Biggest Energy Shock In History To Break 'Fragile' Markets | Doomberg
Summary
Oil Supply Shock: Extensive discussion of the Strait of Hormuz closure, massive asset damage across the Middle East, and historic price volatility underscoring acute supply risk.
Global LNG: Qatar’s Ras Laffan disruptions and South Pars damage threaten LNG supply, with months to normalize even if hostilities cease and a potential split of energy markets by hemisphere.
Diesel Shortage: Diesel futures’ record spike and policy responses (export curbs/increasing availability) highlight refined product tightness and CPI inflation linkage.
Semiconductor Supply: Helium disruptions tied to Gulf chokepoints jeopardize chip manufacturing, with Qatar’s 30% helium share and heavy SK/Taiwan dependence raising risk.
Geopolitical Risk: War-driven escalation dynamics (energy facilities, desalination plants, naval constraints) create broad market uncertainty and potential for further shocks.
Taiwan Risk: Scenario analysis of a potential Chinese embargo on Taiwan exposes critical LNG and power vulnerabilities given minimal gas storage.
Market Outlook: Despite severe supply threats, Brent near $100 and WTI ~$89 suggest surprising complacency; gold, equities, and oil whipsawed by headlines.
Investment Stance: Speaker favors caution/standing pat near-term; long-run view that real oil prices trend lower absent sustained destruction of critical assets; no specific tickers pitched.
Transcript
It's Monday, March 23rd. The Straight of Hormuz, accountable for 20% of the world's daily oil shipping volume, is still closed. More than 70% of oil from Hormuz goes to Asia. At this rate, Vietnam, Bangladesh, and the Philippines are estimated to run out of oil within 3 weeks. China has stopped exporting fuel to guard domestic inventories. But even if the strait reopens tomorrow, there is already long-term damage done to global energy supply. This morning, the head of the International Energy Agency said that at least 40 energy assets across nine countries in the Middle East have been severely or very severely damaged since the Iran war began on February 28th. IEA executive directors called the crisis equivalent to the two oil shocks of the 1970s and the 2022 gas crisis put together. The straight of Hormuz remains at roughly 5% of normal shipping flow. The IEA has already released a record 400 million barrels from emergency stock piles and viral signal readiness for another release. Oil prices fell violently today after President Trump posted on Truth Social claiming very productive and good conversations with Iran. Iran has denied any such events with state media saying no talks with the US have taken place. Brent crude plunged from above $113 to below $100 in under an hour, erasing roughly $17 a barrel in one of the largest intraday swings on record. WTI is still around $89. Meanwhile, the S&P 500 and Dow Jones rallied sharply on the news while gold fell to its lowest level of 2026, dropping below $4,300 as rising yields in a strong dollar crushed the traditional safe haven trade. Diesel futures are up 57% this month, the largest single month spike on record. And the historical correlation between diesel and CPI points towards inflation north of 8% coming up. Meanwhile, the entire semiconductor industry is also at risk from the Street of Hormuz closure as helium supply is disrupted. Helium is needed to transfer heat in semiconductor manufacturing and is critical in the process. According to estimates from the US Geological Survey, Qatar makes 30% of the world's helium. Key semiconductor manufacturer countries rely on this choke point for access. In 2025, South Korea bought 55% of their helium from the Gulf Cooperation Council. while Taiwan bought 69% of its helium from the GCC. So, is this shaping up to be one of the worst global supply chain disasters in history? Follow and subscribe for more daily updates. Our next guest will discuss with us how long the street of Hormuz will likely remain closed and where gas and diesel prices will head from here. Joining us now is Duneberg, headw writer of the Doomberg Substack. Welcome back to the show, Duneberg. Good to see you. What is going on? So obviously before Trump posted this morning on Monday morning before market opened that um he had ordered I guess a 5-day reprieve um some 36 hours earlier he posted that he was giving Iran a 48 hour ultimatum ultimatum uh otherwise he would quote you know destroy their power plants and um make the place basically unlivable. You know, it's it's really hard to do analysis when you have such whiplash um and when the whole world is looking at the president's truth social account. If we take this morning's post, there's only two real possibilities. Um what the president said is true um or what the president said is not true. So let's take both um in order. Um the evidence that what the president said is true begins with the fact that he said it. He's the president of the United States. You would think that there would be some truth to it and markets as you have described in your question have responded at least initially uh perhaps with the hope um that what he posted uh is true. The evidence that it's not true is that um Trump has posted many things that turned out to be not true in the past. And as you alluded to, Iran was pretty swift um to deny it. And then the last piece of evidence was the conspicuous conspicuous nature of the timing of the truthial post um which came you know a couple hours before the market opened um which seems to be a recurring pattern with Trump. Um, if the post is true, count us amongst those who are are happy that negotiations are ongoing and that the war might soon end. Um, and if it's not true, then we have big big issues uh to ponder. So, happy to take it in um in either direction. >> Okay, let's take a look at this post in question. Um, are you referencing this one here? If Iran doesn't fully open without retreat, without threat, the Straight of Hormuz within 48 hours, from this exact point in time, the United States of America will hit and obliterate their various power plants, starting with the biggest one first. Thank you for your attention to this matter. >> Yeah, he put that out Saturday, 2 days ago. >> Yeah, Saturday 4:44 p.m. according to the screen that I'm looking at. Um, we found that a curious thing for the president to post. Some would use other descriptors for it. Um and then the the the the post this morning of course which is the one that is driving markets um seems to have un undid that threat or at least put a 5day pause on it. Um when we saw that post on Saturday obviously it's again it's hard to write in the era of Trump because he you're one headline away from you know um crumpling up your paper. Yeah. That's the second post. Um we we went back to a model that we're working on internally that we're probably going to publish next. And um that comes down to what is the definition of winning a war and in our view a war is won when one side inflicts pain uh more pain than the other side can tolerate. And so Trump's threat on Saturday is a threat to apply such pain. So the the theory behind that post is that if the US with Israel's help destroys Iran's electricity grid, that will inflict enough pain that the war will be won. Iran will come to terms, they'll capitulate, the straight will be open, um and off we go. But um there's two parts to that definition. There's how much pain can you inflict and how much can the other side tolerate? And also then how much pain can the other side impose on you and how much can you tolerate? And I think it's pretty clear that Trump is not ready to tolerate significant stock market declines um in order to prosecute this war. And the timing of that post this morning is a hint to that effect. Um Trump does not want to see oil prices go higher and Trump does not want to see stock prices go lower. now to serve the mission of quote removing Iran as a threat, taking care of their nuclear stuff, reopening the strait. Um, Trump might be willing to take more pain and he might be even willing to convince Americans that such pain is necessary and Americans might even agree to sign up for such pain. But at the moment, it it's pretty clear that the Iranians believe that they have found their point of maximum pain for Trump, which is to close the straight and threaten to destroy the Arab countries oil and gas producing facilities and Iran's sorry and Israel's desalination facilities and its power plants, which are much smaller and much easier to target. Um, so here we are. Um, who has escalation dominance? Um, this is this is the big question of the day. Before we continue, I want to bring to your attention today's sponsor, Monetary Metals. Now, most people think of gold as something you buy in store. Monetary Metals takes a different approach. Instead of just holding gold and waiting for price appreciation, you can earn a yield on it paid in physical ounces. Through their leasing platform, investors can earn up to 4% annually with yield paid monthly in ounces. That means your return is measured in gold, not just in currency terms. Rather than sitting idle while you pay storage costs, your gold generates income. The metal remains your asset and can be redeemed at any time. Thousands of investors are already earning monthly interest