere all at once by trying a little harder, drilling a little more, being a bit more aggressive? Um, sure. Um, there's also of course, you know, significant amount of inventory around the world that is being worked down and the and if we're kind of trading future production for today and what what do I mean Just the mechanics of how the SPR release works. Um, you give a million barrels to a refiner, they're not paying the US government cash for that. They're committing to return those million barrels plus, I think, 20% or 25% at some point in the future.”
The world is experiencing an unprecedented shift from oil-based electricity generation to natural gas, coal, and renewables; historically oil was too cheap to burn for electricity outside the Middle East, but now even Middle Eastern oil-to-electricity is being phased out due to price differentials, eliminating roughly 2 million barrels per day of oil demand formerly used for power generation.
“The world still burns 4 and 1/2 million barrels a day of oil to make electricity. Mhm. Like half of that's in the Middle East, but, you know, Italy, last we checked, still burns a fair bit of oil to produce electricity. We think um burning oil to produce electricity outside of Middle East will will not be long for this planet.”
Fortress North America and its possible expansion (North America plus Venezuela, potentially Brazil, Mexico, Cuba, Greenland, Alberta) is self-sufficient in oil, natural gas, refined products, phosphate, potassium, ammonia, helium, sulfur, and foodstuffs (wheat, corn, soybean), creating a geopolitically autonomous bloc.
“if you draw a circle around Canada and the US, you're self-sufficient in oil, natural gas, refined products, phosphate, potassium, uh you know, ammonia, helium, sulfur, foodstuffs, wheat, corn, soybean, but okay, that's fortress North America's coming.”
Oil prices are being artificially suppressed below $100/barrel despite an exceptional shock (Strait of Hormuz closure, hot war in Middle East, tankers destroyed, Ukraine attacks on Russian facilities, Venezuela embargo broken) because G7 governments are dumping hundreds of millions of barrels onto the market with the express intent of keeping prices under control, making oil investors effectively short against every Western nation.
“the bullish oil investors would say the government's manipulating the price and blah blah blah. And of course, they are. They're dumping hundreds of millions of barrels of oil onto the market with the express intent of keeping a lid on price. And if you are long oil, you have to know that the G7 is your counterparty.”
The oil and gas business is driven by credit dynamics: producers sell forward their production, and when that production is stuck behind the Strait of Hormuz, they face margin calls; simultaneously, there is no stable long-term banker relationship—only short-term banking relationships—meaning all collateral eventually gets liquidated, creating a wave of forced selling of oil reserves that are forward-sold.
“So, we put a post out, I think, on like March 2nd, shortly after the war started. I was talking to our our mutual friend, Jack Johnson, over at Market Vibe Summit. And um we came to three conclusions. One, um the oil business is is driven by credit, right? So, there's an awful um you know, you sell forward your production and your your production is stuck behind the strait, um you you're now facing margin calls, which is probably why gold dropped a little bit here this past month. Um two, there's no such thing as your banker, just a banker. Um and three, in the long run, all collateral gets sold.”
The Yom Kippur War (1973) saw markets down 15% in the first 6 months but continued declining through October 1974, with total losses approaching 50%, illustrating that the 6-month window misses the true bear market aftermath of war-triggered recessions.
“This Yom Kippur War is six months it was it was still down 15% from the start, but uh that wasn't the bottom. The the bear market of the 1974 bear market didn't bottom until October of 2000 uh 74. So, it was down I think another 15 50% almost from there.”
Using historical war data from Goldman Sachs, markets do not have a consistent 6-month post-war return pattern; some wars see 10%+ gains in the following 6 months, others see 15%+ losses, and the distribution is wide; averaging across wars is misleading because individual wars have highly heterogeneous outcomes.
“Each one of these is is a different war energy related or any energy confluenced uh war episode. And you can see sometimes and this is the point zero here at the time of the the outbreak of that that particular event. You can see sometimes markets are way higher six months later, sometimes they're way lower. And this gray area is the basically the the statistical band plus or minus uh you know, 90%. Uh all to say is averages can be tremendously misleading and damaging.”
Oil has no natural demand floor at $200 per barrel; there exists a price threshold below which poor countries and consumers cannot afford to purchase oil at all, creating demand destruction that prevents oil from maintaining prices above approximately $150-200/barrel sustained.
