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The Oil Market Is Tighter Than It Looks with Josh Young, Bison Interests | The Geopolitical Edge
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Research summary
▶ Show introduction, investment approach, and why oil stayed below $200
Miguel Osman introduces *Geopolitical Edge* and guest Josh Young of Bison Interests, then asks about Young’s performance and oil-market outlook. Osman cites the Bison Energy Opportunity Fund’s 10.4% annualized net return and 207.9% total return since inception; Young says its small-cap comparator, the S&P 600 energy index, had declined about 5% per year since launch. Young attributes his approach to limiting mistakes, choosing appropriate commodity exposure and values, and buying companies that are improving rather than apparently cheap companies whose businesses are deteriorating. Asked why Brent had not reached the previously discussed $200 level as the Iran war approached the midterms, Young says that forecast assumed restricted flows would remain restricted and that US policy would be rationally consistent. He describes a May–June waiver of sanctions on Iranian oil and a wave of Iranian and other Persian Gulf supply reaching the market, creating a temporary local glut amid what he characterizes as a broader shortage. He says global inventories were down by more than a billion barrels from the start of the year. He also argues that repeated US statements that the war would end soon, and peace announcements issued when oil prices were beginning to break out, weighed on prices. In his view, such intervention can suppress prices temporarily but historically tends to be followed by higher prices; he interprets the episodes as apparent price suppression.
▶ Inventory drawdowns, strategic reserves, and uncertain Hormuz flows
Young estimates US crude inventories were down roughly 300–400 million barrels and products by more than 100 million barrels, while acknowledging he did not recall the exact figures. He says diesel, gasoline, jet fuel and some other products were at very low levels; diesel was at five-year seasonal lows and close to $250 per barrel on a wholesale basis, subject to his qualification that he would need to check. He says strategic petroleum reserve releases had buffered the drawdown, and argues that ending releases or refilling reserves could support prices; he contrasts recent releases of less than half a million barrels a week with peak releases near 10 million barrels a week. On Middle East exports, he recounts reports of tankers transiting Hormuz with signals off, later increases in flows, and delayed reports of tanker attacks. He describes conflicting official and media narratives, including claims about 19 tankers being attacked, and says the resulting data and news are difficult to interpret. He cautions against relying too heavily on the latest week’s data, emphasizing instead the trajectory of flows since March and over longer periods. He says the US has not yet won the battle over Hormuz.
▶ War risks, portfolio hedges, and the oil-cycle thesis
Young believes tanker flows through Hormuz have probably peaked for now following a wave of attacks, and says tankers reportedly turned around when warned they might be hit. He questions the reliability and timing of information about attacks and insurance, and recounts how attention shifted between Hormuz flows, Saudi Arabia’s East–West pipeline, the Bab al-Mandab Strait and attacks on infrastructure. He describes a short-term risk-management strategy: after WTI rose above $100 and political rhetoric intensified, he bought small amounts of short-dated, out-of-the-money puts on indexes and companies he did not own, calling them “taco insurance.” He says the premiums were small and intended to limit potential portfolio losses from a sudden peace announcement and oil-stock selloff while preserving cash to buy. For the medium term, he expects the war could continue and says infrastructure damage may limit any postwar supply surge, while acknowledging uncertainty. For the longer term, he sees an oil upcycle following more than a decade of underinvestment, dating the peak of exploration spending to around 2012 and describing fewer discoveries and innovations during the downturn. He expects a sequence of higher prices and possible overinvestment over roughly the next three years, followed by oversupply. A recession could, in his view, provide another buying opportunity before the upcycle; he says he would eventually sell into that cycle.
▶ Inflation, refined-product prices, and refinery constraints
Osman asks about inflation, the gap between crude and refined-product prices, and limited refining capacity. Young presents his view that high debt, borrowing to service debt, and entrenched government spending make inflation difficult to escape and tend to produce higher commodity prices. He says oil has often followed major gold and silver price moves by 12–18 months, and sees further crude-price upside. He reports that diesel and gasoline were being accepted at around $250-per-barrel equivalents, with refining margins above $100 per barrel for diesel, around the $80s for gasoline, and similarly high margins for jet fuel. He compares these with average margins of nearly $20 per barrel over the prior decade through 2025, or nearly $15 excluding the Russia–Ukraine war and COVID. Young argues that Russia’s refinery losses from Ukrainian attacks and China’s restrictions on refined-product exports have contributed to the high margins; he says Russia had shifted from being a major diesel exporter to importing diesel. He says US and Canadian refiners were operating at about 95–96% utilization, compared with a typical level near 80%, adding a couple of million barrels per day of products versus normal conditions. He speculates that pressure from the US and Europe, and a possible Ukrainian shift from refinery attacks toward Russian oil exports, could lower refining margins. That could reduce pump prices while higher refinery utilization increases crude consumption and supports crude prices, relative to the status quo. He also argues that Europe’s release of emergency diesel stocks is risky given its undersupply of natural gas and diesel, and predicts Europe may pressure Ukraine to reduce attacks on Russian refineries.
▶ Fuel taxes and the near-term pump-price response
After a brief promotional break, Osman asks whether removing fuel taxes could reduce pump prices before the midterms. Young calls tax cuts a highly effective short-term way to lower pump prices, and says he found it strange that the US had not adopted them. He also discusses waivers on red-dyed diesel and ethanol restrictions, suggesting that use of subpar fuel could contribute to truck or car engine replacement activity. He blames legislative deadlock in part on the opposition minority party, while saying responsibility is not all on one party. Young qualifies the case for tax cuts: gasoline and diesel demand is relatively insensitive to price, so lower taxes may relieve consumers directly but weaken the price signal to reduce consumption and shift some of the cost to other countries. He says further fuel-tax waivers ahead of the midterms were possible but uncertain, and notes that taxes and regulatory fees make up a meaningful part of pump prices in places including California, New York, Canada and parts of Europe.
▶ Europe’s energy supply and policy choices
Osman describes Europe as lacking energy sovereignty and asks whether it can improve domestic supply, noting that Denmark had reopened some fields, Norway was considering projects, and Poland’s shale-gas projects had not delivered as hoped. Young argues that many European economic problems are self-induced and says cutting taxes and regulations would help. He criticizes policies that mandate some energy sources, heavily tax others and subsidize alternatives, arguing that they have coincided with higher electricity and fuel prices. He favors allowing markets to determine the energy mix and says regulatory relaxation could support either European oil and gas production or access to overseas supply. As an example, he describes Japanese trading and utility companies buying US gas fields and LNG project interests, with the expectation of shipping LNG to Japan at a fraction of the current LNG price; he says regulatory changes could benefit Japanese ratepayers for decades. He is pessimistic about Polish shale even if regulations were removed, but argues that reducing taxes and regulations could help Europe’s wider economy as well as energy. Osman adds that Denmark has rationed power connections, with a reported 10-year waitlist and data centers placed at the back, which he says limits construction during the global AI buildout.
▶ Oil outlook and specific investment positioning
Asked to restate his outlook and positioning, Young says near-term prices are unknowable and subject to political efforts to suppress oil, gasoline and diesel prices ahead of US midterm elections in early November; he says that pressure may recede after the election. He considers fair oil prices higher based on supply, demand and inventories, and thinks the US–Iran war is more likely to continue beyond the next month, with Iran continuing to restrict flows and no demonstrated way to fully evade those restrictions. He expects oil prices could rise substantially if that occurs. For the structural outlook, he says annual depletion requires replacing roughly 6–12 million barrels per day of oil and natural gas liquids. He argues that decline rates are rising as supply relies more on US and Canadian unconventional production, requiring more conventional exploration and development, which he says has not happened; he also says lower-tier US shale development needs to accelerate. Young cautions against chasing tanker and refinery stocks after very high rates and margins, noting tanker newbuilds and refinery restarts, expansions and new projects, including Dangote’s Nigeria refinery and a planned Kenya project. He has small net effective short positions in those categories through derivatives as a hedge against a financial crisis or other collapse. He favors smaller producers without refining exposure and onshore service companies, which he expects could benefit from higher oil prices and a possible activity increase in the US, Canada and internationally over the next 12–18 months. He says some companies trade as if oil will remain around $65 or $70, depending on the market. He views service stocks’ discounts to replacement cost and double-digit free-cash-flow yields as unusually attractive, while warning that low price-to-earnings multiples in refiners can be a cyclical danger signal.
▶ Natural gas uncertainty and closing remarks
In response to a listener question about US natural gas, Young says he wants to be bullish because LNG export capacity is expanding and data-center spending may create future demand, though many data centers have not yet come online. He sees a countervailing risk in aggressive investment and production: he describes Citadel entering through Apex, acquiring gas assets and inventory, and a large Haynesville transaction by another commodity trader. He says the activity, including continued drilling with low prices and public producers also drilling heavily, could lead to production growth beyond rational levels and is not a recipe for high prices. He says he is not short natural-gas stocks but is not participating as an equity investor because the outlook is hard to assess and capital discipline has been inadequate. He contrasts gas producers with refiners, which he says improved their economics over the last decade through supply and capacity management. Osman thanks Young and closes the first *Geopolitical Edge* episode; Young thanks the host. The closing segment asks viewers to like and subscribe, watch more videos and visit Real Vision’s membership site.