in gold through monetary medals. Visit monetary-medals.com/lind link in the description down below or scan the QR code here to learn more. And also, where is the red line for both parties? What is a red line for Iran that Trump must not cross? And what is the red line for America's allies, particularly in the Middle East, that Iran must not qu cross cross? Uh, shall desalination plants that Iran threatened to strike. If those were hit, it would leave millions of people without water. >> Yep. So, we wrote about desalination vulnerabilities all the way back in October of 2024, >> um, long before they were, you know, the headlines that they are now. We wrote in the context of Israel's vulnerability, not assuming that Iran would go to war with the Arab Gulf states as well, which they have done. Um, and the Arab Gulf States are even more vulnerable to desalination attacks than Israel. Now to your question, Iran responded to Trump's 48 hour ultimatum by saying, "If you attack our power plants, we will attack oil and gas production facilities across the Arab states and Israel's deselination plants and power grid." They made that threat. Can they follow through on that threat is the question. Um, and I think the answer based on the evidence is yes. Look, 20 days into the war last week, Israel, ostensively acting without Trump's knowledge or approval, so the president says, attacked the South Pars gas field. And then Iran in response said, "We're going to attack Qatar's Ross Laughen site." And within an hour or two of Israel's attack, two targeted missiles landed on the number four and number six trains of Rosloffen's LG export facility. And that shows a capability to take out deca billion dollar oil and gas assets. Um, the Middle East is a collection of very fragile light bulbs that are easy to break that would cause huge pain on the West. The question is, is that pain that the West is willing to tolerate in order to win the war? Um, and so Trump did not attack their power plants this morning. Um, says that he has postponed for 5 days. The Iranians say there are no negotiations ongoing, that this is fake news designed to manipulate the markets and um time will tell. >> You wrote an interesting piece called Island Hopping and this is from uh Doomberg's Substack and uh I encourage everybody if you haven't already to check out Doomberg's Substack. Very informative reports on not just the energy markets but global macro uh and geopolitics. Island hopping does a path to China's control over Taipei run through Havana? Now, um I want to skip ahead to the last paragraph um that I can see here. If we are correct, World War II is about to take on a wholly more precarious dimension. Let's connect the dots before uh let's connect the dots weeks before they might dominate international affairs. And before that, you wrote in our view, Russian President Vladimir Putin and Chinese leader Xiinping are setting up a trap for US President Donald Trump trap. Donald Trump, what does this trap look like? >> So, first of all, David, I have to get you a comp subscription to Doomberg. so we can unroll the rest. But um >> I appreciate that. Thank you. >> I um so this is a bit of an off-the-wall piece that we like to write every once in a while. Um right now the United States is implementing what amounts to an embargo over Cuba. Um, and very much below the headlines, Russia has two tankers steaming to break that blockade filled with oil and refined products to help the island of Cuba and its belleaguered people. And then the question becomes, will Trump allow these Russian tankers to reach Cuba? It's a it's a a replay of the Cuban missile crisis without the missiles and without the press coverage. And so we thought what is going on here? Um, at the same time, China is reinstating its uh naval exercises around Taiwan and inside of Taiwan's international waters. And one wonders whether Putin sending these tankers to break the American embargo on Cuba isn't a test, a a precedent setting test. So that let's imagine that the US boards these tankers or stops them from going to Cuba. What's to stop China from taking advantage of the US being distracted in the Middle East and imposing an embargo on Taiwan in an effort to reach what they would call reconciliation with Taiwan um without firing a shot. And um the clues that this might be going on are twofold. One, last week China offered to Taiwan, hey let's collaborate on energy. we know that you're an island. We know that you depended on the Middle East for oil and imports of LG. You can lean on us and we'll supply everything you need. And Taiwan rejected that. And then um the military exercises that I just described to you started up. Um in a world where it's perfectly fine for the president of the United States to embargo Cuba, um what stops Xiinping from doing the same um with Taiwan? And Taiwan is in a very precarious position. This is widely known. We wrote a piece called Indefensible 2 years ago. They rely on imports for essentially 100% of their hydrocarbons and they only have 11 days of storage of natural gas and they rely on natural gas to produce 40 to 45% of their electricity. So if China's navy surrounds Taiwan and says, um, no LG tankers should come here. If you're the captain of a floating bomb, are you going to you going to run that gauntlet to deliver your cargo to Taiwan? Of course you're not. We've seen that the mere threat of hostilities against cargo ships in the straight of Hormuse has led to the effective closure of the strait and we believe China would be in a position to do that to Taiwan and they just might if these Russian tankers are turned away. So, um, we hope we're wrong, but it's a story that we wanted to put on people's radars because there are consequences to what the US is doing. Um, Trump has argued that might is right, that international law does not apply to him. Um, as president of United States, he defines what is legal and what is not legal, and that's fine. Um, but you better have a pretty good appraisal of the might of your geopolitical opponents in that case. um and China might be willing to just test that. Um and so we just wanted to put that on people's radar um as a possibility to follow. >> How is Russia benefiting from this entire situation if they are at all? >> Sure. Um well, for one thing um the Secretary of the Treasury, Scott Bessant, has relaxed sanctions on Russian oil and gas. um two prices are elevated which increases the profitability of those sales depending on the nature of the contracts. Um, and three, um, if the US is bogged down in an extended war in the Middle East, um, in a scenario where munitions and a and in particular, air defense munitions are in short supply and the Middle East is becoming a priority. Um, because unlike the war in Ukraine, the US is directly involved in the war in Iran, even though we think that's not much of a distinction. um it necessarily means that there will be less than otherwise would be available to um Ukraine. Um and so I think those are the three ways at least in theory it benefits um Russia. There are ways in which of course this war hurts Russia. Um Iran is an ally of Russia and seeing its ally militarily weakened and its offensive capabilities degraded is probably not in Russia's interest. Um and so it's it's a mixed bag. But if you ask me, how does Russia benefit? Those three ways that I outlined, I think, are the primary ones. >> The notion that the Iran war is going to end very soon. Now, Trump has been saying that since day one, but it's been more than a month now, and uh Peak Hex hasn't actually issued an official timeline, not even a range. What is your view on how long this could last? >> You know, that's a great question. I think it's been 3 weeks, not quite a month. Um, but I'm sure if we came back in a week, it would still be going on. Um I I I honestly think that um not enough weight is being given to what the other side is saying and what they're doing. And so you know um the phrase that we see is that it takes two to taco, right? Um, yes, Trump might eventually, you know, Trump always chickens out, but the Iranians will open the straight when the Iranians decide to open the straight and and we think that it's pretty challenging to envision a plausible military scenario that fully opens the straight. Um, you could take a few islands, you could take the shores, the Marines can go in. We don't doubt the capabilities of the Marines to do those things, but does that open the straight is is the question. Um, and the Iranians, um, have been communicating, whether you believe them or not, it's what they're saying. It's an input into the analysis. They have been communicating that their objective is to continue to war for as long as it takes in order to send the message that attacking Iran again is too painful. What it takes for them to achieve that objective remains to be seen. They've laid laid out a series of terms which of course are wholly unacceptable to the US and would be dismissed out of hand and so the longer they stick to those terms and as long as they could take the pain that is being inflicted upon them then the war continues. Whether it escalates is a different question and I think whether it escalates depends on whether Israel and the US take out power plants or Iranian desalination facilities