“Oil oil can print at 200. It can't stay there. There's not enough demand for oil at 200 to to to take up 90 million 90 million barrels a day. Like there is a price at which poor people can't afford buy oil. Right. And that's it's less than $200 a barrel.”
Coal is experiencing a resurgence as an alternative to LNG for electricity generation, with Newcastle coal trading at $137/ton (up 20-25% from pre-war), because LNG and coal are functionally interchangeable inputs for power plant operation and coal is cheaper than LNG at current prices.
“we're seeing an awful lot of switching to coal because LNG imports and coal literally do the same thing, which is being burned to produce electricity. So, Newcastle coal as we're talking is up to $137 a ton, which is still pretty cheap relative to the crisis of of of the Ukraine war. Um but that's up a good um 20 25% from from pre-war.”
China limits refined product exports within 72 hours of the war breaking out, and Russia stopped exporting gasoline as of April 1st, demonstrating that countries with energy surpluses quickly impose export controls to manage domestic prices during crises.
“We saw China limit the exports of refined products within 72 hours of the war breaking out. We saw Russia as of April 1st no longer exporting gasoline. Countries with surpluses take care of their domestic markets and if you don't have a surplus, you're on the hook to compete with everybody else”
The Trump administration has struck $6 billion in Indo-Pacific trade deals for oil and gas from America (particularly Alaska), with customers like Japan preferring 8-day delivery from Alaska versus 25-day delivery from the Persian Gulf, and without risk of the supply region becoming a war zone.
“the administration announced like 50 bit 6 billion in in Indo-Pacific trade deals that were just struck for for oil and gas from America. Um and I remember reading as part of that that like if you're Japan, it takes you like 25 days to get your supply from the Gulf where let's say you're buying it from Alaska, it takes 8 days. And you don't have to worry about Alaska turning into a war zone.”
Europe has taken a bet that the Iran war will end soon by refusing to aggressively refill empty LNG tanks, dividing cargoes toward Asia where prices are higher; this could blow up if the war doesn't end.
“there's a nuance there, which is Asia's more expensive than Europe. Um so cargoes are being diverted to Asia because the European Union has decided to not aggressively refill its empty tanks yet betting on the war ending. Mhm. Um which could really blow up in their face if the war doesn't end.”
If oil prices have already peaked at $120/barrel Brent (recent high), then oil will never reach $150/barrel again because the conditions that historically created super spikes (this war with Strait closure) represent the worst-case scenario, and no realistic future scenario could be worse than a hot war in the Middle East with closed supply routes.
“You know that futures Brent Brent of $120 a barrel a couple weeks ago marked the top. That's as high as oil gets. The war ends, things stabilize. Yes, we stay around 80 or 90 for a long period of time. Under what scenario will you ever get a $150 barrel oil? Like, if not this, then when? Right? Like, what are you waiting for that? Like, what what set of facts would you need to get that super spike that we always hear about?”
Japan and South Korea, which are dependent on LNG imports, already have substantial nuclear capacity, so the war does not create as much new urgency for nuclear in those countries; the smaller set of countries truly impacted by LNG disruption (Korea, Japan, EU) already have nuclear in many cases.
“fewer countries um are are beholden to LNG, and the ones that are already have pretty good nuclear, Japan and Korea, for example. Um Japan turning its nuclear back on, of course.”
When the Kuwaiti oil fields were set on fire by Saddam Hussein, all of the companies that went in and fixed the infrastructure did very well, establishing a historical precedent for profiting from war-damaged energy infrastructure repair.
“when Saddam Hussein lit the Kuwaiti oil fields on fire, all of the companies that went in and fixed stuff after that did very well.”
China can toggle its gas demand as well and has a huge giant pile of coal, so it too is a flexible demand actor that can reduce LNG needs in response to price spikes, further suppressing global LNG prices.
“And then the last thing I would say is don't forget um you have China out there as well. It's a huge giant pile of coal, and it can toggle its gas demand as well.”
LNG represents only 16-20% of global natural gas supply, with Qatar alone being 20% of that LNG, meaning Qatar supply disruption affects only 0.04 (4%) of global gas supply, limiting the war's impact on global LNG prices despite it being a major disruption to any single importer.
“um last point I'd say about LNG, um in the natural gas markets, LNG is let's just round up and say it's 20% of global natural gas now. It's probably more like 16 or 18, but um and Qatar was 20% of that. So, 0.2 * 0.2 is 0.04.”
