Episode 7: Oil Wars | The State of It Podcast with David Murrin #Murrinations
Summary
Oil Supply Chokepoints: Extensive discussion of the Straits of Hormuz, Red Sea disruptions, and Saudi/UAE pipelines cushioning but not eliminating risk to roughly 19–20 mbpd Gulf flows.
Oil Price Outlook: Guest projects a move toward $250–$300 oil, noting pump price hikes, sharper heating oil increases, and potential scarcity amid low U.S. strategic reserves.
Energy Inflation: Higher oil feeds into fertilizers, food, and transport costs, with parallels drawn to the 1970s OPEC shock and warnings of a major economic hit.
Missile Defense Dynamics: Intercepting hypersonic threats requires Arrow/SM-3/THAAD systems, but magazines are low and production limited, implying sustained demand for replenishment.
China Decoupling: China is framed as the strategic driver behind proxy conflicts, supporting Russia and Iran, with a call to eject Chinese influence from Western systems.
Prolonged Conflict Risk: The guest expects duration and attrition rather than a quick resolution, keeping energy markets tight and geopolitical risk elevated.
Investment Angle: No specific tickers were pitched; focus centers on Energy (especially midstream) and Aerospace & Defense as potential beneficiaries of supply stress and rearmament.
Transcript
Welcome back to the States of It podcast, where I'm joined more recently with my dad. Dad, how you doing? H, I'm a bit tired, long day, but great to be here with you again. And we're almost inside a week as we promised our listeners. Almost. I think it's probably looking about more 2 weeks, but we'll get there. We're getting there. We're gradually coming to >> busy last week, so hopefully these become more frequent. What it is to be astute. Honestly, it's a busy life. It's a busy life. Never mind about the calling included, then. No, of course not. >> [laughter] >> As a rugby player. As a rugby player, of course. But anyways, let's let's crack on. >> Did you see the rugby match with England England and France? I did, yes. It was unfortunate. We almost won. We played amazing. We played really good. >> It was an awesome game of rugby for those people out there who are not rugby fans. Rugby is the closest game to a war without killing each other that we've ever got to. >> It really is. It's really two teams energy against each other. It's great. It's a true sport, I think. >> These are two real feisty teams. One out of one had better forwards and and not so good backs, and the other had not so good forwards and better backs. So, it's a real interesting dynamic. >> And it really shows that the whole Six Nations has been up in the air. You never know who's going to win on what day. It's been some unbelievable scores. I mean, Wales beating Italy on this weekend as well on Super Saturday was I'm quite happy that I think first time in 3 years they've won a Six Nations game. It's incredible. They're over the moon as well. And also the Italians beat us. And yeah, only for a moment. I mean, I do think I think though that game, just focusing on it, for anyone that doesn't follow rugby, it just proves it's the greatest competitive game around. And that was the most captivating 80 minutes I've ever watched of rugby I can remember. It was brilliant. And I trained that, you know, England didn't win. Shame the penalty was a bit iffy, perhaps, right at the end. But that's the sport, and both teams should have walked off with great pride. Exactly. Even though we lost that, I think we played a lot better in that game when we did in in the other part. >> No, I think they I think they should be very proud of the rugby they played. >> we should be proud. Yeah. Right, onwards to a rather larger landscape of battle and war. Exactly. There's a couple things that happened in the last 2 weeks, haven't they? Um I want to start about talking about the Straits of Hormuz and how this war uh to me, what I've been reading, the the US-Israel-Iran is become a war in the Straits of Hormuz and the and and a war on oil, really. Obviously, news to us, you know, we're all kind of everyone's kind of panicking about oil prices going up, fuel prices going up. But just to like what I've seen is there are two workarounds at the moment. Please correct me if I'm wrong, but two workarounds at the moment of the Saudi Arabia Saudi Saudi Arabia's pipeline from the east of the Red Sea is transporting 3.6 billion sorry, million barrels of oil a day, and UAE's pipeline is about half of that. This is the only thing keeping uh oil prices not skyrocket at the moment. Is that super far off? Well, there was roughly 19 to 20 um um um million barrels a day comes out of the Gulf on a non-war sort of environment. Of which, as you quite rightly say, the numbers are right, which the Saudis have diverted a pipeline roughly 4 billion to the Red Sea, although the Houthis might be expected to start up >> by the way. Yeah, 4 bi- 4 billion, sorry. >> Million. Yeah. Million. Go on. >> [laughter] >> We're getting our numbers wrong, right? Yeah, yeah. Yeah, and and the same with the UAE. Although uh there's some of those facilities were targeted recently in the past couple of days by strikes. And then there's about 1.9 which comes out via the Iranian flowing to China. So, you could argue there's roughly 8 billion barrels per day coming out of the Gulf of a total of 19. And if you stop those, you're really in trouble. And you stop them a