or vice versa if Iran does. You know, it was very interesting on Saturday night. Um was watching Twitter and um earlier Israel had attacked an Iranian nuclear facility or at least close to one and so Iran responded by launching these missiles um and one in particular hit Deona and um caused serious damage. Well, here we are 3 weeks into the war and Iran can call it shot and deliver missiles that air defenses cannot fully intercept. And that is an escalation capability that is serious. And until all of Iran's launching capabilities are destroyed, it's hard to imagine how that risk isn't hanging out there. Um, and so, who knows how it ends. I honestly think um the war is going to go on for a very long time and I hope that I'm wrong. Um I was very happy to see Trump's post even if I didn't believe it and I think the market was very happy to see Trump's post even if it doesn't believe it. It's trying to signal to Trump that if you want higher stock prices and lower oil prices then continue down this path. >> Okay, let's talk about oil lower energy prices LG uh gas at the pump as well as diesel. We'll touch on all three. Uh Trump threatened, like we mentioned earlier, to bomb Iran more, specifically their energy facilities, if the street of Hormuz were not open within 48 hours. It's been 48 hours. We're close to 48 hours. There's no opening in sight. And so that threat didn't work. What options uh do Trump and his allies now have if Trump still has any allies in the region left to open reopen the Trade of Cormoose? because ultimately that will help alleviate some of the pressure. We could talk about other strategies as well. >> Yeah. I I honestly don't know what the options are other than coming to terms with the Iranians and the Iranians are not presenting terms that are remotely acceptable to the president or to his allies or to the average American who doesn't doesn't necessarily see the day-to-day of what's going on um in the war. I mean, Iran's terms for ending this war are pretty stiff. Um, I'm not sure if you've seen them. Um, but they include the US abandoning its military bases in the Middle East. Well, that alone is a non-starter for the US. It's never going to do that, at least not willingly. Um, so if Iran means it, then the war continues and can and victory will be imposed militarily by by either side. Um and so the in our view look what the straight up removes is incredibly difficult to reopen militarily because all it takes is a few drones fired from great distance and the threat of more drones, you know, underwater drones, in the air drones, artillery bombardment, long-range missiles. If you're an owner of an oil tanker and you have the lives of the crew members, you know, under your responsibility, are you going to say run that gauntlet? Um, and so as long as Iran wants to close the straight, it can. So now you have two possibilities. You you change the regime or you come to terms with the existing one. Now, if you change the regime, who's to say that the regime that replaces the current one has enough control over Iran to open the straight? Because if you think about it logically, if Iran becomes another Libya or another Afghanistan or another Iraq, then there will be pockets within Iran that will never agree to open the straight. And if you don't have, you know, a strong government in control of domestic issues, um, how did how does the straight reopen? And so we seem to be in this vice, this impossible vice >> where the world needs that straight to open. Trump needs that straight to open, >> but the pathway to doing it is impossible. And so the straight won't reopen. and markets. You know, look, I'm surprised that oil is at $89 today. Um, you know that I'm long-term bearish on oil, that I think there's plenty of it, but if you had told us 6 months ago that there'd be a hot war with Iran, the straight of moves would be closed for 3 weeks in counting. Um, attacks on Gulf oil and gas infrastructure would occur. >> I would have thought oil would be much much higher than this. And >> you said 200. Well, I mean, but at least temporarily. It can't stay there. That's the thing. Like, it can print there, but it can't it can't stay there because there's just not enough demand for oil at 200 to sustain it. But that's a whole different set of problems, which is, you know, economic destruction, great reset, you know, um 130% debt to GDP comes hard becomes hard to refinance when GDP is contracting 5 6 7%. Um so, nobody wants to go there. Trump doesn't want to go there. Um I assume. And so, you have this intractable problem. Look, the war was started. We've long said one of the reasons why um you should be very hesitant at Star Wars is they're very hard to stop. Um and so here we are. But I I'm shocked at the complacency of the market. Um I understand why US oil is $89. I suppose because the US is a net energy exporter. It's got a lot of oil that's released from the SPR. The government does not want the price of oil to go higher here. But why Brent is only sitting at 100 as we're talking is a real mystery. >> Yeah. And by the way, for those wondering why uh the Navy isn't securing the street of Hormuz, they tried. This is from a few weeks ago. US Navy tells shipping industry Hormuz escorts not possible for now. The US Navy has refused nearly daily requests from the shipping industry for military escorts. Uh citing uh the street of Hormuz is an Iranian killbox. Uh so it's more difficult than some may seem. Now the other issue is not just the street of Hormuz, but energy infrastructure is permanently damaged um in the entire Gulf region. The head of the IEA, for example, made a astounding remark. He said that on Monday, at least 40 energy assets across nine countries in the Middle East have been severely or severely or very severely damaged. Um he said that uh this fallout from the war is equivalent to the two major oil crises of the 70s and the 2022 gas crisis put together. We know that um South Par was damaged. We know that Russ Lefon LNG facility in Qatar which is the largest one in the world uh was severely damaged. So how critical are these actual facilities? How actually critical are these facilities is my question. Yes. >> Yeah. They're very critical. I and I I would say this is a rare occasion where um we agree with uh with the head of the EIA, Mr. Barole. Um this is this is profoundly consequential. Um Ross Laughen alone supplies 20% of global LNG. Now only 17% of the LG trains were damaged significantly. But 20% is currently offline. And if the war ended tomorrow, if Trump's post were true, it would take many months for that to normalize. Um in the long run all of this will be repaired. Um there will be a huge amount of midstream activity, new pipelines built. You know we're pondering for our doom zoom pro tier at the end of this month here a presentation called after her moves punctuated equilibrium in the energy markets. We think the energy markets will probably split in two um with a western hemisphere and an Asian hemisphere. But um right now the crisis is very real. Um Europe exits um the winter uh of 2526 um with empty stores and LG prices doubled since the war broke out. Um and that's assuming that there isn't you know widespread further damage. Right now I would say 40 facilities sounds like a lot but there's probably a thousand important facilities across the Middle East. Um some are more important than others. the most important ones have not yet been hit. Um there are significant um saltwater handling facilities that feed Saudi Arabia that are critical to keeping its oil field pressures high that if those were taken out would be a real catastrophe. And then there's the escalation of the the Houthis shutting down the Red Sea again, which has not yet happened. I think to the surprise of many, including us, if the Houthis were to shut down the Red Sea again, you'd have a a far bigger problem than we have now because that East West pipeline in Saudi Arabia would not be able to feed international markets in the way that it is doing now. Um, and so we're at this weird spot, um, as we've said several times, where everyone knows that the war can't go on, but the pathway out of it is not clear. How long would it take roughly for either these facilities to be repaired or we reroute supply to other areas if that's possible? >> If the war stops now, the industry would be incredibly resilient and the industry is incredibly resilient. Look, even in the very worst case scenarios where much of the oil and gas infrastructure in the Middle East is destroyed, 5 years from now, um things will be back to normal. We we would have a completely different financial structure and who makes what oil and gas might be fundamentally altered but the human endeavor won't be denied which is a constant unrelenting increasing consumption of energy um and and there'd be a huge amount of investor opportunity in the reconstruction. Look what happened in World War II, right? I mean literally Japan and Germany were leveled and within decades they were both economic superpowers again. So there will be a rebirth. Um this too shall pass assuming nuclear war doesn't break out and we make the whole planet unlivable which let's just take that off the border is a possibility. Um absent a full-blown nuclear exchange that even escalates to save Russia