Oil futures prices and spot prices are quote-location-time specific; there is 'no such thing as the price of oil' in absolute terms; instead, there is 'WTI for May', 'Brent for June', etc., and understanding these distinctions is critical to avoiding confusion about which price is being quoted.
“There is no such thing as the price of oil. There is the price of a certain grade of oil at a certain location at a specific time in the future. Right? So, there's WTI for May. There's Brent for June.”
Forecasting commodity prices is 'incredibly hard and incredibly humbling'; historical example: in the 1990s, energy industry forecasters projected natural gas prices at $2-3/MMBTU 'as far as the eye could see', but within two decades prices spiked to nearly $15/MMBTU, proving that forecasts of 'as far as the eye can see' are unreliable.
“I can remember back to my early career in the energy industry and I remember at the time, you know, we were projecting natural gas prices at you know, $2 to $3 a million BTU. And that doesn't sound crazy today, but let me share a chart with you just to kind of let me just use this to emphasize that um we learned a long time ago whether whether whether talking stock markets, commodity markets, whatever. Actually forecasting prices is is as tempting and as as as seductive as it might be to to try to do that to kind of figure out what's going on, it's incredibly hard and and it's incredibly humbling.”
When the Iran-Israel war ends, the price of oil in today's dollars will fall to $25-30 per barrel within 2-4 years due to the onslaught of incremental supply hitting markets just as demand destruction sets in, returning Middle Eastern production and the characteristic pattern that all shortages lead to gluts.
“When this war's over, price of oil is going to collapse. The onslaught of incremental supply will hit markets just as demand destruction sets in...all shortages lead to gluts. The long-term real price of all commodities is lower. And in 2 years, 3 years, 4 years, the price of oil in today's dollars will be $25, $30 a barrel.”
Natural gas in the United States, particularly in the Permian shale basin, is being flared and sold at negative prices (minus $4/MMBTU at Waha hub, free or negative in Alberta) because shale co-production of oil and natural gas means producers drill for oil at $100/barrel and must dispose of gas; while LNG exports trade at $16-20/MMBTU, creating a massive arbitrage opportunity for fuel switching.
“in a world where oil spikes to $100 a barrel, and you're in the Permian, you're drilling as much as you can, and you're giving away the gas. So, gas trapped in the United States is dirt cheap. It's less than three bucks a million BTU right now, which is $17 a barrel oil equivalent. Um this is exactly as would have predicted on, you know, given the thesis that I rolled out for your audience.”
Crises create many commitments that go unfulfilled: post-2008, the pledge of 'never again will we have bad mortgages in the banking system' became unfulfilled as private credit now pervades the system; therefore, the current war-driven commitments to energy independence may similarly fade once the crisis recedes.
“I do I think crises creates a lot of commitments that go on fulfilled, you know. Never again will we be caught, you know, um, with with bad mortgages permeating the banking system. Meanwhile, we have private credit everywhere, right?”
Punctuated equilibrium as a mental model explains that when you shake a system and the snowflakes fall back down, they reorganize; the crisis is an opportunity to reorganize—to overcome political pressure against strategic petroleum reserves by building tanks and filling them, and to invest in flexible engines.
“Okay. But, we can discuss that. But, the the broad strokes of fuel switching um there's nothing like a shock to a system to recalibrate where that equilibrium is, which is why we went with that punctuated equilibrium mental model for our our Doom Zoom last week. Um whenever you shake a system up and the snowflakes fall back down to the bottom of the globe, you know, they tend to they tend to reorganize. And And this is an opportunity to reorganize. If you had political pressure, you know, that stopped you from creating a strategic petroleum reserve because everyone was telling you this is a stranded asset and we're not going to Well, now's the time to overcome that that political pressure and to build those tanks to fill them.”
The Strait of Hormuz closure can only be weaponized once in this manner; the war will catalyze a long-term pipeline and logistics infrastructure build-out through Oman, Israel, and rail networks to bypass the Strait, creating a permanent reduction in chokepoint risk and diversifying Middle Eastern export routes.
“there's going to be the mother of all midstream opportunities in the Middle East when this war is done because the Strait of Hormuz was a trick that can only be played once. Um you're going to see choke points being diversified. Pipelines through Oman, pipelines through Israel. Railroad.”