number of ways. You stop their ship the the the tank the um pipelines from working, and you stop them because you close the straits, and you stop them because you blow up the island um Kharg Island that the Iranians use to export 90% of their oil, or you stop the straits and you stop the flow in the Gulf. I think by the end of this, you mentioned it's become an oil war. It is fundamentally a war that started with Iran trying to destroy Israel, and Israel trying to push Iran back for its existential survival. And part of Iran's strategy was to build a nuclear weapon, and that got America involved because they worked very close, and they also had ballistic weapons that they were hypersonic capable, therefore could slice through most defenses, and be there in building longer and longer rocketry, and they could well have easily followed the path like Little Rocket Man did in North Korea, where suddenly America is held at risk to North Korean nuclear weapons. So, you can see it all unfolding, and it's I think that America did have to do something. I would argue that Trump should have done it on day 13 of the 12-day war, and kept going until it was over. To give him a sp- give the Iranians a peace to recover was did, the Americans may be able to win a battle, but they can't win a war if the Iranians extend that war, and their forces and their use of their weapons have been modeled in such a way to survive intense American bombardment and keep at it. And the thing with the Iranians is they just have to keep at it, because time is not in Trump's favor. Just much as the Houthis have kept the Red Sea closed effectively for years by just intermittent actions, and representing and and menacing and danger the global shipping route has effectively been closed, and everyone goes around the Cape. So, they just have to emulate that, and remember the IRGC taught the Houthis how to do this. So, you know, they're going to be good. And only a few mines can cause more damage than not. You don't have to sink a ship, or hit a destroyer, or you know, just one of those things and everything changes. So, the stakes are high, and um the other part of this war which is not talked about is the interception of uh things like the Fattah 1 missile with hypersonic glide weapons. And the only way you intercept them is in space at the apogee of the curve of their flight before they release the maneuvering vehicle. And the Arrow 2s and Arrow 3s are about that process. And for the Americans, SM-3s from warships and THAAD missiles from their batteries do that. But their magazines are running very, very low. And I think there is some sort of concerted action via China to run the magazines of America to absolutely as low as possible, because that opens windows for their hostilities across the Pacific, which I think are looming evermore as naval concentration moves in to the Gulf battle, and the magazine depth gets lower. And if the oil ever flow ever stops flowing, that represents strategic constriction for China, which would be a perfect trigger point. We talked about magazine depth in our last podcast about 2 weeks ago. What is there obviously you look at this all the time is there an update on how the depth is looking? Because we when we when we last talked talked about it, I think we said something like 4 weeks. That I mean at the rate they were going towards the start, it was looking like they could they could potentially run out in 4 weeks. Yeah, well look what we they're very obviously tight-lipped about what those numbers are. We know the rumors are that in the 12-day war last year, 25% of fats and SM3s were used. And most if not all of the arrows. So they ran out in that time and they probably faced something more intense continuing. Because there's probably a higher ratio of fattier ones in these missile barrages than there were in the 12-day war. And they didn't really replace their lost 25% because it's only 9 months ago and they only make about 20 of them. So and then probably got to think the magazine depth is around 40% of what it was at the beginning of the 12-day war would be my guess. Maybe 30 to 40% would be my intuitive feel. Which must be very alarming. It's getting pretty low. And you talked about Trump not having much time. Is that is that what you mean with magazine depth or not? Like why does Trump not have a lot of time? Magazine depth is less a time function than a just a scale function. The time is that he said it would be a short war. The American electorate had disliking him. Oil prices above 100 give him all sorts of electoral grief. He didn't have any permission from Congress and no one agreed with the war. He made poor decisions about it and every day the straits are closed, that becomes a bigger issue. I think the thing that's going to surprise people is every my work you know, price-based modeling on oil. Is this is the beginning of a move you know, to 250, 300. And these are the foothills of it. So judging by price prediction, all of this is going to get much worse. So let's talk about your price predictions, right? You said 250, 300. What what does that mean? Oh, so here in South UK, we've seen some all all petrol stations basically preemptively they've put up their petrol prices already. Even though there's meant to be a time delay, they've done it. They've done it preemptively that they shouldn't. Anyways, what does this actually mean for people's fuel prices? Well, when