Full transcript
[0:09] Hello out there. Welcome to the geopolitical edge on Real Vision. My name is Miguel Osman and I've been really excited to launch this new format as we try and build our geopolitical coverage on Real Vision. The geopolitical edge will be our video format uh for geopolitical coverage on Real Vision. We're going to be posting it both some of the stuff on Real Vision, some of it behind the payw wall, some of it in front of the payw wall on YouTube. We're all going to be figuring that guy that out week by week. But I made sure to start with the absolute hottest topic and maybe the hottest guy
[0:40] and the hottest topic. Uh, [laughter] at least we have you, Josh. Very very pleased to to have you on the show. Welcome. How are you doing, Josh? >> Good. I was excited to hear the hottest guy and the hottest topic. What is it? Who is it? >> That's supposed to be you, Josh. It's uh this is the hottest topic anyway and I think you're you're you're one of the guys really drawing attention to this on uh on X. Let me start. Josh, we we we had a talk earlier this year. How has this year been for for for for an oil oil oil analyst such as yourself? Well, it's been very volatile, but also
[1:12] very lucrative. And really, I think the game has been to be optimistic from, I think, an equity price perspective and to not get too fixated on any one headline or any one uh narrative. >> Absolutely. Today, we're going to try and unwrap what the market gets wrong about oil right now. What's the outlook? what uh what have we seen and what has been driven driving this very very volatile oil uh setup throughout 2026. Um before we get into it, Josh, I um I
[1:43] look a little bit into your uh your company and what you're doing. you're obviously working with Bison Interests and you're running the uh part of running the the Bison Energy Opportunity Fund and you've had quite quite nice returns especially this year if you compare it to to benchmark like energy indexes uh and and over the 10 11 years you since you've been doing it you've had a 10.4 four annualized net return uh and and 207.9 [clears throat] um total return since your inception. Uh how have you managed to do that? Because
[2:13] I think energy markets are um something that a lot of traders follow. The energy index should be following things. How do you manage to do this? >> Yeah, I I try to not lose money. So, uh, I'm not always successful, but so I think the the returns, uh, since you mentioned it, just putting it in context, the the index that I get comped with is the small cap. It's the S&P 600 energy, which is down, I think, 5% a
[2:44] year since we launched, which is, >> yeah, >> just insane. So yeah, look, I think it's the the combination I I was jokingly saying not lose money. The the way to not do that is to try to make as few mistakes as possible and not repeat them and then try to find sort of this combination of right commodity exposure along with the right values and trying to I've learned over time to try to buy stocks of companies that are improving and doing better rather than trying to
[3:15] buy into situations that seem valuep priced but where things are maybe deteriorating. >> Yeah. And it seems like what what you've been doing well is catch some of the big uptrends both leading into 2022. Obviously the years up to that and also the years up to the Iran war. So so so really really great work. Really interesting. We're going to dive more into how you you guys are positioned right now as far as you can tell us that. Uh we'll dive into that. But also your your look on uh uh on oil markets. So Josh, when we talked earlier this year um we were in the midst of the sort
[3:46] of the first phase of the Iran war. Uh the the war um slowed down over the summer. We had the memorandum of understanding. The war restarted and we're now very very close to the midterms. So we're close to the point where some oil analysts predicted now if this goes on until the midterms, we're looking at uh a Brent price of $200. So what went wrong with that? What what what deviated from that assessment? And why are we still just above $100 in oil? If if you follow that perspective.
[4:16] >> Yeah. Yeah. I think it's a great question. I think the the assumption was that if flows were going to be restricted that they would stay restricted and that the US to the extent that it was going to pursue this war with Iran would pursue it in a rational manner. And that those are I think base assumptions that would have been somewhat reasonable at the time. But instead of the US for example uh imposing and enforcing sanctions on Iran
[4:46] consistently from even let's say before the start of the war you had this very weird dynamic where the US allowed and actually fully waved sanctions on Iranian oil in uh the May June time frame and you saw this whole wave of oil both Iranian which had been on the water in some cases for years and heavily sanctioned and whatever. Um, as well as a lot of supply that had built up from
[5:16] other Middle East sort of Persian Gulf producers all come out in a wave in that sort of June time frame and getting into this weird situation where overall there was an oil shortage and global inventories are down it looks like more than a billion barrels from the start of this year. uh but at the same time having sort of a mini glut in the middle of a larger shortage sort of a stock flow type problem. So that's how you end
[5:48] up in a situation where oil prices are lower even with inventory levels much lower. And then there's one other dynamic worth mentioning which is that since the start of the Iran war uh the US president as well as various US senior officials have stated that the war is ending soon. I think even two days in uh President Trump said the war is ending soon. I can't remember the exact timeline that he gave, but days, weeks, months, back to days. And he I
[6:19] think he said over a hundred times that the Iran war is ending soon or that the US had already won the war. And so I think this job owning is increasingly ineffective. But if you look at sort of the big peace announcements or sort of the big job attempts, they've been at points where oil prices were starting to break out. So, if you put your tech, I'm not really a technical analyst, but if you put your technical analyst hat on, you say, "Hey, what's the optimal time to put out news that's bearish for oil,
[6:50] conveniently, that news came out at literally the most optimal times from an oil price chart, which again, short-term has been bearish, but it has me increasingly bullish because that looks a lot to me like overt price suppression." And when I look historically at what's happened after price suppression, almost never has it been lower prices, uh, you know, this should not be surprising, I think, to anyone who's a student of free markets.
[7:20] When you try to push prices down from a government intervention perspective, in the end, you get much higher prices. But while it's happening, you can end up with prices that are sort of irrational and where it's necessary to get into these sort of handwavy explanations to to understand what's happening in the moment. >> Yeah. It seems like sometimes the war has been moving in sine waves and you've all sometimes at at at periods you've almost had this weekly uh schedule of Monday and Sunday you get you almost had
[7:51] that at at one point. So how much has the outflow of inventories out of the US but but perhaps most importantly China uh what role has that played here and and how how how low are we in those inventories? Yeah. So, it looks like the US is down hundreds of millions of barrels and I don't want to give I don't remember the exact number offhand, but it looks like was it 300 or 400 million barrels of crude oil and then another 100 million plus of products, which there aren't
[8:22] large product stocks, so that's a big deal to be down a lot. Uh we're at last I checked fiveyear seasonal lows for diesel which is partly why diesel prices are close to $250 a barrel uh when you know measured at the I think that's even at the wholesale price but I'd have to go double check. Um, and then similar gasoline levels really low, jet fuel levels really low, and even some other products that should in theory be in surplus because the US is a net exporter
[8:53] of them also also at quite low levels. So yeah, the US inventory level is low and some of that's been buffered by releases of strategic petroleum reserves, which some analysts say you should exclude. But if they're used to keep prices low when they're being released, then you would think that the converse should also be true, which is that when they either get refilled or are just no longer being tapped, that that could allow for prices potentially to rise, especially if they literally
[9:23] run out at least of barrels that aren't contaminated and that are easily accessible. there's there's some weird narratives around or re weird sort of reality where where they've had to construct odd narratives to explain that the SPR is actually released less than I think it's less than half a million barrels a week the last couple of weeks which is just not you know you saw at the peak releases of close to 10 million barrels of oil from the US SPR in a week
[9:54] and so we're at a 20th of that or less and so that's hard to explain especially as President Trump is out there pushing Europe uh to release its uh own both oil and products stocks in size. >> Absolutely. So, so the the outflows and the the emptying essentially of of the reserves have uh has played great part here. So, [snorts] if you look at the situation right now, Josh, we're we're hearing about um oil outflow from the
[10:24] Middle East, maybe even exceeding pre-wall levels. If you look at it region wise, um it's my feeling. It's always very very hard to judge this week by week that the US has managed to create some sort of um outflow channel in the straight of Hormuz. Um not for Iranian oil, mind you, which is the important part obviously strategically. Um, we have we we can get back to the Saudi pipelines as well. So, how do you see the uh the supply situation right now out of the Middle East and has the
[10:54] US won the battle of Hermuz essentially? >> Yeah, I mean I'm American and I'm a patriot and unfortunately we have not yet won and one of the very interesting dynamics there's a few sort of very interesting dynamics in this war uh that are worth noting because they they seem to keep repeating themselves. So, um, the US in May figured out a way to sneak tankers by, uh, in the middle of the night with their signal off and, um,
[11:25] Iran sort of missed it and various oil market observers missed it because this was, you know, it was like a a James Bond style, you know, getting tankers out. So, by the time we started to hear about it, within a week it was publicly disseminated and then it stopped. And so um similarly we saw starting in August this narrative around uh oil coming out and you didn't really hear too much about it until let's say end of August.
[11:55] There were some big claims by the US uh energy secretary uh Chris Wright and I think by Trump and various other folks and you actually it took about a month you couldn't see it in the data and then a month later you started to actually see it. So, I think they were telling you what they were going to do and maybe the strategy there was to talk about it before they did it this time and then um it wasn't there. The the oil wasn't like you just could see it in the physical market. They're just they it didn't exist. Um and then the flows did ramp
[12:25] how they were describing a month later, but by the time they were talking about how flows out of Hormuz, it looks like there were two or three days maybe where there were flows higher out of Hormuz than there were pre-war. um Iran started to attack tankers a lot more and and even there it was sort of interesting that there's this weird narrative battle going on where the there was I think I can't remember if it was Tanim far one of the Iranian regime linked IRGC linked
[12:56] news channels put out something saying hey we attacked 19 tankers and so I made the mistake of sharing that on social media because again I'm American I'd like America to win But it's official news from one of the two parties of the war and yeah like were 19 attacked I don't know did they did they try to hit 19 I believe that how many were hit you know TBD and it took two weeks I think a week and a half from when that was announced for uh the UK Maritime
[13:26] Authority which somehow has become the official arbiter of these things to release all at once on a Monday morning uh after the market opened that a whole bunch of these tankers had actually been hit and they they called them late reports and that again when you just add into this muddle of news and data and so on, it appears my guess is that that was linked to the US withdrawing strategic bombers from the UK after citing security concerns with the way the UK
[13:58] was dealing with a terror threat. And again, people said, "Hey, that means the war is over because they moved the bombers." And it turned out it was more that the US was worried, at least from what they're saying about there had been an attack on an airfield. Uh, and then the UK released the terror suspects per, you know, US reporting. And again, who knows? Like I don't want to get in the middle of this. Maybe they'll revise this news report again. Um, but anyway, very interesting, weird narrative. And um, that's made it. It's very hard. you
[14:29] can see the data and I think it makes sense to to understand what the data has been showing but also not get too tied to it because in the end it's not really about what the rearview mirror showed over the last week. It's about this trajectory since March and really this trajectory over many years in terms of restricted and unrestricted flows as well as a longer term oil commodity cycle. So, how how do you navigate this uh when running an an energy investment fund? I
[15:00] mean, both the uh obvious jawbon, the government intervention in this market that's very very hard to navigate as an investor, but also this whole fog of war where it's very very hard to tell our ships getting hit and if ships are getting hit, that tells you two things also. It tells you that the Iran is attacking them, but it also tells you that someone tried to to to pass the straight. So, so what's your approach? How do you even begin to treat this uh as an energy investment fund? >> Yeah. So, uh, first off, from a just a
[15:30] pure tanker flow perspective, I do think that we've seen the peak flows for a while through the straight of Hormuz that this wave of attacks on tankers likely means that we're going to see way fewer tankers go through and that these I think it's it's actually sort of like weirdly cynical to have withheld confirmation on these attacks. I think some of these tankers may not have gone through if they knew that others were getting hit. And when you have US