Financial advisors should not shame clients who wish to change their allocation or consider selling during uncertain times; shaming investors for defensive positioning is 'factually improper' and 'downright arrogant' given the weight of history showing that tactical adjustments are legitimate.
“you should really be be elsewhere because that is not only a factually improper position for any financial take given the weight of history, but it's downright arrogant frankly that our industry shames people if they think they want to change the mix and you know, they're they're made made to feel like, "Hey, you got to be with the program or you're out."”
California oil and gas policy has driven out major producers (Chevron left after 140 years) and shut refineries, forcing California to import oil from far-flung and less reliable sources at premium prices, and this may become a national template if Gavin Newsom, who benefited from the Iran war to blame energy price spikes on, becomes president.
“you have a lot of oil companies are leaving the state and the policy decisions the state has made to to create that inhospitable environment. And and the you know, this this current situation as I understand it is you know, big big oil companies are leaving like Chevron just left after 140 years. You have refineries that are leaving or at least companies shutting down their refineries. And basically California is having to buy its oil from far-flung and not necessarily very friendly countries right now.”
Australia was caught in a dangerous position: producing only one-third of the crude it consumes but still exporting crude because it cannot refine crude domestically due to insufficient refining capacity, and faces major scandal for allowing this strategic vulnerability; Australia will now be forced to spend heavily on reserve creation, refinery reopening, and potentially allowing new drilling to regain energy security.
“Australia, we wrote about Australia this morning, they got caught completely naked, frankly. Scandal of epic proportions that Australia allowed itself to to be in this position. They're going to spend money when this is done. Um to Refilling their reserves. Well, creating reserves. Okay. And and re- and then filling them. Um perhaps opening up some refinings again and and allowing for drilling.”
Venezuela can bring 0.5-1 million barrels per day of new production online relatively quickly if political constraints are removed, because the existing resource base has already proven it can produce 4 million barrels per day historically; Argentina's Vaca Muerta shale can scale from 600,000-700,000 barrels per day to 2-3 million barrels per day; combined with Guyana, Suriname, and Brazil development, the Western Hemisphere can add 5-10 million barrels per day of new supply.
“I'd say it's going to come online faster than skeptics think, but it still will take a long time. Um I think the first half a million barrels a day will be easier than most people realize to bring online, you know, um there's going to be a cost curve of incremental production. And the cheapest stuff will come online come online first. But, the impediments to Vaca Muerta, you know...Venezuela has proven its resource base can produce 4 million barrels a day. Okay?”
If there is a major nuclear accident in the Middle East (e.g., Fukushima-style missile damage to reactors, radiation leak contaminating seawater and desalination plants), it could set back nuclear energy adoption significantly by triggering public fear and overreaction, similar to post-Fukushima nuclear politics.
“You have to be totally honest with you. Um, we're seeing very dangerous escalations on both sides. You know, missiles landing dangerously close to nuclear reactors...if you have a a Fukushima missile, it could set back nuclear. Again, you have to As much as we are pro-nuclear...one has to be cognizant of the fact that a true radiation leak...could set back nuclear power.”
The arc of hydrocarbon consumption is trending toward lighter and lighter molecules (natural gas, natural gas liquids) and away from heavy crude, and the Iran war will accelerate this structural shift by making oil-heavy demand switching more economically attractive.
“the arc of of hydrocarbon consumption was towards lighter and lighter molecules and and this crisis is only going to accelerate that.”
Oil (as tracked by USO ETF) spiked dramatically when the Iran war broke out and 'never looked back,' but everything else (stocks, gold, silver, bonds) sold off simultaneously, so investors who tried to buy 'safe haven' assets like gold and silver when the war started were whipsawed as those assets declined significantly.
“one thing that went straight up was oil. Here is um USO is an ETF that tracks oil. Right back around here, I forget the exact date that the war broke out, but oil broke out and never looked back. Everything else went down. Stocks, gold, silver, bonds even, everything straight down. If you bought silver or gold thinking, "Well, shoot, war broke out. Let's buy some precious metals." And look what they did over the same period of time. You know, they're down quite a bit.”
The S&P 500 has been in a tight trading range since October 2024, with a 50-day moving average that is nearly flat (emblematic of a sideways market), but in early March 2025 broke below its 50-day and 21-day moving averages and has since fallen below the 200-day moving average, signaling a shift from congestion to downtrend.