and China getting involved. Um there will be you know a rebirth when this war is done. um you know um Iraq Saddam Hussein destroyed Kuwaiti oil fields, lit them all on fire. Remember it took remember those pictures back in the day of all the the black sky and and the firefighters trying to cap all those wells. Um it took some time, but Kuwait became a major oil producer again and and is today. >> There also is an a diesel crisis right now. the uh the government is considering I'll show you this article uh increasing the supply of diesel amid rising prices. Energy Secretary Chris Wright announced that the US government is considering increasing diesel fuel availability in the market to combat rising prices. How are they going to do that and how long ultimately do you think diesel prices will stay high because that ultimately impacts trucking which impacts everything that we we we consume through trucking. >> Yeah. So the US is actually in a great spot. We wrote about this in a piece called Project Turtle. The real countries that have to cons concern themselves with this are island nations like Australia, New Zealand, Taiwan. Um the US is in a great spot, but even here there's an admission that there's only so much pain the US government is going to tolerate um imparting upon the consumers in the United States. Um, so one thing that can happen and um, nothing is officially true until it's been denied. Um, but the US is a major exporter of refined products net and it could just stop doing that. Um, that would hurt the rest of the world in a big way. But China's already done it. Um, China stopped the export of refined products which is why you're seeing jet fuel shortages in Asia and Australia kind of panicking correctly. Um, but the US is home to some of the cheapest refined fuel prices in the world. And you have the Secretary of Energy, Chris Wright, who, thank God, he's in the job, by the way, um, because he's one of the few people who actually understands the energy markets um, in government today. Um, that the price of diesel today in the US is too high when it's the cheapest, you know, amongst the cheapest in the world tells you how little pain um, the US is willing to absorb um, for this war. Okay, Dubber, what are the paths forward from here for investors? Um, do we stay long energy markets or do you think your thesis for lower energy is going to start kicking in as more supply is released into the market? Keep in mind the IEA couple weeks ago and a week and a half ago said that its member countries are ready to release up to 400 million barrels of oil. I wonder if that's enough. Well, that's just their member countries and and not included on that list is China with its 1.5 billion barrels of oil. Um the long-term real price of all commodities is lower. The long-term real price of oil will be lower from here. um especially if the top is already in. But right now, gambling on energy markets is a bet on whether or not these critical infrastructure assets in the Middle East will be destroyed or not. And I don't know how anybody can have a firm bet in either direction given the information at hand. Um, and so I think until there's more clarity on the war, um, standing pat is probably the most prudent, uh, move you can make. If you pushed us, um, we would say that the top is in, and that's mostly out of hope. um not any analysis, but if the pre-market top of, you know, the futures market top of Brent at 120 ends up being the high price for this war, that's pretty remarkable, David, cuz that's not even nominally higher than where Brent got when Russia invaded Ukraine. And it's it's not nominally higher than what oil was in 2008 before the global financial crisis. So, if you can't get $150 oil from this fax set, what fact set do you need to get $150 oil from here? And if you can't ever get to $150 oil from here, why do you want to own it? >> Mhm. >> This is not going to go there. So, anyway, that's >> also today the stock market rallied. Uh, like we mentioned earlier, the S&P is up about 1.5%. Is the stocks are stocks going up because of the supposed um productive talks between Trump and Iran or are they going up because oil is coming down? Is it is is there a direct reverse relationship right now? >> I think they're the two sides of the same coin. Yeah, I think Trump's Trump's post this morning drove both reactions and gold, by the way. Um gold recovering on that post as well from a pretty hard selloff overnight. Um, all of those things are related. And so, again, back to like one of the earliest questions possible, like either that post is true or it's not. And if it's not true, which is not something that we've really talked about cuz nobody really wants to go there. But if the president of United States made this up out of whole cloth, then what do investors do next? >> Yeah. >> I don't know. Yeah. Well, uh, we could we could wait for major milestones before, uh, pulling the trigger on sell, buy, or or or hold. Um, what milestones are you watching for, uh, in the next, uh, 6 weeks, let's say? Um, not not not so much milestones, but markers for news. >> Sure. I mean, look, if if the carriers leave the Middle East, >> it's kind of hard to prosecute a war if the carriers aren't there. um if we see escalation. So if for example um one desalination plant in Israel is blown up, I mean that would be a huge escalation and then you would be you know does Israel escalate to the unthinkable? That's on the board as a possibility. Um or if everyone says, "Okay, wo, now we've gone too close to the abyss. Let's have a legitimate ceasefire and a and a discussion of terms." Um or if you see a uprising in Iran and the regime overthrown. It's not our base case, but it's certainly possible. Um that would be a milestone. But ultimately, in our view, the best trade is the one that's the most certain. And when this war is over and oil is at $70 and its implied volatility has collapsed, I think that's a pretty sure sign of the direction of travel going forward, which would be lower then. >> Well, maybe another sign, I'm just speculating, is let's say Congress doesn't approve the $200 billion >> of additional funds needed. Can you comment on this? What's the what what are the chances this gets approved versus not approved? >> Great, great call, David. Um, I wish I'd thought of it in my answer because I was thinking about it this weekend when I went for a long walk. It it is not clear to us that there is sufficient support within Congress to pass this. Having said that, >> that's an awful lot of um, let's say um, grift to be had and an awful lot of um, you know, projects that you could cut ribbons on in your district. And if there's one thing that Congress has been shown to be susceptible to over time, it is the laress of military industrial complex spending on this scale. I tell you what, $200 billion is a lot of money, David. I mean, just think about it. That's as much money as the US lent or gave uh in support for the war in Ukraine over years. And we're three weeks into this war and 200 billion is the price tag already. I mean, that's pretty. Now, of course, that's the price tag going forward to prosecute the war as as the secretary of war uh thinks he needs, but that's a huge price tag. Have we become numb to what hund00 billion is. So, yes, it's no sure thing to us that Congress will pass this, but history also teaches that Congress loves to appropriate. And let me just let me just end on this note. The war cost apparently 11.3 billion in the first week alone, mostly on smart munitions. Americans are probably wondering how expensive this war is going to cost in, you know, in total. It's already looking like the most expensive conflict ever on a per per day basis. Where is this money coming from? What other sources of funding need to be diverted in order to fund uh this conflict? Right. >> Yeah. Yeah, I mean there's all kinds of things you could do with $200 billion. You could build a an awful lot of nuclear power plants, for example. Um, and by the way, David, that's just money. Where is the rare earth going to come from? Where's the tungsten going to come from? Where where are the magnets going to come from? Um, it's not clear that just printing a lot of money cuz that's what would have to happen here. There's no taxation policies that's going to raise that incremental 200 billion in the face of a federal budget deficit of 1.6 to 2 trillion already. Um, but it's not clear to me that you can just print weapons and China has a strangle hold over certain supply chains. So, I it makes one wonder, but $200 billion, David, I'm old enough to remember when a billion dollars was a lot. >> Okay. Uh, Duneberg, tell us uh tell us where uh we can find your work and what you're working on right now. >> Yeah. Uh, duneberg.com is where you can find everything. And what I'm working on right now is two things. our doom zoom called um after whoo um the you know punctuated equilibrium in the energy markets and then the next piece if it gets through edit is um house of pain on wars and winning them um and and this is where we get into this concept of not only is it important to see how much pain you can inflict but it's also important to measure how much pain can be tolerated by both sides and and using that as a lens to um analyze where we are in the war with Iran. So David, great to see you. Glad we were able to make this happen. Um and um hopefully the next time we talk um this this whole affair will be behind us. >> Oh, hopefully. And uh hopefully uh this war ends sooner rather than later. Thanks for coming back. My audience has been asking for your return for quite some time. So I'm very glad that you're able to make it happen. Do follow Doomberg links down below. We'll put the links in the description. So make sure to check out his Substack and subscribe if you haven't already. Thank you so much, Duneberg. I appreciate your time. and we'll see you next time. >> You bet. >> Thank you for watching. Don't forget to like, subscribe,