[16:02] insurance for the tankers and then propaganda saying, "Hey, they're not getting hit when they were," I think it induced additional tankers to go through. And one of the reasons I think that is that there were multiple tankers that apparently in the last couple of days when they were warned that they might get hit, they were I mean the IRGC threatened them reportedly and they turned around. And so that makes me think, hey, if they knew that there was a chance they would get hit, they wouldn't have gone through an elevated risk of getting hit. And so I think those flows at least for now have
[16:32] diminished. And then there was this other weird game that's worth highlighting of when straightfors fell, everyone pointed to all the pundits and banks and the Trump administration pointed to the East West pipeline in Saudi Arabia. Oh, hey, no problem. We'll get it out through the West Coast. Then the Houthis get control of the Babal Mendub strait and then they also knock out the east west pipeline and then also hit Yamboo intermittently and some of the refineries on the west coast and
[17:02] then suddenly the narrative is oh we don't need that. The flows through Hormuz are spectacular. Now the flows through Hormuz are are down and there's all this noise again about the East West pipeline which we were told confidently a week ago didn't matter and wasn't necessary. Now we're being told sell oil because the East West pipeline is back on but at a reduced flow rate. So again there's a lot of noise and sort of weirdness. So I I have sort of two time frames that I'm operating on. One is this sort of short-term time frame. How
[17:33] do I not get my face ripped off? I think it was June that was very very painful for energy equities. You know everything I owned was down. Everything in the market almost every oil and gas related stock was down a lot. And so, um, I'd like to avoid that to some extent if possible. And I noticed that there was increasing rhetoric as WTI Oil got over a hundred a couple weeks ago. So, I started to buy just some shorter term out of the money puts on various indexes
[18:04] and various companies that I thought were particularly susceptible that I didn't own shares in, but just that I thought I I called it taco insurance. If um there was another sort of big peace declaration and there was a gap down in oil and a gap down in oil stocks, my view was, hey, these things will print. Maybe I'll get 20x or 50x or something the money I put in, you know, very out of the money, small premiums, not betting the ranch on this or anything, but just, you know, sacrificing
[18:34] essentially a few basis points, uh, you know, maybe 20 basis points, whatever, to be able to be positioned to avoid losing 10 or 20% in a month. and then um maybe losing 5% let's say in a month but also having cash to go by. So that's the very very short term trying to just play these sort of very mini cycles and mostly not even to speculate on them as much as just to sacrifice a little upside in exchange for a lot of potential downside mitigation. And then longer term, I think, well, medium-term,
[19:06] I think that there's a lot of damage to energy infrastructure. And as much as people want to say, hey, there's going to be this flood of oil coming out of the Persian Gulf and out of the Middle East on the backside of this war, my view is most likely, and again, I don't know. No one really knows for sure, but I think that this war could go on longer. It's already gone on way longer than everyone said, for the most part. And so, I'm going to go with, hey, maybe it keeps going. And so from a medium-term perspective, independent of
[19:36] these sort of very short-term taco type risks of uh you know sessation of conflict for a brief period, I think unfortunately the war seems likely to go longer. And so I want that sort of medium-termish exposure. And then just from a long run perspective, I think that we're in the middle of an oil cycle. There's been underinvestment in oil for more than a decade really since 2012. that was sort of the peak of exploration spend right as China's growth was peeking out and uh
[20:08] a lot of other commodities were peeking out right in that 2012 to 2014 time frame and so we've been in a long downturn there's been a lot of harvesting of technology and discoveries that were sort of achieved in that prior bull cycle and the longer the downturn goes the fewer discoveries there are the fewer innovations there are and so on the more upside there ends being in the ensuing commodity bull market. And so right now I think we're in the early stages of that sort of cyclical
[20:39] underinvestment leading to under supply leading to high prices and overinvestment. I think we're getting into that higher prices and then potential overinvestment let's say over the next three years which would lead to over supply. So, I want to be invested here from a cyclical perspective because this to me seems very obvious. And if we get a recession, which may happen, who knows? Um, that may just be another buying opportunity ahead of what seems very likely as an upcycle, which I will
[21:11] sell into and uh, you know, get called an idiot just like I was a complete idiot for buying when things looked really bleak for the oil cycle, let's say, a year and a half ago. >> Very interesting, Josh. Uh I want to dive even more into both the the price of the pump and and and and and the outlook uh uh of the oil price and the the the the investment scope here. But first just just a few notes um for for for people tuning in. Please do post your questions if you're watching this live on Wheel Vision Alpha. Uh we we we do have time to pick up a few questions. So you're you're free to do that.
[21:42] Remember this is our new uh geopolitical show uh called Geopolitical Edge on your geopolitical channel on on YouTube. when we're releasing this, our first show is with uh Josh Young of Bison Interests. Um so just Josh I wanted to obviously on real vision we're talking a lot about inflation right now. Everything is about inflation because that obviously drives the the central bank decisions and etc. So and and and one of the main drivers of the inflation wave that we've seen in 2026 has obviously been energy related also because it trickles down to
[22:13] everything else. So u um what I wanted to ask you is um we've seen a divergence between the oil price and the uh the price of oil products. Uh there's been a lot of talk about a uh a lack lack of refinement capacity. Uh so so even in periods where the oil price has has rolled over a little bit, we've still still seen very very high prices at the pump. Uh we've seen a lack of jet fuel etc. You mentioned that a little bit. So, how do you see that refinery that that lack of refinary capacity? Is it a
[22:45] real thing? What can be done about it? And what's the outlook for that? Um, if if we begin with that. >> Sure. Well, first just on inflation. So, I have my uh hundred trillion dollar Zimbabwe note up there. Uh, as as sort of a reminder to myself that, you know, what's actually happening here? It looks like uh a close friend and I think he's been on Real Vision a bunch of times. Uh Harris Copperman's he came up with this framework of Project Zimbabwe. He's subsequently moved on but I'm still on
[23:16] it. I think uh I think it's sort of a reasonable way to think about things where you end up with this sort of these debt cycles that are really hard to get out of and you know when you have lots of debt so you have a lot of borrowing that's necessary just to pay the interest on the debt and then large government expenditures that are sort of structured into the economy and structured into people's expectations. It's really hard to get out of that and inevitably you end up with a lot of inflation like you mentioned and you end up with much higher commodity prices and
[23:49] um in some cases higher economic activity in bursts and then uh really sort of tough periods and bursts. And so um we saw gold prices and silver prices go nuts last year. We saw really and into the start of this year you saw gold essentially go parabolic and then you saw silver go parabolic. And there's this tendency for oil prices to follow 12 to 18 months after. And so we've seen oil move up, but not nearly as much as gold moved up or not at all as much as
[24:19] silver moved up. And if you look again in prior periods, you saw oil really have a significant up move. So just broadly crude oil wise, thinking about inflation, I think there's a lot of upside potential. getting into crude products. The crude product prices that we're seeing right now are actually very supportive for that theory, too, because we're seeing um mostly there's a little demand destruction, but we're seeing mostly acceptance of diesel and gasoline at $250 barrel equivalents. And so most
[24:51] of that margin right now is going to refiners where you're seeing over a $100 a barrel margin for refining crude oil to turn it into diesel. similar on jet fuel. Last I checked, it was something like an 80s something dollar a barrel margin for gasoline. These are extraordinary margins. The average margin over the last decade if you just cut it off at 2025 was close to $20 a barrel and that was including the Russia Ukraine war. Uh if you exclude Russia
[25:21] Ukraine, you exclude COVID looking back it was close to a $15 a barrel margin. So you're seeing mostly price acceptance of net effectively like $200 to $230 a barrel crude oil. We're testing this in real time economically by seeing what the price at the pump is. And so that may sound aggressive because okay, well that's nice theory, but the reality is it's because of this tightness and refining availability right now. But
[25:53] when you look at it, the the White House finally got something right, which is good, you know, uh I'll give them credit where due. Uh where they they said, "Hey, the the price at the pump is not the direct result of our Iraq or our Iran policy." Sorry, I almost said Iraq because that was the last of big a last cycle. Um so they're not wrong. Like the big problem right now in refining has been they left out China, which is odd, but it's been Ukraine destroying tons of
[26:23] Russian refineries and Russia going from a massive diesel exporter to actually importing diesel. I think for the first time in the history of diesel, they're an I mean Russia's been a oil exporter for the whole I mean what since like 1900 something like that. the caucuses, I mean, is one of the original oil fields commercially, you know, after the discoveries in Pennsylvania very early on. Um, so it's it's remarkable and completely out of ahistoric and out of
[26:55] balance for Russia to be a diesel importer. And then secondarily, China has been extremely restrictive on their refined product exports. And so you have a structural exporter becoming an importer temporarily hopefully due to a temporary hopefully war which has gone on for years but there's been an escalation since the war with Iran of Ukrainian attacks on Russian refineries and then also you know China cut off their refined product exports almost
[27:26] right away after the the war started between the US and Iran in March. And so those two factors have been a huge component of much higher refining uh margins. One offsetting factor that I think will be really helpful uh in in balancing this is that normally US and Canadian refiners are running at about 80% utilization. Right now it's a seasonal down period. They call it for maintenance. The reality is I view it mostly as price control where they they
[27:56] have an oligopoly and they run less in order to be able to get higher prices. Right now there's a Department of Justice investigation into this particular topic. So you know I'm not speculating. They're literally investigating this aspect and that investigation I think this is speculation along with just very high margins has led to very high utilization of refiners that normally would have lower utilization. So we're at about 95 or 96% utilization here in the US and on the Canadian refiners. And so that um
[28:27] that has an extra I think it's something like a couple million barrels a day of diesel and gasoline and jet fuel that are getting produced um here in the US and Canada that that wouldn't have been produced in normal conditions. And so, uh, yeah, the prices are still very high, but we seem to be setting up, especially if with the pressure potentially from Europe and certainly from the US, Ukraine maybe redirects, which we're seeing early indications of, they're attacks more on Russian oil
[28:57] exports and less on Russian refineries. Um, if we see that combination, we could actually see much lower refining margins. And some of that may acrue to the pump where you may see lower gas prices and lower diesel prices, lower jet fuel prices. But you may also see that acrue to crude oil and crude oil producers where higher refining utilization should lead to uh essentially more oil being consumed, which should lead to higher prices, at least relative to the status quo. And
[29:28] then higher oil prices, but also lower pump prices. I've thought this would happen for the last couple months. It's taken a little longer than I thought, but it seems like it's starting to play out. And then just the last point on the Europe SPR release, as Europe releases diesel, these are their emergency stocks, and Europe is under supplied for natural gas and diesel in the current environment because of the war with Ukraine, the Russia war with Ukraine, and because of their sanctions and import bans and so on. And so it seems
[29:59] increasingly likely to me that Europe will start to push real pressure on Ukraine, which they fund and help arm, to not attack as many Russian oil refineries. And again, it's not about Ukraine losing or winning. Uh there's, I think, a good argument that, hey, letting up on those refineries and redirecting to oil exports may have just as much or even more of an impact on Russia's economy from here. And so it's sort of natural, I think. and economic, but also in Europe's best interest uh
[30:31] for for that shift to happen. So, I think I think there's some alignment here where where you may see that shift play out pretty fast. >> Yeah, very interesting. Allow me to just put a pin in the European question because we had a question on that. I'll get back to that. >> So, a quick break in your regular programming. If you're serious about your future, grab my free report called Prepare for 2030. I think you've got 5 years to make as much money as possible. And this guide will help you navigate what's coming. The link is in the description. Download it now.