“we had one of the tightest ranges in a long time of the S&P going back to October. It it done pretty much and maybe zooming out uh to to weekly chart, you know, you can see when you know, this is this is October here, right through the, you know, early part of this year, it was kind of pretty sideways. Even though some sectors like energy were going to screaming higher, basic materials were screaming higher...we have seen a pretty notable rounded top here...the green line is the 50-day moving average...it was a very flat line...we have taken out back in early March, we took out the 50-day and the 21-day moving average and we've since about March 20th or so been below the 200-day moving average.”
The administration briefly raised the possibility of export controls on oil but had to publicly deny this plan, indicating that the threat of such controls is real and likely to be deployed if oil prices spike further (e.g., to $200/barrel during an election year).
“And by the way, that was raised here in the states briefly, right? The administration had to come out and say we're not going to do that, right? Well, then nothing is true until it's been officially denied now, is it? Um And so I mean it would happen at the look if if oil did go to 200, you think the US consumers are going to pay that equivalent price at the pump? Of course they're not. We have an election this year. It's not going to happen.”
Mexico's governance is a mess but 'easily cleaned up' compared to finding new oil reserves; Venezuela's proven resource base and relative short-term fix (managing relations with the existing government) make it a more attractive target than greenfield exploration elsewhere.
“Mexico's a mess. Easily cleaned up. Is it Is it easier to clean up Mexico or find a bunch of oil that you don't know where it is yet? Right? I mean, Venezuela has proven its resource base can produce 4 million barrels a day.”
The most pressing near-term investment opportunity is in production that scales with volume outside the Strait of Hormuz, because all market participants recognize the Strait must be diversified away from as a single point of failure.
“anything that scales with volume production outside of the Strait is going to be in huge demand. Um and then there's going to be the mother of all midstream opportunities in the Middle East when this war is done”
Technologies that enable fuel switching (especially dual-fuel engines that can switch between hydrocarbons without engine replacement) and alternative technologies to hydrocarbons altogether will be valuable investments; however, the main driver preventing fossil fuel shortages is storage expansion, not switching away from hydrocarbons entirely.
“So, if you're an investor, what does that mean? Any technology that enables switching, ideally in fact that enables dual fuel use, so you can switch between them without having to change the engine. Those are going to be valuable. Um alternative technologies to hydrocarbons altogether in some cases will be valuable as well, but we don't think the main driver of being caught without enough fossil fuels uh is going to be to move away from them altogether. It's going to be to store more of them going forward, so you don't get caught again.”
The next technological breakthrough in energy (analogous to the shale revolution catalyzed by $147 oil in 2008) is unknown and could be natural hydrogen, ultra-deep drilling, abiotic oil development in China, or shale unlocking in Australia or China, and identifying where this next breakthrough occurs is a major focus.
“we are um skipping a few steps ahead and pondering what is going to be the next shale. You know, we mentioned this earlier. $147 a barrel oil back in '08, boom, shale revolution happens. What's that going to be this time around? Um natural hydrogen, ultra-deep drilling, you know, abiotic oil in China. Um China unlocks its shale. Australia unlocks its shale.”
New Harbor Financial has implemented put options at the 6,500 level on the S&P 500 as portfolio insurance, such that if markets break below 6,500 (about one-third of their equity exposure), they will automatically de-risk from 45% equities to 30% equities, capturing downside protection while remaining uncapped on upside.
“I'm going to call out this dotted horizontal line. That's at at 6500 on the S&P. These are put options we have on our client portfolios for those accounts that are big enough to to handle options like this which essentially is like an insurance policy...if we poke below that 6,500 level...we would very quickly have the financial equivalent of de-risking to about 30% in equities...we're about 45% equities right now...it provides the hedge on the downside, but if we shoot higher here, yeah, we're going to lose some money on those on those puts, but we're going to be uncapped on the upside.”
Europe shutting down nuclear capacity was a strategic mistake, as some European officials are now publicly acknowledging, but the political momentum to reverse this decision and rebuild nuclear is much slower than it should be (11 steps to go, as they say).
“we are seeing, at least in Europe, the mouthing of the words that shutting down nuclear was a strategic mistake. idea, yeah. Yeah. So, that's a you know, that as we like to say 11 steps to go, you know.”
On a monthly basis, gold has only had one down month (recently ended), which is 'not really a big deal in the grand scheme of things'; gold bull markets are typically 8-10 year affairs, and one monthly decline does not invalidate the multi-year bull thesis.