you think that oil was this is WTI, was roughly you know, at the beginning of the year 60 and here we are roughly around the say we're at 90, we're above it. That's a 50% increase in fuel prices, which should translate to the pumps. More so for heavy oil and heating oil because heavy oil comes out of the Gulf rather than light oil which is part of the heating complex. So you know, some people have reported 100% increases for heating oil and that's probably a bit of profiteering, but it is more more in demand versus its supply because of the Gulf. So what does it really mean is you know, where do I think oil is going? It's going to double again. And next we're going to have scarcity issues. Because if the Gulf, you know, gets more friction, becomes more hostile, let's assume there's 20 billion barrels that don't actually flow at all. And that's a big constriction over time because the release of strategic reserves, which I think in America were already very very low by the way, because no one bothered to fill them up again having sold and sold and sold all the way you know, down into the lows on the argument that you're constraining the Russian economy, they made the fundamental error of not replenishing their reserves. So I think all of this the longer it lasts, the worse it gets in short. And I think we should be preparing for 3 to 4 months, not you know, 3 to 4 weeks as Americans would like. And you you're saying that the heating prices are uh going up more than actual petrol, diesel prices. As you said, people have reported 100% increase. Obviously we're going to summer now. Going into winter you said you see about 6 months in advance, you see this getting far worse than going into winter. Is this something that the general public should seriously be concerned about? Look, I I think you know, in a world where the cost of living is really hard already, superimposing this type of price inflation is a killer for people because it affects food prices, transportation, it affects everything. And I think what we are about to witness is the constriction of the oil price through events around this issue. And then the knock-on effect to fertilizers, food, transportation. So it's going to be a tough time and the corollary of this if I use my half war cycle, contrarian cycle, was in the '70s when oil went through the roof with an OPEC squeeze. And it caused immeasurable grief to a much stronger economy in America for example than today in many ways. So I think we need to brace ourselves for a very big economic shock. All right, going back to um we said about Trump's administration not agreeing with him. Today I believe Joe Kent has resigned. Is that is that happened today? He did, yeah. Apparently. >> And he resigned out of protest. It's not like an like an another person who dislikes Trump. He's he was a long time supporter in a position of power. He was uh remind me of his title. He was the head of anti-terrorism of the US. Is that right? Yeah. He said his words were that Trump started the war and there was Trump started the war from pressure from Israel and that Iran posed no threat. What do you think about that? The US has obviously dismissed his letter of resignation due to that. Do you actually think that he's lying or why would someone he's in such power, why would someone lie about that? And Well, obviously you know, please please help me out. Yeah, yeah, yeah, it's a really good pick up, H, because so much you know, so there's a bit of truth and there's a load of bollocks. So there was clearly a threat to American interests if Iran built a nuclear weapon, period. And American interests include the continuation of Israel and the threat Israel was just not acceptable or to Saudi Arabia. I mean the Saudi Arabian MBS has been encouraging the the destruction of the Iranian regime because it sees a long-term threat. So when someone says there was no threat to America immediately, they're right. But in a year's time, those fattier ones might be you know, intercontinental missiles ballistic missiles. Then you have a bunch of mullahs who have a completely different concept of risk and life putting America at risk. So I think it is a reasonable strategic statement to see the imperative is that America had with Israel to do this. Tick. Do I think that Netanyahu has an unbelievable hold over Trump? Yes, I do. Because the Epstein files were Mossad. Trump is willingly steeped in the evidence and similarly Putin has the same evidence through crossover in '06, '08 and essentially both of them are semi or complete puppet masters of Trump's behavior various times. So was there influence from Israel? Without doubt. Was there a threat to America? Absolutely. Why is this guy resigning? Well, that's really interesting. The whole MAGA movement feels betrayed. If he was a MAGA-ite, what Trump said he would do and what he's doing is diametrically opposite. And his justifications and behaviors are really alarming. I mean even those all them person has got to see the extreme behavioral changes we've seen in him in the short period in office. And when he let loose the dogs of war and he was destroying drug running boats and killing people who were surrendering or stationary, that was just like I think it's a real low point in international law and illegal action from Hexeth and Trump and Co. just was a marker of the dogs of war the dogs of war were loose. And they got away with