[31:02] >> But what we what we've also had questions on and just wanted to round that off is is the price of the pump. I think the the point you're making is very interesting that if we see uh uh tighter margins on uh on refinement um it will only lead to more consumption. So so so we just push push the price towards the crude price. That's sort of the same dynamic. That's one question we've had because a lot of European countries I think it's been it's been uh raised as potential solution in the US as well. We've had a lot of talk about removing the u the taxes or the the
[31:32] juice on uh on gasoline and diesel. Would that have the same effect? What what what what experiences do we have around that? And and is there even uh uh are there hope for the for the price of the pump before the midterms? As we had one question here. Yeah, I mean, we're getting really close to US midterm elections, so I'm not sure how much more they're um they're waving uh a restriction on red dye diesel, which is taxed less here in the US, which is weird. It's apparently I was
[32:03] looking at it. It's not great for normal truck engines either. So, um, this may lead to actually weirdly it's sort of like a Keynesian economic boom where like going and breaking a whole bunch of windows and then oh well it's going to be good for window replacements. So there may be a truck engine replacement cycle coming up because they're using a subpar. It's sort of like when they they actually earlier on in the war, I think they like waved some ethanol restrictions and uh so you may end up with uh some car engine uh replacement cycles uh getting
[32:35] you know accelerated and and additional activity there. Um, so yes, uh, lowering the price at the pump via tax cuts is a highly effective short-term solution to this. And frankly, it's weird to me that at least in the US, they didn't come through. And again, like there's a very broken legislative process right now in the US, unfortunately, the opposition minority party is blocking almost all legislation, which is not really what
[33:06] it's designed for. There's supposed to be checks and balances, but not full legislative deadlock. And so I think it's worth mentioning that ahead of this election that there is this deadlock and it's not all one party's fault. The minority party is blocking some stuff that would have helped a lot. So some of the pain is the Democrat's fault. It's not all the Republicans fault. I know that's heresy to like say, "Hey, maybe both sides have [laughter] a stake in the problems as well as the solutions." But a a simple solution would have been
[33:36] to cut the taxes on gasoline and diesel. Um the flip side is like you say over the medium term that could actually just cause more pain because it would reduce the price signal to shift consumption. The problem is that um demand for gasoline and diesel is very insensitive to price. And so the reason you would lower the taxes there is because it would just directly alleviate some of that pain. And really what it does is shift the pain over to other countries.
[34:08] And while that might be cynical, that's sort of very in line with what politicians do, which is favor their constituents over other people. And so um I think you might see maybe you'll see more fuel tax waiverss in the next month just ahead of midterms. Maybe not. But it is very strange to me to see all of the other efforts that have gone into having low prices at the pump beyond just the very simple solution in the
[34:38] short term of the government cutting taxes. I mean in some jurisdictions, US uh like in California or New York or you look at Canada or parts of Europe, I mean a meaningful portion of the price that's being paid at the pump is direct and indirect taxes and regulatory fees and other stuff like that. >> Absolutely. I just want to get back to the point in Europe and I know you're you're positioned in the in North America, not in Europe as I am, but but but still you're you're you're the guy who knows about this stuff. So, so I mean we I've been trying some way. We we
[35:09] we all know that Europe uh is lacking energy sovereignty. Uh we don't produce enough energy. We have to some extent uh committed an energy suicide. We've shut down a lot of natural gas and oil production. Um my country Denmark has reopened some of our fields, but it's very very little. Uh Norway is trying to open some some stuff. But in any way, even when I counted everything I can find, every potential source of uh fossil fuels in Europe, we end up with a big big deficit. Do you see any hope of
[35:39] European energy sovereignty? I mean, even the shell gas projects in in Poland haven't really turned out. Do you see any hope for Europe in uh in this field? >> Yeah, I mean, I think most of Europe's economic problems are self-induced. And so very simply, if Europe cut taxes and regulations, I know this is complete heresy, so you know, uh [laughter] please don't arrest me if I go visit sometime. Beautiful countries, they're nice to go visit. But um yeah, cutting
[36:11] taxes and cutting regulations literally would be miraculous for European economies on many fronts. And unfortunately the solution, the alleged solution to uh higher uh prices, higher electricity prices, higher fuel prices in Europe around the Russia Ukraine war when it started in 2022 and then the energy crisis even before that in 2021 was to shift towards renewables. Uh
[36:41] unfortunately there's a very large coincidence of renewable adoption requirements and even higher electricity prices and even higher fuel prices. So you know mandating energy sources and then heavily taxing certain ones while trying to subsidize other ones, it just doesn't work and it just leads to even higher prices. And so I think the the government causes a problem and then the government comes in to fix it is it's
[37:12] sort of a disease. It's a you know Hayek wrote about it famous Austrian economist uh as the road to surfom. It's this like government intervention trap. And so the solution is very simple but it's also very hard to implement which is just cut taxes, cut regulations and let the market figure it out. And the good news is in jurisdictions where they have tried this, it's worked extremely well. And so whether it's actually discovering and producing more let's say oil or
[37:43] natural gas within Europe or whether it's Europe doing what let's say Japan has done where a number of friends now are working for subsidiaries of Japanese trading companies or Japanese utility companies which have come in and bought US natural gas fields and parts of US LG projects and they're going to have LG shipped to Japan for a fraction. of the current price for LNG because they're just forward thinking and
[38:13] they've allowed the regulators have they had very strict rules and they've all all it's taken is for them to relax some of those rules and now their rate payers are going to benefit for decades potentially from that relaxation. So it's not really about hey does the shale in Poland work which I'm sort of pessimistic on. We'll see even if the regulations went away it it may not work. We'll see. But um just lowering taxes and regulations I think would really help whether it's directly or
[38:43] indirectly solving many of the problems that Europe has not just on the energy front. >> No. And the energy front has so many ribbon on effects. I mean in some countries like my own Denmark we have uh very specific rationing of power. Um so households get their power, existing businesses get their power, but outside of that you have sort of a have a 10-year weight list etc. and and now they've decided to to sort that weight list uh by political purposes which means the data centers go to the very back of that line. So very
[39:14] specifically means that we're not building any data centers uh which is quite a problem when you're in the middle of a of a global AI buildout. But uh but anyway, enough about Europe here. It's it's always good to to have your your pessimism strengthened here a little bit. So so thank you for that. Uh I want to get back to your positioning and your outlook just to make this very specific for our listeners because I know a lot of people are are are very very eager to jump in on this. What what are your maybe you can just repeat in line your your your your timeline for oil as you
[39:44] mentioned uh of of of the cycle and how you're you're positioned right now. >> Yeah. So, in the short term, I'd say no one knows. And there's lots of political pressure to suppress oil prices as well as to the extent they can suppress uh gasoline and diesel prices, especially ahead of this midterm election in early November. So, again, we're getting really close. It's less than a month now. So, um I'm not sure how focused they still I mean I imagine there's
[40:15] still focus on it, but that should diminish as we get to the election and then maybe it recedes in the rearview mirror for a period of time after. Um so in the immediate term truly I don't think anyone knows. I think there's a fair price for oil which is higher based on current inventory levels and demand and supply and so on but in the immediate term no one knows. Um, I think unfortunately it's most likely that this war between the US and Iran continues and that Iran continues to exercise its
[40:46] various options to restrict oil flows. And so far it's not proven that the US or anyone can really fully evade those. As you know, again, the Saudis were sort of shipping oil to their west coast. You saw the Houthis and uh Iranbacked militias in Iraq uh shooting at those pumping stations and hitting various uh infrastructure there. You saw Iran hit a
[41:16] bunch of tankers uh which were the reporting shockingly was delayed. Uh so in the the mediumish term let's say beyond let's say the next month it does look like unfortunately the war continues and unfortunately probably oil prices go much higher and then I'm pretty bullish oil from a cyclical perspective where we just haven't had that wave of rig additions we haven't had the big conventional discoveries and we have huge depletion which I didn't
[41:46] mention before but you need to add somewhere between six and maybe 12 million barrels a day of oil and natural gas liquids of supply every year just to make up for depletion of existing fields. And as more and more production is being sourced from the US unconventional, Canada unconventional um the decline rates for that that production base are actually rising. They're not falling. And so you're
[42:16] you're on this so they call it a red queen effect where the faster you go the faster the problem grows. And so you really need I think more conventional exploration and delineation activity and you need more development of conventional oil prospects and that's just not been happening so far. A and you also need probably an acceleration of this sort of lower tier US oil shale development which is also not happening. So in terms of positioning specifically
[42:47] um I think that there's the temptation to go in what's worked but I think what's worked is actually very very risky here. So specifically I think oil tankers some of the tanker experts who I follow um are are ex you know encouraging caution because yeah there's very high rates right now and yeah tankers are getting hit which is sort of uh perversely very bullish for it's direct kinetic supply restriction of tankers but there's a big build cycle
[43:18] going on and very high rates and it's very hard to imagine much higher rates from here that are durable and so most likely you see tanker rates fall similar with refiners, very very high, historically high margins which are leading to potential restarts of refineries even in places that are hostile to oil like California. Um you're seeing expansions in refineries. You're seeing new builds. There's that Dangote uh IPO which I'm not involved in
[43:48] but that's happening. And uh they're going to do a east uh eastern Africa refinery after their uh it was it took a while but tremendously successful um what is it Nigeria refinery and now they're going to do one in Kenya. You're going to see a bunch of this sort of resource nationalism on the refinery side. So those to me are very uninteresting and I actually have through derivatives small net effective short positions on those just because again I don't short stocks but I'll I'll sort of almost as a hedge right if
[44:19] there's a big financial crisis or other sort of collapse those things actually maybe have the most downside. So they're sort of the easiest for me to get downside exposure to through paying premium and getting that left tail exposure. And then the most interesting things conversely to me are smaller cap producers that don't have that refining exposure, haven't had their earnings lifted by ultra high refining margins, but also um may benefit to the extent that things play out how I'm expecting
[44:49] and oil prices rise and maybe refining margins fall. And it doesn't appear the market's giving them any credit for even current prices. is a number of these companies are trading as if oil is going to be at 65 let's say for a while or 70 depending on their market and then similarly services companies that are focused particularly onshore where I think we're going to get another wave higher of activity US Canada and international where people don't really talk about this much when they talk about the oil cycle they seem to really
[45:20] talk a lot about the offshore drillers and services companies and I think there's really this underfollowed but very obvious onshore potential boom that we may see in the next let's say 12 to 18 months which seems very promising to me and a number of these companies uh just to to pick on them for a second there is this weird thing where deep value investors try to buy stocks at a large discount to replacement cost and then um you know earningsoriented
[45:50] investors typical investors look for high free cash flow yields low price toearnings multiples which ironically cycl cyclically are usually good signs of the top of a cycle and like the refiners are at low price to earnings multiples but again to me that's very scary. Um but some of these services stocks they're both deep value investments as a huge discount to replacement cost and trading at double digit free cash flow yields and so this should not happen and they send I think very weird confusing messages to the
[46:21] market and to me that message is it's like the Jim Kramer button like bye bye bye. Um, so that that's that's what I'm doing. >> Incredibly interesting, Josh. Thanks. Thanks a lot for laying that out. I just want to finish with one final listener question here that we had from uh from Robert on the platform. Uh, and you you you did touch a bit on Nat Gas already, but but but uh just to get even more into it here, uh, great video so far, guys. Do you does your guest have any outlook for for for natural gas uh in
[46:51] the US? any hope for a bullish uptick and any opinion on what's the best area in net gas equities that makes sense from a position standpoint? >> Yeah, natural gas is really hard because I want to be bullish because there's this huge buildout of LNG export and then there's been a lot of data center spend but not a lot that have actually turned on yet. So, you know, there's more demand coming. The problem is that first Citadel came into the US natural gas market uh via what is it? Apex. They named it after Ken Griffin's dinosaur.