Biggest Energy Shock In History To Break 'Fragile' Markets | Doomberg
Summary
Transcript
It's Monday, March 23rd. The Straight of Hormuz, accountable for 20% of the world's daily oil shipping volume, is still closed. More than 70% of oil from Hormuz goes to Asia. At this rate, Vietnam, Bangladesh, and the Philippines are estimated to run out of oil within 3 weeks. China has stopped exporting fuel to guard domestic inventories. But even if the strait reopens tomorrow, there is already long-term damage done to global energy supply. This morning, the head of the International Energy Agency said that at least 40 energy assets across nine countries in the Middle East have been severely or very severely damaged since the Iran war began on February 28th. IEA executive directors called the crisis equivalent to the two oil shocks of the 1970s and the 2022 gas crisis put together. The straight of Hormuz remains at roughly 5% of normal shipping flow. The IEA has already released a record 400 million barrels from emergency stock piles and viral signal readiness for another release. Oil prices fell violently today after President Trump posted on Truth Social claiming very productive and good conversations with Iran. Iran has denied any such events with state media saying no talks with the US have taken place. Brent crude plunged from above $113 to below $100 in under an hour, erasing roughly $17 a barrel in one of the largest intraday swings on record. WTI is still around $89. Meanwhile, the S&P 500 and Dow Jones rallied sharply on the news while gold fell to its lowest level of 2026, dropping below $4,300 as rising yields in a strong dollar crushed the traditional safe haven trade. Diesel futures are up 57% this month, the largest single month spike on record. And the historical correlation between diesel and CPI points towards inflation north of 8% coming up. Meanwhile, the entire semiconductor industry is also at risk from the Street of Hormuz closure as helium supply is disrupted. Helium is needed to transfer heat in semiconductor manufacturing and is critical in the process. According to estimates from the US Geological Survey, Qatar makes 30% of the world's helium. Key semiconductor manufacturer countries rely on this choke point for access. In 2025, South Korea bought 55% of their helium from the Gulf Cooperation Council. while Taiwan bought 69% of its helium from the GCC. So, is this shaping up to be one of the worst global supply chain disasters in history? Follow and subscribe for more daily updates. Our next guest will discuss with us how long the street of Hormuz will likely remain closed and where gas and diesel prices will head from here. Joining us now is Duneberg, headw writer of the Doomberg Substack. Welcome back to the show, Duneberg. Good to see you. What is going on? So obviously before Trump posted this morning on Monday morning before market opened that um he had ordered I guess a 5-day reprieve um some 36 hours earlier he posted that he was giving Iran a 48 hour ultimatum ultimatum uh otherwise he would quote you know destroy their power plants and um make the place basically unlivable. You know, it's it's really hard to do analysis when you have such whiplash um and when the whole world is looking at the president's truth social account. If we take this morning's post, there's only two real possibilities. Um what the president said is true um or what the president said is not true. So let's take both um in order. Um the evidence that what the president said is true begins with the fact that he said it. He's the president of the United States. You would think that there would be some truth to it and markets as you have described in your question have responded at least initially uh perhaps with the hope um that what he posted uh is true. The evidence that it's not true is that um Trump has posted many things that turned out to be not true in the past. And as you alluded to, Iran was pretty swift um to deny it. And then the last piece of evidence was the conspicuous conspicuous nature of the timing of the truthial post um which came you know a couple hours before the market opened um which seems to be a recurring pattern with Trump. Um, if the post is true, count us amongst those who are are happy that negotiations are ongoing and that the war might soon end. Um, and if it's not true, then we have big big issues uh to ponder. So, happy to take it in um in either direction. >> Okay, let's take a look at this post in question. Um, are you referencing this one here? If Iran doesn't fully open without retreat, without threat, the Straight of Hormuz within 48 hours, from this exact point in time, the United States of America will hit and obliterate their various power plants, starting with the biggest one first. Thank you for your attention to this matter. >> Yeah, he put that out Saturday, 2 days ago. >> Yeah, Saturday 4:44 p.m. according to the screen that I'm looking at. Um, we found that a curious thing for the president to post. Some would use other descriptors for it. Um and then the the the the post this morning of course which is the one that is driving markets um seems to have un undid that threat or at least put a 5day pause on it. Um when we saw that post on Saturday obviously it's again it's hard to write in the era of Trump because he you're one headline away from you know um crumpling up your paper. Yeah. That's the second post. Um we we went back to a model that we're working on internally that we're probably going to publish next. And um that comes down to what is the definition of winning a war and in our view a war is won when one side inflicts pain uh more pain than the other side can tolerate. And so Trump's threat on Saturday is a threat to apply such pain. So the the theory behind that post is that if the US with Israel's help destroys Iran's electricity grid, that will inflict enough pain that the war will be won. Iran will come to terms, they'll capitulate, the straight will be open, um and off we go. But um there's two parts to that definition. There's how much pain can you inflict and how much can the other side tolerate? And also then how much pain can the other side impose on you and how much can you tolerate? And I think it's pretty clear that Trump is not ready to tolerate significant stock market declines um in order to prosecute this war. And the timing of that post this morning is a hint to that effect. Um Trump does not want to see oil prices go higher and Trump does not want to see stock prices go lower. now to serve the mission of quote removing Iran as a threat, taking care of their nuclear stuff, reopening the strait. Um, Trump might be willing to take more pain and he might be even willing to convince Americans that such pain is necessary and Americans might even agree to sign up for such pain. But at the moment, it it's pretty clear that the Iranians believe that they have found their point of maximum pain for Trump, which is to close the straight and threaten to destroy the Arab countries oil and gas producing facilities and Iran's sorry and Israel's desalination facilities and its power plants, which are much smaller and much easier to target. Um, so here we are. Um, who has escalation dominance? Um, this is this is the big question of the day. Before we continue, I want to bring to your attention today's sponsor, Monetary Metals. Now, most people think of gold as something you buy in store. Monetary Metals takes a different approach. Instead of just holding gold and waiting for price appreciation, you can earn a yield on it paid in physical ounces. Through their leasing platform, investors can earn up to 4% annually with yield paid monthly in ounces. That means your return is measured in gold, not just in currency terms. Rather than sitting idle while you pay storage costs, your gold generates income. The metal remains your asset and can be redeemed at any time. Thousands of investors are already earning monthly interest in gold through monetary medals. Visit monetary-medals.com/lind link in the description down below or scan the QR code here to learn more. And also, where is the red line for both parties? What is a red line for Iran that Trump must not cross? And what is the red line for America's allies, particularly in the Middle East, that Iran must not qu cross cross? Uh, shall desalination plants that Iran threatened to strike. If those were hit, it would leave millions of people without water. >> Yep. So, we wrote about desalination vulnerabilities all the way back in October of 2024, >> um, long before they were, you know, the headlines that they are now. We wrote in the context of Israel's