Venezuela with skilled special operations. And then they thought they could do the same to a country of a completely different magnitude halfway around the world. And the strategic thought behind it was completely absent. And the understanding that the Iranians if they lost their toys and their nuclear weapons and they were bombed would flip to plan B, which was an endurance attritional conflict, which is what we're seeing. And they just happen to own a very very important piece of waterway that feeds you know, 20 20% of the world's world's oil. It's interesting. >> No, I think he was I think he was part of something wholeheartedly and he's backed out of it and tried to make himself look good in the process. But just remember, you know, he was part of the MAGA not jobs that that oppressed this American regime and he would have been thoroughly sick of >> not make his story feel a little bit more believing now because he is a big time supporter? Well, it does I think. I think if you're a big time supporter and you're witnessing two things, Trump's behavior and an absolutely disastrous war scenario. But you've taken you've said you never wanted a forever war, you'd never take America into a forever war and you've got stuck in a war that is just awful with no clear end and no clear strategy from the outset. That would tip the balance with anyone who understood the problems. Yeah, it's interesting, isn't it? It is. It brings it brings some more cards to the table where You know, people don't like to believe that. I saw an interview with Piers Morgan and you know, a a a a woman who was interviewed and uh she just basically said, "I've known Trump all my life, but I don't recognize him right now. So, he's obviously had a personality transplant and that is either uh dementia possible or other things which are difficult to fathom, but what we've got is someone who shouldn't be holding the levers of power. Do you think Trump has dementia? Because I've also seen stuff flying around saying he does. There's I mean, obviously, you know, social media can skew stuff. But there is more evidence showing uh appearing that he might Well have it. So, you know, extreme narcissism like the before he has is never going to age well, ever. And he so you you would expect him to get worse with age. And he's definitely worse with age. He just sprouts and lies at every minute. And I think there he is old enough that that is possible. The dementia isn't manifesting in memory loss, but more behavioral change. And if you look at dementia qualities or early symptoms, character changes and extreme shifts in personality are parts of that. And certainly, he is not the same person that took office, you know, only a few months ago. So, I can see why supporters are alarmed and I think all of us should be alarmed that the leader of the free world is really, you know, shouldn't be in that seat. But I think MAGA supporters aren't alarmed because they see him like a god. So, they they think whatever he does is the best thing in the world that anyone has ever done. Yeah, half on and half off. And the half that continue have sort of like almost like a slavish adherence that you're describing. No amount of evidence will change their view. Much like the Nazis, the die-hard Nazis just didn't change their view about Hitler, even though their country was in rubble. But then some of the people did flip and there are cases of, you know, die-hard MAGA rights who just saying, "This is a MAGA. MAGA's dead." And it is because they were duped. Trump rode to office. He hijacked the MAGA agenda so he could get power. Now he's in, doesn't need them. How is he still getting away with this though? Because basically everything he said to get into office, he isn't doing. Or he's done wrong, differently. >> Democracies require accountability. They require processes that held parties and leaders to account. So, legal, law uh opposition parties So, you know, the legal system is not functioning. He's delivered his way through numerous court cases and you know, evidential trails against him. Obviously, the Epstein fell falls sit over him like the sword of Damocles because I'm sure the evidence him would would depose him. And the opposition party in the form of Democrats is just diabolically weak. It is, you know, are insipid. And so, no one is there to call him to account. And as a result, he's created a existentialization of his brain. And his brain is full of fantasy and lies that place him at the center of the universe as a man of brilliance. And what's so interesting if you just watch him around his cabinet and people since he got into office, that sort of sycophantic, malignant, narcissistic language has spread across the administration, spews out of the White House through Levitt. And you listen, it's really toxic. And that comes from him. And he's distorted their reality as a function of his distorted reality, like a cancer spreads it through a body. So, he is a malignancy, I'm afraid. And he's got some very good people protecting him because they feel duty-bound as a Secret Service and and the and the intelligence services to act as as if to protect him and yet he's a cancer on American society. >> he'll lose this whole time? Uh if I had to give odds I think his behavior is so bad. But one of the things you really learn about people that are dark and use dark dark energy is they're incredibly survivable. So, if they bend