[47:21] um they uh they bought uh various natural gas uh companies and inventory and they've hit it very very aggressively and I think they're making money on the trading side or something best I can tell because they're not making money on the production side. They're prices are way too low to be as aggressive in my opinion, my assessment. I don't have their financials. Um but then it looked like they were having too much fun. So I don't remember the name but it's the old I think Glen Core they Cantalon I don't know something like that they renamed and they just bought
[47:53] um a they did a large uh transaction in the Hannesville recently and the one of the reasons cited in the Bloomberg report on this was that they had 300 locations and the potential to grow their production a lot. So um unfortunately there are some it used to be the big public or the public companies that were sort of the uh transgressors on the capital allocation side. Now it's weirdly very smart commodity traders who I think are maybe they're flooding the market and then shorting the the physical way more than
[48:24] their whatever. I'm not sure what the strategy is exactly there, but um the bad news is for gas bulls that the writing's on the wall with another 300 locations on this latest transaction that was just announced and Citadel keeps via Apex keeps buying stuff and you know they use great service providers using a lot of rigs. So again, good for my rig thesis and weirdly you've seen sustained drilling activity for gas even with low prices. That is not a recipe for high prices. So, I'm
[48:54] not short these stocks. I'm not whatever. I just It's just so hard to tell what's going to happen. And it feels like the writing's on the wall for higher than rational production growth. And then just the last thing, there's there's sort of this igopoly of public gas producers and they seem to be looking at what these private companies are doing and saying, "Hey, that's fun." And going and drilling too much, too. There's been way too little capital discipline in my view by the large producers. I think they should look at
[49:25] what the refiners did over the last decade where they turned a business that was horrible into a business that was very lucrative through supply and capacity management and these gas producers have not done that. It's great for the US economy. It's great like you said Denmark's not facilitating data centers. the US has been at least at the federal level facilitating data centers and this flood of gas that's coming in thanks you know I don't know if anyone ever says thanks to Citadel but thanks Ken Griffin for the low power prices
[49:55] relative to where they would have been uh thanks to Glenor likely for the future lower natural gas prices but as an equity investor man just very hard and uh for the reasons I just cited I'm I'm just not participating for now. Thanks a lot for that, Josh. And thanks a lot for joining the show. It was incredibly interesting and uh uh educating here. So, thanks a lot for that. As always, uh Josh is a great follow on on X and be sure to check out his his work at B interest. So, uh
[50:25] thanks a lot to you for for joining, Josh. >> Yeah, thank you for having me. I really appreciate it. >> Absolutely. That was all we had for you in this first edition of the geopolitical edge, our new geopolitical series on uh real vision. We are always happy to take in your feedback. Uh and also if you like what you saw, please please remember to uh subscribe and like uh this video so we can get even more coverage and traction on YouTube and elsewhere. Thanks to Josh. Thanks to everyone for watching. We'll be back on Real Vision. So, you obviously like this
[50:55] video enough that you've got to the end. That's quite a big task. But listen, do me a favor. Hit the like and subscribe button and also check out what videos next cuz I think you'll love it. But if you want even more, and when I'm talking more, I'm talking about memberergenerated ideas, incredible alpha research, everything there to help you in your journey, just head to realton.com/join for the best financial intelligence out there and the pure alpha that's within the platform.
[0:40] and the hottest topic. Uh, [laughter] at least we have you, Josh. Very very pleased to to have you on the show. Welcome. How are you doing, Josh? >> Good. I was excited to hear the hottest guy and the hottest topic. What is it? Who is it? >> That's supposed to be you, Josh. It's uh this is the hottest topic anyway and I think you're you're you're one of the guys really drawing attention to this on uh on X. Let me start. Josh, we we we had a talk earlier this year. How has this year been for for for for an oil oil oil analyst such as yourself? Well, it's been very volatile, but also
[1:12] very lucrative. And really, I think the game has been to be optimistic from, I think, an equity price perspective and to not get too fixated on any one headline or any one uh narrative. >> Absolutely. Today, we're going to try and unwrap what the market gets wrong about oil right now. What's the outlook? what uh what have we seen and what has been driven driving this very very volatile oil uh setup throughout 2026. Um before we get into it, Josh, I um I
[1:43] look a little bit into your uh your company and what you're doing. you're obviously working with Bison Interests and you're running the uh part of running the the Bison Energy Opportunity Fund and you've had quite quite nice returns especially this year if you compare it to to benchmark like energy indexes uh and and over the 10 11 years you since you've been doing it you've had a 10.4 four annualized net return uh and and 207.9 [clears throat] um total return since your inception. Uh how have you managed to do that? Because
[2:13] I think energy markets are um something that a lot of traders follow. The energy index should be following things. How do you manage to do this? >> Yeah, I I try to not lose money. So, uh, I'm not always successful, but so I think the the returns, uh, since you mentioned it, just putting it in context, the the index that I get comped with is the small cap. It's the S&P 600 energy, which is down, I think, 5% a
[2:44] year since we launched, which is, >> yeah, >> just insane. So yeah, look, I think it's the the combination I I was jokingly saying not lose money. The the way to not do that is to try to make as few mistakes as possible and not repeat them and then try to find sort of this combination of right commodity exposure along with the right values and trying to I've learned over time to try to buy stocks of companies that are improving and doing better rather than trying to
[3:15] buy into situations that seem valuep priced but where things are maybe deteriorating. >> Yeah. And it seems like what what you've been doing well is catch some of the big uptrends both leading into 2022. Obviously the years up to that and also the years up to the Iran war. So so so really really great work. Really interesting. We're going to dive more into how you you guys are positioned right now as far as you can tell us that. Uh we'll dive into that. But also your your look on uh uh on oil markets. So Josh, when we talked earlier this year um we were in the midst of the sort
[3:46] of the first phase of the Iran war. Uh the the war um slowed down over the summer. We had the memorandum of understanding. The war restarted and we're now very very close to the midterms. So we're close to the point where some oil analysts predicted now if this goes on until the midterms, we're looking at uh a Brent price of $200. So what went wrong with that? What what what deviated from that assessment? And why are we still just above $100 in oil? If if you follow that perspective.
[4:16] >> Yeah. Yeah. I think it's a great question. I think the the assumption was that if flows were going to be restricted that they would stay restricted and that the US to the extent that it was going to pursue this war with Iran would pursue it in a rational manner. And that those are I think base assumptions that would have been somewhat reasonable at the time. But instead of the US for example uh imposing and enforcing sanctions on Iran
[4:46] consistently from even let's say before the start of the war you had this very weird dynamic where the US allowed and actually fully waved sanctions on Iranian oil in uh the May June time frame and you saw this whole wave of oil both Iranian which had been on the water in some cases for years and heavily sanctioned and whatever. Um, as well as a lot of supply that had built up from
[5:16] other Middle East sort of Persian Gulf producers all come out in a wave in that sort of June time frame and getting into this weird situation where overall there was an oil shortage and global inventories are down it looks like more than a billion barrels from the start of this year. uh but at the same time having sort of a mini glut in the middle of a larger shortage sort of a stock flow type problem. So that's how you end
[5:48] up in a situation where oil prices are lower even with inventory levels much lower. And then there's one other dynamic worth mentioning which is that since the start of the Iran war uh the US president as well as various US senior officials have stated that the war is ending soon. I think even two days in uh President Trump said the war is ending soon. I can't remember the exact timeline that he gave, but days, weeks, months, back to days. And he I
[6:19] think he said over a hundred times that the Iran war is ending soon or that the US had already won the war. And so I think this job owning is increasingly ineffective. But if you look at sort of the big peace announcements or sort of the big job attempts, they've been at points where oil prices were starting to break out. So, if you put your tech, I'm not really a technical analyst, but if you put your technical analyst hat on, you say, "Hey, what's the optimal time to put out news that's bearish for oil,
[6:50] conveniently, that news came out at literally the most optimal times from an oil price chart, which again, short-term has been bearish, but it has me increasingly bullish because that looks a lot to me like overt price suppression." And when I look historically at what's happened after price suppression, almost never has it been lower prices, uh, you know, this should not be surprising, I think, to anyone who's a student of free markets.