vulnerability, not assuming that Iran would go to war with the Arab Gulf states as well, which they have done. Um, and the Arab Gulf States are even more vulnerable to desalination attacks than Israel. Now to your question, Iran responded to Trump's 48 hour ultimatum by saying, "If you attack our power plants, we will attack oil and gas production facilities across the Arab states and Israel's deselination plants and power grid." They made that threat. Can they follow through on that threat is the question. Um, and I think the answer based on the evidence is yes. Look, 20 days into the war last week, Israel, ostensively acting without Trump's knowledge or approval, so the president says, attacked the South Pars gas field. And then Iran in response said, "We're going to attack Qatar's Ross Laughen site." And within an hour or two of Israel's attack, two targeted missiles landed on the number four and number six trains of Rosloffen's LG export facility. And that shows a capability to take out deca billion dollar oil and gas assets. Um, the Middle East is a collection of very fragile light bulbs that are easy to break that would cause huge pain on the West. The question is, is that pain that the West is willing to tolerate in order to win the war? Um, and so Trump did not attack their power plants this morning. Um, says that he has postponed for 5 days. The Iranians say there are no negotiations ongoing, that this is fake news designed to manipulate the markets and um time will tell. >> You wrote an interesting piece called Island Hopping and this is from uh Doomberg's Substack and uh I encourage everybody if you haven't already to check out Doomberg's Substack. Very informative reports on not just the energy markets but global macro uh and geopolitics. Island hopping does a path to China's control over Taipei run through Havana? Now, um I want to skip ahead to the last paragraph um that I can see here. If we are correct, World War II is about to take on a wholly more precarious dimension. Let's connect the dots before uh let's connect the dots weeks before they might dominate international affairs. And before that, you wrote in our view, Russian President Vladimir Putin and Chinese leader Xiinping are setting up a trap for US President Donald Trump trap. Donald Trump, what does this trap look like? >> So, first of all, David, I have to get you a comp subscription to Doomberg. so we can unroll the rest. But um >> I appreciate that. Thank you. >> I um so this is a bit of an off-the-wall piece that we like to write every once in a while. Um right now the United States is implementing what amounts to an embargo over Cuba. Um, and very much below the headlines, Russia has two tankers steaming to break that blockade filled with oil and refined products to help the island of Cuba and its belleaguered people. And then the question becomes, will Trump allow these Russian tankers to reach Cuba? It's a it's a a replay of the Cuban missile crisis without the missiles and without the press coverage. And so we thought what is going on here? Um, at the same time, China is reinstating its uh naval exercises around Taiwan and inside of Taiwan's international waters. And one wonders whether Putin sending these tankers to break the American embargo on Cuba isn't a test, a a precedent setting test. So that let's imagine that the US boards these tankers or stops them from going to Cuba. What's to stop China from taking advantage of the US being distracted in the Middle East and imposing an embargo on Taiwan in an effort to reach what they would call reconciliation with Taiwan um without firing a shot. And um the clues that this might be going on are twofold. One, last week China offered to Taiwan, hey let's collaborate on energy. we know that you're an island. We know that you depended on the Middle East for oil and imports of LG. You can lean on us and we'll supply everything you need. And Taiwan rejected that. And then um the military exercises that I just described to you started up. Um in a world where it's perfectly fine for the president of the United States to embargo Cuba, um what stops Xiinping from doing the same um with Taiwan? And Taiwan is in a very precarious position. This is widely known. We wrote a piece called Indefensible 2 years ago. They rely on imports for essentially 100% of their hydrocarbons and they only have 11 days of storage of natural gas and they rely on natural gas to produce 40 to 45% of their electricity. So if China's navy surrounds Taiwan and says, um, no LG tankers should come here. If you're the captain of a floating bomb, are you going to you going to run that gauntlet to deliver your cargo to Taiwan? Of course you're not. We've seen that the mere threat of hostilities against cargo ships in the straight of Hormuse has led to the effective closure of the strait and we believe China would be in a position to do that to Taiwan and they just might if these Russian tankers are turned away. So, um, we hope we're wrong, but it's a story that we wanted to put on people's radars because there are consequences to what the US is doing. Um, Trump has argued that might is right, that international law does not apply to him. Um, as president of United States, he defines what is legal and what is not legal, and that's fine. Um, but you better have a pretty good appraisal of the might of your geopolitical opponents in that case. um and China might be willing to just test that. Um and so we just wanted to put that on people's radar um as a possibility to follow. >> How is Russia benefiting from this entire situation if they are at all? >> Sure. Um well, for one thing um the Secretary of the Treasury, Scott Bessant, has relaxed sanctions on Russian oil and gas. um two prices are elevated which increases the profitability of those sales depending on the nature of the contracts. Um, and three, um, if the US is bogged down in an extended war in the Middle East, um, in a scenario where munitions and a and in particular, air defense munitions are in short supply and the Middle East is becoming a priority. Um, because unlike the war in Ukraine, the US is directly involved in the war in Iran, even though we think that's not much of a distinction. um it necessarily means that there will be less than otherwise would be available to um Ukraine. Um and so I think those are the three ways at least in theory it benefits um Russia. There are ways in which of course this war hurts Russia. Um Iran is an ally of Russia and seeing its ally militarily weakened and its offensive capabilities degraded is probably not in Russia's interest. Um and so it's it's a mixed bag. But if you ask me, how does Russia benefit? Those three ways that I outlined, I think, are the primary ones. >> The notion that the Iran war is going to end very soon. Now, Trump has been saying that since day one, but it's been more than a month now, and uh Peak Hex hasn't actually issued an official timeline, not even a range. What is your view on how long this could last? >> You know, that's a great question. I think it's been 3 weeks, not quite a month. Um, but I'm sure if we came back in a week, it would still be going on. Um I I I honestly think that um not enough weight is being given to what the other side is saying and what they're doing. And so you know um the phrase that we see is that it takes two to taco, right? Um, yes, Trump might eventually, you know, Trump always chickens out, but the Iranians will open the straight when the Iranians decide to open the straight and and we think that it's pretty challenging to envision a plausible military scenario that fully opens the straight. Um, you could take a few islands, you could take the shores, the Marines can go in. We don't doubt the capabilities of the Marines to do those things, but does that open the straight is is the question. Um, and the Iranians, um, have been communicating, whether you believe them or not, it's what they're saying. It's an input into the analysis. They have been communicating that their objective is to continue to war for as long as it takes in order to send the message that attacking Iran again is too painful. What it takes for them to achieve that objective remains to be seen. They've laid laid out a series of terms which of course are wholly unacceptable to the US and would be dismissed out of hand and so the longer they stick to those terms and as long as they could take the pain that is being inflicted upon them then the war continues. Whether it escalates is a different question and I think whether it escalates depends on whether Israel and the US take out power plants or Iranian desalination facilities or vice versa if Iran does. You know, it was very interesting on Saturday night. Um was watching Twitter and um earlier Israel had attacked an Iranian nuclear facility or at least close to one and so Iran responded by launching these missiles um and one in particular hit Deona and um caused serious damage. Well, here we are 3 weeks into the war and Iran can call it shot and deliver missiles that air defenses cannot fully intercept. And that is an escalation capability that is serious. And until all of Iran's launching capabilities are destroyed, it's hard to imagine how that risk isn't hanging out there. Um, and so, who knows how it ends. I honestly think um the war is going to go