“Take a look at a monthly chart, maybe just over the last uh 15 years. 2011 high, this big level back at 2000 on gold we've been talking about for years. 2000 became 4000 became 5500. And on a monthly chart, we had the first monthly uh down month uh which ended yesterday. That's not really a big deal in the grand scheme of things.”
The Trump administration's handling of Venezuela as a regime change operation has been 'pretty smooth' so far and 'not devolving to a Libya yet', suggesting the war has been managed in a way that avoids catastrophic regional destabilization.
“full credit to the Trump administration. That is not dissolving to a or devolving to a Libya yet. As far as regime change operation goes, that one's been pretty smooth.”
John and Mike added oil service stocks (ticker EXES) to their model portfolios in October-November 2024, months before the Iran war broke out, based on charts and technical breakouts indicating the sector was the strongest; the decision was driven by technical signals, not energy crisis narrative.
“We're in an ETF in our model that's an oil service ETF. We actually got into that many months ago, long before this war. We got into it because the charts told us to. We're always looking for the strongest sectors and that chart broke out and we put it in”
Silver (SLV) experienced a large triangle breakout followed by a breakdown through the bottom of the triangle toward $70 (roughly 12-15% decline from triangle apex), tested the lower support of the triangle, and is now recovering back toward $80, which would confirm the entire decline was a 'fake out' if it breaks back above.
“Let's take a quick look at at silver and gold here. SLV is silver. It has this what I see as a big triangle. And then we had this breakdown here at 70 on um on SLV, which is roughly 80, maybe 78 to 80 on spot. Basically, came down and tested the bottom part of that triangle, and look what's happening. We're coming back slowly. We'll see if we got a nice big pop back up here to like 80 on SLV, and that would be, I guess, close to 90 spot. We get back into this zone, then I think we can say all of this was a fake out.”
Markets should be respected as sources of intelligence; when markets diverge from an analyst's thesis, the analyst should adjust rather than assume markets are wrong; full disclosure on previous errors (holding the European energy crisis narrative too long) strengthens credibility.
“We have a healthy respect for the markets. Um you know, when when we did our after-action report of the European energy crisis um and how we did um full disclosure, we hung on to that crisis internally too long. The crisis was over before we recognized it as being over. And that was because we thought the markets were wrong. Markets are pretty good.”
There is something the G7 did not anticipate about how the Iran war would evolve, surprising US strategic planners about the trajectory of the conflict.
“I I think the US um has been surprised by the by the way in which this war has evolved.”
The oil industry has committed to a thesis of cautious analysis regarding the war: not engaging in hyperbole to get eyeballs, avoiding excessive criticism of the commander-in-chief during active military operations, and respecting market intelligence over ideological predictions.
“We made a couple of commitments to ourselves when this war broke out. Um, two or three. First was that we would not, um, indulge in hyperbole just to get eyeballs. I mean, if there ever was a time where that might work, I suppose um, now would be it. We've tried to be cautious about what we've said. Second is we wouldn't we would try not to be super critical of of the commander-in-chief during a time of war.”
Scott Bessent (Treasury) and Chris Wright (Energy) are well-chosen for managing the economic dimensions of the war due to their domain expertise: Bessent is a seasoned hedge fund manager who understands market intricacies, and Wright founded two oil and gas unicorns and deeply understands the oil business.
“If you asked for for two people to be in the seat that they're in right now, Scott Bessent and Chris Wright at Treasury and Energy uh respectively would be two pretty good picks. I mean, if there's somebody who knows the oil business, it's a guy who's founded two oil uh and gas unicorns, Chris Wright and Scott Bessent. Of course, seasoned hedge fund manager knows the intricacies of the markets well.”
The majority of Thoughtful Money's client referrals specify 'capital preservation' as their number one priority, indicating that preservation of capital is more important to most investors than growth, especially in uncertain times.
“the majority of them says like capital preservation is my number one priority here”
Doomberg is taking a small break from podcasts to write a book, a commitment made before the Iran war broke out; the book will require a lot of work and focus.
“Yeah, we're taking a small break from doing podcasts. Hopefully, we're going to try we've committed to uh to writing a book, and you know, a Doomberg book, which is a big deal, a lot of work, and um so taking a bit of a break. Of course, this was planned before the war in Iran broke out.”