[7:20] When you try to push prices down from a government intervention perspective, in the end, you get much higher prices. But while it's happening, you can end up with prices that are sort of irrational and where it's necessary to get into these sort of handwavy explanations to to understand what's happening in the moment. >> Yeah. It seems like sometimes the war has been moving in sine waves and you've all sometimes at at at periods you've almost had this weekly uh schedule of Monday and Sunday you get you almost had
[7:51] that at at one point. So how much has the outflow of inventories out of the US but but perhaps most importantly China uh what role has that played here and and how how how low are we in those inventories? Yeah. So, it looks like the US is down hundreds of millions of barrels and I don't want to give I don't remember the exact number offhand, but it looks like was it 300 or 400 million barrels of crude oil and then another 100 million plus of products, which there aren't
[8:22] large product stocks, so that's a big deal to be down a lot. Uh we're at last I checked fiveyear seasonal lows for diesel which is partly why diesel prices are close to $250 a barrel uh when you know measured at the I think that's even at the wholesale price but I'd have to go double check. Um, and then similar gasoline levels really low, jet fuel levels really low, and even some other products that should in theory be in surplus because the US is a net exporter
[8:53] of them also also at quite low levels. So yeah, the US inventory level is low and some of that's been buffered by releases of strategic petroleum reserves, which some analysts say you should exclude. But if they're used to keep prices low when they're being released, then you would think that the converse should also be true, which is that when they either get refilled or are just no longer being tapped, that that could allow for prices potentially to rise, especially if they literally
[9:23] run out at least of barrels that aren't contaminated and that are easily accessible. there's there's some weird narratives around or re weird sort of reality where where they've had to construct odd narratives to explain that the SPR is actually released less than I think it's less than half a million barrels a week the last couple of weeks which is just not you know you saw at the peak releases of close to 10 million barrels of oil from the US SPR in a week
[9:54] and so we're at a 20th of that or less and so that's hard to explain especially as President Trump is out there pushing Europe uh to release its uh own both oil and products stocks in size. >> Absolutely. So, so the the outflows and the the emptying essentially of of the reserves have uh has played great part here. So, [snorts] if you look at the situation right now, Josh, we're we're hearing about um oil outflow from the
[10:24] Middle East, maybe even exceeding pre-wall levels. If you look at it region wise, um it's my feeling. It's always very very hard to judge this week by week that the US has managed to create some sort of um outflow channel in the straight of Hormuz. Um not for Iranian oil, mind you, which is the important part obviously strategically. Um, we have we we can get back to the Saudi pipelines as well. So, how do you see the uh the supply situation right now out of the Middle East and has the
[10:54] US won the battle of Hermuz essentially? >> Yeah, I mean I'm American and I'm a patriot and unfortunately we have not yet won and one of the very interesting dynamics there's a few sort of very interesting dynamics in this war uh that are worth noting because they they seem to keep repeating themselves. So, um, the US in May figured out a way to sneak tankers by, uh, in the middle of the night with their signal off and, um,
[11:25] Iran sort of missed it and various oil market observers missed it because this was, you know, it was like a a James Bond style, you know, getting tankers out. So, by the time we started to hear about it, within a week it was publicly disseminated and then it stopped. And so um similarly we saw starting in August this narrative around uh oil coming out and you didn't really hear too much about it until let's say end of August.
[11:55] There were some big claims by the US uh energy secretary uh Chris Wright and I think by Trump and various other folks and you actually it took about a month you couldn't see it in the data and then a month later you started to actually see it. So, I think they were telling you what they were going to do and maybe the strategy there was to talk about it before they did it this time and then um it wasn't there. The the oil wasn't like you just could see it in the physical market. They're just they it didn't exist. Um and then the flows did ramp
[12:25] how they were describing a month later, but by the time they were talking about how flows out of Hormuz, it looks like there were two or three days maybe where there were flows higher out of Hormuz than there were pre-war. um Iran started to attack tankers a lot more and and even there it was sort of interesting that there's this weird narrative battle going on where the there was I think I can't remember if it was Tanim far one of the Iranian regime linked IRGC linked
[12:56] news channels put out something saying hey we attacked 19 tankers and so I made the mistake of sharing that on social media because again I'm American I'd like America to win But it's official news from one of the two parties of the war and yeah like were 19 attacked I don't know did they did they try to hit 19 I believe that how many were hit you know TBD and it took two weeks I think a week and a half from when that was announced for uh the UK Maritime
[13:26] Authority which somehow has become the official arbiter of these things to release all at once on a Monday morning uh after the market opened that a whole bunch of these tankers had actually been hit and they they called them late reports and that again when you just add into this muddle of news and data and so on, it appears my guess is that that was linked to the US withdrawing strategic bombers from the UK after citing security concerns with the way the UK
[13:58] was dealing with a terror threat. And again, people said, "Hey, that means the war is over because they moved the bombers." And it turned out it was more that the US was worried, at least from what they're saying about there had been an attack on an airfield. Uh, and then the UK released the terror suspects per, you know, US reporting. And again, who knows? Like I don't want to get in the middle of this. Maybe they'll revise this news report again. Um, but anyway, very interesting, weird narrative. And um, that's made it. It's very hard. you
[14:29] can see the data and I think it makes sense to to understand what the data has been showing but also not get too tied to it because in the end it's not really about what the rearview mirror showed over the last week. It's about this trajectory since March and really this trajectory over many years in terms of restricted and unrestricted flows as well as a longer term oil commodity cycle. So, how how do you navigate this uh when running an an energy investment fund? I
[15:00] mean, both the uh obvious jawbon, the government intervention in this market that's very very hard to navigate as an investor, but also this whole fog of war where it's very very hard to tell our ships getting hit and if ships are getting hit, that tells you two things also. It tells you that the Iran is attacking them, but it also tells you that someone tried to to to pass the straight. So, so what's your approach? How do you even begin to treat this uh as an energy investment fund? >> Yeah. So, uh, first off, from a just a
[15:30] pure tanker flow perspective, I do think that we've seen the peak flows for a while through the straight of Hormuz that this wave of attacks on tankers likely means that we're going to see way fewer tankers go through and that these I think it's it's actually sort of like weirdly cynical to have withheld confirmation on these attacks. I think some of these tankers may not have gone through if they knew that others were getting hit. And when you have US
[16:02] insurance for the tankers and then propaganda saying, "Hey, they're not getting hit when they were," I think it induced additional tankers to go through. And one of the reasons I think that is that there were multiple tankers that apparently in the last couple of days when they were warned that they might get hit, they were I mean the IRGC threatened them reportedly and they turned around. And so that makes me think, hey, if they knew that there was a chance they would get hit, they wouldn't have gone through an elevated risk of getting hit. And so I think those flows at least for now have
[16:32] diminished. And then there was this other weird game that's worth highlighting of when straightfors fell, everyone pointed to all the pundits and banks and the Trump administration pointed to the East West pipeline in Saudi Arabia. Oh, hey, no problem. We'll get it out through the West Coast. Then the Houthis get control of the Babal Mendub strait and then they also knock out the east west pipeline and then also hit Yamboo intermittently and some of the refineries on the west coast and
[17:02] then suddenly the narrative is oh we don't need that. The flows through Hormuz are spectacular. Now the flows through Hormuz are are down and there's all this noise again about the East West pipeline which we were told confidently a week ago didn't matter and wasn't necessary. Now we're being told sell oil because the East West pipeline is back on but at a reduced flow rate. So again there's a lot of noise and sort of weirdness. So I I have sort of two time frames that I'm operating on. One is this sort of short-term time frame. How
[17:33] do I not get my face ripped off? I think it was June that was very very painful for energy equities. You know everything I owned was down. Everything in the market almost every oil and gas related stock was down a lot. And so, um, I'd like to avoid that to some extent if possible. And I noticed that there was increasing rhetoric as WTI Oil got over a hundred a couple weeks ago. So, I started to buy just some shorter term out of the money puts on various indexes
[18:04] and various companies that I thought were particularly susceptible that I didn't own shares in, but just that I thought I I called it taco insurance. If um there was another sort of big peace declaration and there was a gap down in oil and a gap down in oil stocks, my view was, hey, these things will print. Maybe I'll get 20x or 50x or something the money I put in, you know, very out of the money, small premiums, not betting the ranch on this or anything, but just, you know, sacrificing
[18:34] essentially a few basis points, uh, you know, maybe 20 basis points, whatever, to be able to be positioned to avoid losing 10 or 20% in a month. and then um maybe losing 5% let's say in a month but also having cash to go by. So that's the very very short term trying to just play these sort of very mini cycles and mostly not even to speculate on them as much as just to sacrifice a little upside in exchange for a lot of potential downside mitigation. And then longer term, I think, well, medium-term,
[19:06] I think that there's a lot of damage to energy infrastructure. And as much as people want to say, hey, there's going to be this flood of oil coming out of the Persian Gulf and out of the Middle East on the backside of this war, my view is most likely, and again, I don't know. No one really knows for sure, but I think that this war could go on longer. It's already gone on way longer than everyone said, for the most part. And so, I'm going to go with, hey, maybe it keeps going. And so from a medium-term perspective, independent of
[19:36] these sort of very short-term taco type risks of uh you know sessation of conflict for a brief period, I think unfortunately the war seems likely to go longer. And so I want that sort of medium-termish exposure. And then just from a long run perspective, I think that we're in the middle of an oil cycle. There's been underinvestment in oil for more than a decade really since 2012. that was sort of the peak of exploration spend right as China's growth was peeking out and uh
[20:08] a lot of other commodities were peeking out right in that 2012 to 2014 time frame and so we've been in a long downturn there's been a lot of harvesting of technology and discoveries that were sort of achieved in that prior bull cycle and the longer the downturn goes the fewer discoveries there are the fewer innovations there are and so on the more upside there ends being in the ensuing commodity bull market. And so right now I think we're in the early stages of that sort of cyclical
[20:39] underinvestment leading to under supply leading to high prices and overinvestment. I think we're getting into that higher prices and then potential overinvestment let's say over the next three years which would lead to over supply. So, I want to be invested here from a cyclical perspective because this to me seems very obvious. And if we get a recession, which may happen, who knows? Um, that may just be another buying opportunity ahead of what seems very likely as an upcycle, which I will
[21:11] sell into and uh, you know, get called an idiot just like I was a complete idiot for buying when things looked really bleak for the oil cycle, let's say, a year and a half ago. >> Very interesting, Josh. Uh I want to dive even more into both the the price of the pump and and and and and the outlook uh uh of the oil price and the the the the investment scope here. But first just just a few notes um for for for people tuning in. Please do post your questions if you're watching this live on Wheel Vision Alpha. Uh we we we do have time to pick up a few questions. So you're you're free to do that.