on for a very long time and I hope that I'm wrong. Um I was very happy to see Trump's post even if I didn't believe it and I think the market was very happy to see Trump's post even if it doesn't believe it. It's trying to signal to Trump that if you want higher stock prices and lower oil prices then continue down this path. >> Okay, let's talk about oil lower energy prices LG uh gas at the pump as well as diesel. We'll touch on all three. Uh Trump threatened, like we mentioned earlier, to bomb Iran more, specifically their energy facilities, if the street of Hormuz were not open within 48 hours. It's been 48 hours. We're close to 48 hours. There's no opening in sight. And so that threat didn't work. What options uh do Trump and his allies now have if Trump still has any allies in the region left to open reopen the Trade of Cormoose? because ultimately that will help alleviate some of the pressure. We could talk about other strategies as well. >> Yeah. I I honestly don't know what the options are other than coming to terms with the Iranians and the Iranians are not presenting terms that are remotely acceptable to the president or to his allies or to the average American who doesn't doesn't necessarily see the day-to-day of what's going on um in the war. I mean, Iran's terms for ending this war are pretty stiff. Um, I'm not sure if you've seen them. Um, but they include the US abandoning its military bases in the Middle East. Well, that alone is a non-starter for the US. It's never going to do that, at least not willingly. Um, so if Iran means it, then the war continues and can and victory will be imposed militarily by by either side. Um and so the in our view look what the straight up removes is incredibly difficult to reopen militarily because all it takes is a few drones fired from great distance and the threat of more drones, you know, underwater drones, in the air drones, artillery bombardment, long-range missiles. If you're an owner of an oil tanker and you have the lives of the crew members, you know, under your responsibility, are you going to say run that gauntlet? Um, and so as long as Iran wants to close the straight, it can. So now you have two possibilities. You you change the regime or you come to terms with the existing one. Now, if you change the regime, who's to say that the regime that replaces the current one has enough control over Iran to open the straight? Because if you think about it logically, if Iran becomes another Libya or another Afghanistan or another Iraq, then there will be pockets within Iran that will never agree to open the straight. And if you don't have, you know, a strong government in control of domestic issues, um, how did how does the straight reopen? And so we seem to be in this vice, this impossible vice >> where the world needs that straight to open. Trump needs that straight to open, >> but the pathway to doing it is impossible. And so the straight won't reopen. and markets. You know, look, I'm surprised that oil is at $89 today. Um, you know that I'm long-term bearish on oil, that I think there's plenty of it, but if you had told us 6 months ago that there'd be a hot war with Iran, the straight of moves would be closed for 3 weeks in counting. Um, attacks on Gulf oil and gas infrastructure would occur. >> I would have thought oil would be much much higher than this. And >> you said 200. Well, I mean, but at least temporarily. It can't stay there. That's the thing. Like, it can print there, but it can't it can't stay there because there's just not enough demand for oil at 200 to sustain it. But that's a whole different set of problems, which is, you know, economic destruction, great reset, you know, um 130% debt to GDP comes hard becomes hard to refinance when GDP is contracting 5 6 7%. Um so, nobody wants to go there. Trump doesn't want to go there. Um I assume. And so, you have this intractable problem. Look, the war was started. We've long said one of the reasons why um you should be very hesitant at Star Wars is they're very hard to stop. Um and so here we are. But I I'm shocked at the complacency of the market. Um I understand why US oil is $89. I suppose because the US is a net energy exporter. It's got a lot of oil that's released from the SPR. The government does not want the price of oil to go higher here. But why Brent is only sitting at 100 as we're talking is a real mystery. >> Yeah. And by the way, for those wondering why uh the Navy isn't securing the street of Hormuz, they tried. This is from a few weeks ago. US Navy tells shipping industry Hormuz escorts not possible for now. The US Navy has refused nearly daily requests from the shipping industry for military escorts. Uh citing uh the street of Hormuz is an Iranian killbox. Uh so it's more difficult than some may seem. Now the other issue is not just the street of Hormuz, but energy infrastructure is permanently damaged um in the entire Gulf region. The head of the IEA, for example, made a astounding remark. He said that on Monday, at least 40 energy assets across nine countries in the Middle East have been severely or severely or very severely damaged. Um he said that uh this fallout from the war is equivalent to the two major oil crises of the 70s and the 2022 gas crisis put together. We know that um South Par was damaged. We know that Russ Lefon LNG facility in Qatar which is the largest one in the world uh was severely damaged. So how critical are these actual facilities? How actually critical are these facilities is my question. Yes. >> Yeah. They're very critical. I and I I would say this is a rare occasion where um we agree with uh with the head of the EIA, Mr. Barole. Um this is this is profoundly consequential. Um Ross Laughen alone supplies 20% of global LNG. Now only 17% of the LG trains were damaged significantly. But 20% is currently offline. And if the war ended tomorrow, if Trump's post were true, it would take many months for that to normalize. Um in the long run all of this will be repaired. Um there will be a huge amount of midstream activity, new pipelines built. You know we're pondering for our doom zoom pro tier at the end of this month here a presentation called after her moves punctuated equilibrium in the energy markets. We think the energy markets will probably split in two um with a western hemisphere and an Asian hemisphere. But um right now the crisis is very real. Um Europe exits um the winter uh of 2526 um with empty stores and LG prices doubled since the war broke out. Um and that's assuming that there isn't you know widespread further damage. Right now I would say 40 facilities sounds like a lot but there's probably a thousand important facilities across the Middle East. Um some are more important than others. the most important ones have not yet been hit. Um there are significant um saltwater handling facilities that feed Saudi Arabia that are critical to keeping its oil field pressures high that if those were taken out would be a real catastrophe. And then there's the escalation of the the Houthis shutting down the Red Sea again, which has not yet happened. I think to the surprise of many, including us, if the Houthis were to shut down the Red Sea again, you'd have a a far bigger problem than we have now because that East West pipeline in Saudi Arabia would not be able to feed international markets in the way that it is doing now. Um, and so we're at this weird spot, um, as we've said several times, where everyone knows that the war can't go on, but the pathway out of it is not clear. How long would it take roughly for either these facilities to be repaired or we reroute supply to other areas if that's possible? >> If the war stops now, the industry would be incredibly resilient and the industry is incredibly resilient. Look, even in the very worst case scenarios where much of the oil and gas infrastructure in the Middle East is destroyed, 5 years from now, um things will be back to normal. We we would have a completely different financial structure and who makes what oil and gas might be fundamentally altered but the human endeavor won't be denied which is a constant unrelenting increasing consumption of energy um and and there'd be a huge amount of investor opportunity in the reconstruction. Look what happened in World War II, right? I mean literally Japan and Germany were leveled and within decades they were both economic superpowers again. So there will be a rebirth. Um this too shall pass assuming nuclear war doesn't break out and we make the whole planet unlivable which let's just take that off the border is a possibility. Um absent a full-blown nuclear exchange that even escalates to save Russia and China getting involved. Um there will be you know a rebirth when this war is done. um you know um Iraq Saddam Hussein destroyed Kuwaiti oil fields, lit them all on fire. Remember it took remember those pictures back in the day of all the the black sky and and the firefighters trying to cap all those wells. Um it took some time, but Kuwait became a major oil producer again and and is today. >> There also is an a diesel crisis right now. the uh the government is considering I'll show you this article uh increasing the supply of diesel amid rising prices. Energy Secretary Chris Wright announced that the US government is considering increasing diesel fuel availability in the market to combat rising prices. How are they going to do that and how long ultimately do you think diesel prices will stay high because that ultimately impacts trucking which impacts everything that we we we consume through trucking. >> Yeah. So the US is actually in a great spot. We wrote about this in a piece called Project Turtle. The real countries that have to cons concern themselves with this are island nations like Australia, New Zealand, Taiwan. Um the US is in a great spot, but even here there's an admission that there's only so much pain the US government is going to tolerate um imparting upon the consumers in the United States. Um, so one thing that can happen and um, nothing is officially true until it's been denied. Um, but the US is a major exporter of refined products net and it could just stop doing that. Um, that would hurt the rest of the world in a big way. But China's already done it. Um, China stopped the export of refined products which is why you're seeing jet fuel shortages in Asia and Australia kind of panicking correctly. Um, but the US is home to some of the cheapest refined fuel prices in the world. And you have the Secretary of Energy, Chris Wright, who, thank God, he's in the job, by the way, um, because he's one of the few people who actually understands the energy markets um, in government today. Um, that the price of diesel today in the US is too high when it's the cheapest, you know, amongst the cheapest in the world tells you how little pain um, the US is willing to absorb um, for this war. Okay, Dubber, what are the paths forward from here for investors? Um, do we stay long energy markets or do you think your thesis for lower energy is going to start kicking in as more supply is released into the market? Keep in mind the IEA couple weeks ago and a week and a half ago said that its member countries are ready to release up to 400 million barrels of oil. I wonder if that's enough. Well, that's just their member countries and and not included on that list is China with its 1.5 billion barrels of oil. Um the long-term real price of all commodities is lower. The long-term real price of oil will be lower from here. um especially if the top is already in. But right now, gambling on energy markets is a bet on whether or not these critical infrastructure assets in the Middle East will be destroyed or not. And I don't know how anybody can have a firm bet in either direction given the information at hand. Um, and so I think until there's more clarity on the war, um, standing pat is probably the most prudent, uh, move you can make. If you pushed us, um, we would say that the top is in, and that's mostly out of hope. um not any analysis, but if the pre-market top of, you know, the futures market top of Brent at 120 ends up being the high price for this war, that's pretty remarkable, David, cuz that's not even nominally higher than where Brent got when Russia invaded Ukraine. And it's it's not nominally higher than what oil was in 2008 before the global financial crisis. So, if you can't get $150 oil from this fax set, what fact set do you need to get $150 oil from here? And if you can't ever get to $150 oil from here, why do you want to own it? >> Mhm. >> This is not going to go there. So, anyway, that's >> also today the stock market rallied. Uh, like we mentioned earlier, the S&P is up about 1.5%. Is the stocks are stocks going up because of the supposed um productive talks between Trump and Iran or are they going up because oil is coming down? Is it is is there a direct reverse relationship right now? >> I think they're the two sides of the same coin. Yeah, I think Trump's Trump's post this morning drove both reactions and gold, by the way. Um gold recovering on that post as well from a pretty hard selloff overnight. Um, all of those things are related. And so, again, back to like one of the earliest questions possible, like either that post is true or it's not. And if it's not true, which is not something that we've really talked about cuz nobody really wants to go there. But if the president of United States made this up out of whole cloth, then what do investors do next? >> Yeah. >> I don't know. Yeah. Well, uh, we could we could wait for major milestones before, uh, pulling the trigger on sell, buy, or or or hold. Um, what milestones are you watching for, uh, in the next, uh, 6 weeks, let's say? Um, not not not so much milestones, but markers for news. >> Sure. I mean, look, if if the carriers leave the Middle East, >> it's kind of hard to prosecute a war if the carriers aren't there. um if we see escalation. So if for example um one desalination plant in Israel is blown up, I mean that would be a huge escalation and then you would be you know does Israel escalate to the unthinkable? That's on the board as a possibility. Um or if everyone says, "Okay, wo, now we've gone too close to the abyss. Let's have a legitimate ceasefire and a and a discussion of terms." Um or if you see a uprising in Iran and the regime overthrown. It's not our base case, but it's certainly possible. Um that would be a milestone. But ultimately, in our view, the best trade is the one that's the most certain. And when this war is over and oil is at $70 and its implied volatility has collapsed, I think that's a pretty sure sign of the direction of travel going forward, which would be lower then. >> Well, maybe another sign, I'm just speculating, is let's say Congress doesn't approve the $200 billion >> of additional funds needed. Can you comment on this? What's the what what are the chances this gets approved versus not approved? >> Great, great call, David. Um, I wish I'd thought of it in my answer because I was thinking about it this weekend when I went for a long walk. It it is not clear to us that there is sufficient support within Congress to pass this. Having said that, >> that's an awful lot of um, let's say um, grift to be had and an awful lot of um, you know, projects that you could cut ribbons on in your district. And if there's one thing that Congress has been shown to be susceptible to over time, it is the laress of military industrial complex spending on this scale. I tell you what, $200 billion is a lot of money, David. I mean, just think about it. That's as much money as the US lent or gave uh in support for the war in Ukraine over years. And we're three weeks into this war and 200 billion is the price tag already. I mean, that's pretty. Now, of course, that's the price tag going forward to prosecute the war as as the secretary of war uh thinks he needs, but that's a huge price tag. Have we become numb to what hund00 billion is. So, yes, it's no sure thing to us that Congress will pass this, but history also teaches that Congress loves to appropriate. And let me just let me just end on this note. The war cost apparently 11.3 billion in the first week alone, mostly on smart munitions. Americans are probably wondering how expensive this war is going to cost in, you know, in total. It's already looking like the most expensive conflict ever on a per per day basis. Where is this money coming from? What other sources of funding need to be diverted in order to fund uh this conflict? Right. >> Yeah. Yeah, I mean there's all kinds of things you could do with $200 billion. You could build a an awful lot of nuclear power plants, for example. Um, and by the way, David, that's just money. Where is the rare earth going to come from? Where's the tungsten going to come from? Where where are the magnets going to come from? Um, it's not clear that just printing a lot of money cuz that's what would have to happen here. There's no taxation policies that's going to raise that incremental 200 billion in the face of a federal budget deficit of 1.6 to 2 trillion already. Um, but it's not clear to me that you can just print weapons and China has a strangle hold over certain supply chains. So, I it makes one wonder, but $200 billion, David, I'm old enough to remember when a billion dollars was a lot. >> Okay. Uh, Duneberg, tell us uh tell us where uh we can find your work and what you're working on right now. >> Yeah. Uh, duneberg.com is where you can find everything. And what I'm working on right now is two things. our doom zoom called um after whoo um the you know punctuated equilibrium in the energy markets and then the next piece if it gets through edit is um house of pain on wars and winning them um and and this is where we get into this concept of not only is it important to see how much pain you can inflict but it's also important to measure how much pain can be tolerated by both sides and and using that as a lens to um analyze where we are in the war with Iran. So David, great to see you. Glad we were able to make this happen. Um and um hopefully the next time we talk um this this whole affair will be behind us. >> Oh, hopefully. And uh hopefully uh this war ends sooner rather than later. Thanks for coming back. My audience has been asking for your return for quite some time. So I'm very glad that you're able to make it happen. Do follow Doomberg links down below. We'll put the links in the description. So make sure to check out his Substack and subscribe if you haven't already. Thank you so much, Duneberg. I appreciate your time. and we'll see you next time. >> You bet. >> Thank you for watching. Don't forget to like, subscribe,