[21:42] Remember this is our new uh geopolitical show uh called Geopolitical Edge on your geopolitical channel on on YouTube. when we're releasing this, our first show is with uh Josh Young of Bison Interests. Um so just Josh I wanted to obviously on real vision we're talking a lot about inflation right now. Everything is about inflation because that obviously drives the the central bank decisions and etc. So and and and one of the main drivers of the inflation wave that we've seen in 2026 has obviously been energy related also because it trickles down to
[22:13] everything else. So u um what I wanted to ask you is um we've seen a divergence between the oil price and the uh the price of oil products. Uh there's been a lot of talk about a uh a lack lack of refinement capacity. Uh so so even in periods where the oil price has has rolled over a little bit, we've still still seen very very high prices at the pump. Uh we've seen a lack of jet fuel etc. You mentioned that a little bit. So, how do you see that refinery that that lack of refinary capacity? Is it a
[22:45] real thing? What can be done about it? And what's the outlook for that? Um, if if we begin with that. >> Sure. Well, first just on inflation. So, I have my uh hundred trillion dollar Zimbabwe note up there. Uh, as as sort of a reminder to myself that, you know, what's actually happening here? It looks like uh a close friend and I think he's been on Real Vision a bunch of times. Uh Harris Copperman's he came up with this framework of Project Zimbabwe. He's subsequently moved on but I'm still on
[23:16] it. I think uh I think it's sort of a reasonable way to think about things where you end up with this sort of these debt cycles that are really hard to get out of and you know when you have lots of debt so you have a lot of borrowing that's necessary just to pay the interest on the debt and then large government expenditures that are sort of structured into the economy and structured into people's expectations. It's really hard to get out of that and inevitably you end up with a lot of inflation like you mentioned and you end up with much higher commodity prices and
[23:49] um in some cases higher economic activity in bursts and then uh really sort of tough periods and bursts. And so um we saw gold prices and silver prices go nuts last year. We saw really and into the start of this year you saw gold essentially go parabolic and then you saw silver go parabolic. And there's this tendency for oil prices to follow 12 to 18 months after. And so we've seen oil move up, but not nearly as much as gold moved up or not at all as much as
[24:19] silver moved up. And if you look again in prior periods, you saw oil really have a significant up move. So just broadly crude oil wise, thinking about inflation, I think there's a lot of upside potential. getting into crude products. The crude product prices that we're seeing right now are actually very supportive for that theory, too, because we're seeing um mostly there's a little demand destruction, but we're seeing mostly acceptance of diesel and gasoline at $250 barrel equivalents. And so most
[24:51] of that margin right now is going to refiners where you're seeing over a $100 a barrel margin for refining crude oil to turn it into diesel. similar on jet fuel. Last I checked, it was something like an 80s something dollar a barrel margin for gasoline. These are extraordinary margins. The average margin over the last decade if you just cut it off at 2025 was close to $20 a barrel and that was including the Russia Ukraine war. Uh if you exclude Russia
[25:21] Ukraine, you exclude COVID looking back it was close to a $15 a barrel margin. So you're seeing mostly price acceptance of net effectively like $200 to $230 a barrel crude oil. We're testing this in real time economically by seeing what the price at the pump is. And so that may sound aggressive because okay, well that's nice theory, but the reality is it's because of this tightness and refining availability right now. But
[25:53] when you look at it, the the White House finally got something right, which is good, you know, uh I'll give them credit where due. Uh where they they said, "Hey, the the price at the pump is not the direct result of our Iraq or our Iran policy." Sorry, I almost said Iraq because that was the last of big a last cycle. Um so they're not wrong. Like the big problem right now in refining has been they left out China, which is odd, but it's been Ukraine destroying tons of
[26:23] Russian refineries and Russia going from a massive diesel exporter to actually importing diesel. I think for the first time in the history of diesel, they're an I mean Russia's been a oil exporter for the whole I mean what since like 1900 something like that. the caucuses, I mean, is one of the original oil fields commercially, you know, after the discoveries in Pennsylvania very early on. Um, so it's it's remarkable and completely out of ahistoric and out of
[26:55] balance for Russia to be a diesel importer. And then secondarily, China has been extremely restrictive on their refined product exports. And so you have a structural exporter becoming an importer temporarily hopefully due to a temporary hopefully war which has gone on for years but there's been an escalation since the war with Iran of Ukrainian attacks on Russian refineries and then also you know China cut off their refined product exports almost
[27:26] right away after the the war started between the US and Iran in March. And so those two factors have been a huge component of much higher refining uh margins. One offsetting factor that I think will be really helpful uh in in balancing this is that normally US and Canadian refiners are running at about 80% utilization. Right now it's a seasonal down period. They call it for maintenance. The reality is I view it mostly as price control where they they
[27:56] have an oligopoly and they run less in order to be able to get higher prices. Right now there's a Department of Justice investigation into this particular topic. So you know I'm not speculating. They're literally investigating this aspect and that investigation I think this is speculation along with just very high margins has led to very high utilization of refiners that normally would have lower utilization. So we're at about 95 or 96% utilization here in the US and on the Canadian refiners. And so that um
[28:27] that has an extra I think it's something like a couple million barrels a day of diesel and gasoline and jet fuel that are getting produced um here in the US and Canada that that wouldn't have been produced in normal conditions. And so, uh, yeah, the prices are still very high, but we seem to be setting up, especially if with the pressure potentially from Europe and certainly from the US, Ukraine maybe redirects, which we're seeing early indications of, they're attacks more on Russian oil
[28:57] exports and less on Russian refineries. Um, if we see that combination, we could actually see much lower refining margins. And some of that may acrue to the pump where you may see lower gas prices and lower diesel prices, lower jet fuel prices. But you may also see that acrue to crude oil and crude oil producers where higher refining utilization should lead to uh essentially more oil being consumed, which should lead to higher prices, at least relative to the status quo. And
[29:28] then higher oil prices, but also lower pump prices. I've thought this would happen for the last couple months. It's taken a little longer than I thought, but it seems like it's starting to play out. And then just the last point on the Europe SPR release, as Europe releases diesel, these are their emergency stocks, and Europe is under supplied for natural gas and diesel in the current environment because of the war with Ukraine, the Russia war with Ukraine, and because of their sanctions and import bans and so on. And so it seems
[29:59] increasingly likely to me that Europe will start to push real pressure on Ukraine, which they fund and help arm, to not attack as many Russian oil refineries. And again, it's not about Ukraine losing or winning. Uh there's, I think, a good argument that, hey, letting up on those refineries and redirecting to oil exports may have just as much or even more of an impact on Russia's economy from here. And so it's sort of natural, I think. and economic, but also in Europe's best interest uh
[30:31] for for that shift to happen. So, I think I think there's some alignment here where where you may see that shift play out pretty fast. >> Yeah, very interesting. Allow me to just put a pin in the European question because we had a question on that. I'll get back to that. >> So, a quick break in your regular programming. If you're serious about your future, grab my free report called Prepare for 2030. I think you've got 5 years to make as much money as possible. And this guide will help you navigate what's coming. The link is in the description. Download it now.
[31:02] >> But what we what we've also had questions on and just wanted to round that off is is the price of the pump. I think the the point you're making is very interesting that if we see uh uh tighter margins on uh on refinement um it will only lead to more consumption. So so so we just push push the price towards the crude price. That's sort of the same dynamic. That's one question we've had because a lot of European countries I think it's been it's been uh raised as potential solution in the US as well. We've had a lot of talk about removing the u the taxes or the the
[31:32] juice on uh on gasoline and diesel. Would that have the same effect? What what what what experiences do we have around that? And and is there even uh uh are there hope for the for the price of the pump before the midterms? As we had one question here. Yeah, I mean, we're getting really close to US midterm elections, so I'm not sure how much more they're um they're waving uh a restriction on red dye diesel, which is taxed less here in the US, which is weird. It's apparently I was
[32:03] looking at it. It's not great for normal truck engines either. So, um, this may lead to actually weirdly it's sort of like a Keynesian economic boom where like going and breaking a whole bunch of windows and then oh well it's going to be good for window replacements. So there may be a truck engine replacement cycle coming up because they're using a subpar. It's sort of like when they they actually earlier on in the war, I think they like waved some ethanol restrictions and uh so you may end up with uh some car engine uh replacement cycles uh getting
[32:35] you know accelerated and and additional activity there. Um, so yes, uh, lowering the price at the pump via tax cuts is a highly effective short-term solution to this. And frankly, it's weird to me that at least in the US, they didn't come through. And again, like there's a very broken legislative process right now in the US, unfortunately, the opposition minority party is blocking almost all legislation, which is not really what
[33:06] it's designed for. There's supposed to be checks and balances, but not full legislative deadlock. And so I think it's worth mentioning that ahead of this election that there is this deadlock and it's not all one party's fault. The minority party is blocking some stuff that would have helped a lot. So some of the pain is the Democrat's fault. It's not all the Republicans fault. I know that's heresy to like say, "Hey, maybe both sides have [laughter] a stake in the problems as well as the solutions." But a a simple solution would have been
[33:36] to cut the taxes on gasoline and diesel. Um the flip side is like you say over the medium term that could actually just cause more pain because it would reduce the price signal to shift consumption. The problem is that um demand for gasoline and diesel is very insensitive to price. And so the reason you would lower the taxes there is because it would just directly alleviate some of that pain. And really what it does is shift the pain over to other countries.
[34:08] And while that might be cynical, that's sort of very in line with what politicians do, which is favor their constituents over other people. And so um I think you might see maybe you'll see more fuel tax waiverss in the next month just ahead of midterms. Maybe not. But it is very strange to me to see all of the other efforts that have gone into having low prices at the pump beyond just the very simple solution in the
[34:38] short term of the government cutting taxes. I mean in some jurisdictions, US uh like in California or New York or you look at Canada or parts of Europe, I mean a meaningful portion of the price that's being paid at the pump is direct and indirect taxes and regulatory fees and other stuff like that. >> Absolutely. I just want to get back to the point in Europe and I know you're you're positioned in the in North America, not in Europe as I am, but but but still you're you're you're the guy who knows about this stuff. So, so I mean we I've been trying some way. We we
[35:09] we all know that Europe uh is lacking energy sovereignty. Uh we don't produce enough energy. We have to some extent uh committed an energy suicide. We've shut down a lot of natural gas and oil production. Um my country Denmark has reopened some of our fields, but it's very very little. Uh Norway is trying to open some some stuff. But in any way, even when I counted everything I can find, every potential source of uh fossil fuels in Europe, we end up with a big big deficit. Do you see any hope of
[35:39] European energy sovereignty? I mean, even the shell gas projects in in Poland haven't really turned out. Do you see any hope for Europe in uh in this field? >> Yeah, I mean, I think most of Europe's economic problems are self-induced. And so very simply, if Europe cut taxes and regulations, I know this is complete heresy, so you know, uh [laughter] please don't arrest me if I go visit sometime. Beautiful countries, they're nice to go visit. But um yeah, cutting
[36:11] taxes and cutting regulations literally would be miraculous for European economies on many fronts. And unfortunately the solution, the alleged solution to uh higher uh prices, higher electricity prices, higher fuel prices in Europe around the Russia Ukraine war when it started in 2022 and then the energy crisis even before that in 2021 was to shift towards renewables. Uh
[36:41] unfortunately there's a very large coincidence of renewable adoption requirements and even higher electricity prices and even higher fuel prices. So you know mandating energy sources and then heavily taxing certain ones while trying to subsidize other ones, it just doesn't work and it just leads to even higher prices. And so I think the the government causes a problem and then the government comes in to fix it is it's
[37:12] sort of a disease. It's a you know Hayek wrote about it famous Austrian economist uh as the road to surfom. It's this like government intervention trap. And so the solution is very simple but it's also very hard to implement which is just cut taxes, cut regulations and let the market figure it out. And the good news is in jurisdictions where they have tried this, it's worked extremely well. And so whether it's actually discovering and producing more let's say oil or
[37:43] natural gas within Europe or whether it's Europe doing what let's say Japan has done where a number of friends now are working for subsidiaries of Japanese trading companies or Japanese utility companies which have come in and bought US natural gas fields and parts of US LG projects and they're going to have LG shipped to Japan for a fraction. of the current price for LNG because they're just forward thinking and
[38:13] they've allowed the regulators have they had very strict rules and they've all all it's taken is for them to relax some of those rules and now their rate payers are going to benefit for decades potentially from that relaxation. So it's not really about hey does the shale in Poland work which I'm sort of pessimistic on. We'll see even if the regulations went away it it may not work. We'll see. But um just lowering taxes and regulations I think would really help whether it's directly or
[38:43] indirectly solving many of the problems that Europe has not just on the energy front. >> No. And the energy front has so many ribbon on effects. I mean in some countries like my own Denmark we have uh very specific rationing of power. Um so households get their power, existing businesses get their power, but outside of that you have sort of a have a 10-year weight list etc. and and now they've decided to to sort that weight list uh by political purposes which means the data centers go to the very back of that line. So very
[39:14] specifically means that we're not building any data centers uh which is quite a problem when you're in the middle of a of a global AI buildout. But uh but anyway, enough about Europe here. It's it's always good to to have your your pessimism strengthened here a little bit. So so thank you for that. Uh I want to get back to your positioning and your outlook just to make this very specific for our listeners because I know a lot of people are are are very very eager to jump in on this. What what are your maybe you can just repeat in line your your your your timeline for oil as you
[39:44] mentioned uh of of of the cycle and how you're you're positioned right now. >> Yeah. So, in the short term, I'd say no one knows. And there's lots of political pressure to suppress oil prices as well as to the extent they can suppress uh gasoline and diesel prices, especially ahead of this midterm election in early November. So, again, we're getting really close. It's less than a month now. So, um I'm not sure how focused they still I mean I imagine there's
[40:15] still focus on it, but that should diminish as we get to the election and then maybe it recedes in the rearview mirror for a period of time after. Um so in the immediate term truly I don't think anyone knows. I think there's a fair price for oil which is higher based on current inventory levels and demand and supply and so on but in the immediate term no one knows. Um, I think unfortunately it's most likely that this war between the US and Iran continues and that Iran continues to exercise its
[40:46] various options to restrict oil flows. And so far it's not proven that the US or anyone can really fully evade those. As you know, again, the Saudis were sort of shipping oil to their west coast. You saw the Houthis and uh Iranbacked militias in Iraq uh shooting at those pumping stations and hitting various uh infrastructure there. You saw Iran hit a
[41:16] bunch of tankers uh which were the reporting shockingly was delayed. Uh so in the the mediumish term let's say beyond let's say the next month it does look like unfortunately the war continues and unfortunately probably oil prices go much higher and then I'm pretty bullish oil from a cyclical perspective where we just haven't had that wave of rig additions we haven't had the big conventional discoveries and we have huge depletion which I didn't
[41:46] mention before but you need to add somewhere between six and maybe 12 million barrels a day of oil and natural gas liquids of supply every year just to make up for depletion of existing fields. And as more and more production is being sourced from the US unconventional, Canada unconventional um the decline rates for that that production base are actually rising. They're not falling. And so you're
[42:16] you're on this so they call it a red queen effect where the faster you go the faster the problem grows. And so you really need I think more conventional exploration and delineation activity and you need more development of conventional oil prospects and that's just not been happening so far. A and you also need probably an acceleration of this sort of lower tier US oil shale development which is also not happening. So in terms of positioning specifically
[42:47] um I think that there's the temptation to go in what's worked but I think what's worked is actually very very risky here. So specifically I think oil tankers some of the tanker experts who I follow um are are ex you know encouraging caution because yeah there's very high rates right now and yeah tankers are getting hit which is sort of uh perversely very bullish for it's direct kinetic supply restriction of tankers but there's a big build cycle
[43:18] going on and very high rates and it's very hard to imagine much higher rates from here that are durable and so most likely you see tanker rates fall similar with refiners, very very high, historically high margins which are leading to potential restarts of refineries even in places that are hostile to oil like California. Um you're seeing expansions in refineries. You're seeing new builds. There's that Dangote uh IPO which I'm not involved in
[43:48] but that's happening. And uh they're going to do a east uh eastern Africa refinery after their uh it was it took a while but tremendously successful um what is it Nigeria refinery and now they're going to do one in Kenya. You're going to see a bunch of this sort of resource nationalism on the refinery side. So those to me are very uninteresting and I actually have through derivatives small net effective short positions on those just because again I don't short stocks but I'll I'll sort of almost as a hedge right if
[44:19] there's a big financial crisis or other sort of collapse those things actually maybe have the most downside. So they're sort of the easiest for me to get downside exposure to through paying premium and getting that left tail exposure. And then the most interesting things conversely to me are smaller cap producers that don't have that refining exposure, haven't had their earnings lifted by ultra high refining margins, but also um may benefit to the extent that things play out how I'm expecting
[44:49] and oil prices rise and maybe refining margins fall. And it doesn't appear the market's giving them any credit for even current prices. is a number of these companies are trading as if oil is going to be at 65 let's say for a while or 70 depending on their market and then similarly services companies that are focused particularly onshore where I think we're going to get another wave higher of activity US Canada and international where people don't really talk about this much when they talk about the oil cycle they seem to really
[45:20] talk a lot about the offshore drillers and services companies and I think there's really this underfollowed but very obvious onshore potential boom that we may see in the next let's say 12 to 18 months which seems very promising to me and a number of these companies uh just to to pick on them for a second there is this weird thing where deep value investors try to buy stocks at a large discount to replacement cost and then um you know earningsoriented
[45:50] investors typical investors look for high free cash flow yields low price toearnings multiples which ironically cycl cyclically are usually good signs of the top of a cycle and like the refiners are at low price to earnings multiples but again to me that's very scary. Um but some of these services stocks they're both deep value investments as a huge discount to replacement cost and trading at double digit free cash flow yields and so this should not happen and they send I think very weird confusing messages to the
[46:21] market and to me that message is it's like the Jim Kramer button like bye bye bye. Um, so that that's that's what I'm doing. >> Incredibly interesting, Josh. Thanks. Thanks a lot for laying that out. I just want to finish with one final listener question here that we had from uh from Robert on the platform. Uh, and you you you did touch a bit on Nat Gas already, but but but uh just to get even more into it here, uh, great video so far, guys. Do you does your guest have any outlook for for for natural gas uh in
[46:51] the US? any hope for a bullish uptick and any opinion on what's the best area in net gas equities that makes sense from a position standpoint? >> Yeah, natural gas is really hard because I want to be bullish because there's this huge buildout of LNG export and then there's been a lot of data center spend but not a lot that have actually turned on yet. So, you know, there's more demand coming. The problem is that first Citadel came into the US natural gas market uh via what is it? Apex. They named it after Ken Griffin's dinosaur.
[47:21] um they uh they bought uh various natural gas uh companies and inventory and they've hit it very very aggressively and I think they're making money on the trading side or something best I can tell because they're not making money on the production side. They're prices are way too low to be as aggressive in my opinion, my assessment. I don't have their financials. Um but then it looked like they were having too much fun. So I don't remember the name but it's the old I think Glen Core they Cantalon I don't know something like that they renamed and they just bought
[47:53] um a they did a large uh transaction in the Hannesville recently and the one of the reasons cited in the Bloomberg report on this was that they had 300 locations and the potential to grow their production a lot. So um unfortunately there are some it used to be the big public or the public companies that were sort of the uh transgressors on the capital allocation side. Now it's weirdly very smart commodity traders who I think are maybe they're flooding the market and then shorting the the physical way more than
[48:24] their whatever. I'm not sure what the strategy is exactly there, but um the bad news is for gas bulls that the writing's on the wall with another 300 locations on this latest transaction that was just announced and Citadel keeps via Apex keeps buying stuff and you know they use great service providers using a lot of rigs. So again, good for my rig thesis and weirdly you've seen sustained drilling activity for gas even with low prices. That is not a recipe for high prices. So, I'm
[48:54] not short these stocks. I'm not whatever. I just It's just so hard to tell what's going to happen. And it feels like the writing's on the wall for higher than rational production growth. And then just the last thing, there's there's sort of this igopoly of public gas producers and they seem to be looking at what these private companies are doing and saying, "Hey, that's fun." And going and drilling too much, too. There's been way too little capital discipline in my view by the large producers. I think they should look at
[49:25] what the refiners did over the last decade where they turned a business that was horrible into a business that was very lucrative through supply and capacity management and these gas producers have not done that. It's great for the US economy. It's great like you said Denmark's not facilitating data centers. the US has been at least at the federal level facilitating data centers and this flood of gas that's coming in thanks you know I don't know if anyone ever says thanks to Citadel but thanks Ken Griffin for the low power prices
[49:55] relative to where they would have been uh thanks to Glenor likely for the future lower natural gas prices but as an equity investor man just very hard and uh for the reasons I just cited I'm I'm just not participating for now. Thanks a lot for that, Josh. And thanks a lot for joining the show. It was incredibly interesting and uh uh educating here. So, thanks a lot for that. As always, uh Josh is a great follow on on X and be sure to check out his his work at B interest. So, uh
[50:25] thanks a lot to you for for joining, Josh. >> Yeah, thank you for having me. I really appreciate it. >> Absolutely. That was all we had for you in this first edition of the geopolitical edge, our new geopolitical series on uh real vision. We are always happy to take in your feedback. Uh and also if you like what you saw, please please remember to uh subscribe and like uh this video so we can get even more coverage and traction on YouTube and elsewhere. Thanks to Josh. Thanks to everyone for watching. We'll be back on Real Vision. So, you obviously like this
[50:55] video enough that you've got to the end. That's quite a big task. But listen, do me a favor. Hit the like and subscribe button and also check out what videos next cuz I think you'll love it. But if you want even more, and when I'm talking more, I'm talking about memberergenerated ideas, incredible alpha research, everything there to help you in your journey, just head to realton.com/join for the best financial intelligence out there and the pure alpha that's within the platform.