the fabric of the universe to their will. I mean, Hitler was at them to assassinations when I 28 or something ridiculous and he walked away from them all. So, I think there's a, you know, yes, I think he will be exposed to something to remove him with his extreme behavior, but history talks about how hard it is to remove people like him. And once he is out of office The reason I'm asking so many questions about Trump and the administration is because what's going on is truly fascinating. Obviously, I like it it's just it's there's so much going on that there's it feels like you could talk about it forever. But do you think Trump will be tried when he's done? Oh god. >> think he'll be tried for war crimes? Yeah, he'll be impeached. There'll be an investigation on whether this this invasion on Iran was relevant or necessary rather than just complete completely out of the his will. Okay, so I think how come he's not >> is like what people are talking about. Yeah, okay. So, so you're exactly right and if you had a midterm election now instead of the end of the year he'd get wiped out. I mean, people and his popularity is really bad. And so, the house would fall to the Democrats uh both houses and they could impeach him. So, this war is not just a war to him. It's the very war for his survival. And the only way he's going to get through this in his own mind cuz if he goes through the Democratic route of midterms, he will be found out. Cuz, you know, it'll got so much worse by then at the end of the year. So, his real decision is can he follow through on Project 2020 where his plan which is essentially to ensure that he becomes a dictator. So, you can assume that in terms of his domestic policies, they're going to become more extreme in my opinion as his popularity decreases. And that's a very dangerous threshold. In what way? How I mean, obviously, he's said that he wants to run again next next term, but is that is that even possible? Well, I I think his mental acuity is probably going to prevent that. But what we're really talking about is the Project 2025 people are not quite the same as Trump's agenda. You've got to think if they have this like gradient between democracy and autocracy in the new American form, it's a straight line and Trump's behavior does this, but actually oscillates around the line. So, we think it's all chaotic, but underneath Trump's chaos, there is a wretched system closing on democracy in America. And I think Trump will definitely do all he can to complete that because then he doesn't have to go to the midterms. So, his instead of his unpopularity being a thing that constrain him and shape his behavior, he's more likely to accelerate something even more extreme. Yeah. I'd quite like to talk about um Pakistan and Afghanistan. Um which is now being classed in news articles as an open war. Uh Pakistan has claimed to strike a technical support infrastructure, declared it a success. Was Afghan the Afghan Taliban government obviously said that they didn't or it was a failed um strike. They said they hit a bomb uh sorry, a drug facility. Obviously, like the governments are producing different information and I found it hard to research what's actually going on. So, what news source or what can we actually know about what's going on at at the moment? To be fair, I haven't followed it very closely. Um as you say, grumbles on. And I think the key thing here is two things that, you know, I would observe is one is the the Taliban is a creation of the Pakistani intelligence services, ISI. And you reap what you sow. As a little amusement because, you know, it was them that helped and supported the Taliban against Britain and America and its allies in the campaign that lasted almost 20 years. So, there's there are irony with that. Why this continues is because the Pakistanis at least believe the Indians are helping the Taliban. And so, it's a proxy war for the other two, India and Pakistan. So, and they are in a super grumbling state and they're sort of chomping at the bit in a strange way each for each because you've got Hindu nationalism and you've got Pakistani nationalism. So, you know, as we talk about this pulse of entropy surging through into 2030 we're seeing it manifest in that region. We're seeing it manifest in the global region. So, all in all, it's just part of that mosaic of increased conflict dynamics. And as we sort of joked a bit, I wonder whether families actually, if you could trace them and, you know, companies and basically smaller social units than countries versus countries are all suffering this increased friction between people. Which creates polarization, difference of views, intolerance, and conflict on the larger level. You describe it as like a round round and round tumbling. Um Pakistan's accusation that the Taliban is harboring the TTP, the Pakistani version of the Taliban, which they have some serious history with. Obviously, Afghanistan is denying that. Does this Like you said you don't follow it you aren't following it closely right now, but I'll ask you about that in a minute. But >> [clears throat] >> do you like do you see this expanding elsewhere than what's going on at the moment? Because obviously they're so close to the Middle East. India is indirectly, directly involved. Well, I think it's it is a friction coefficient between India and Pakistan. And at some stage, they are going to kick off. And Pakistan will be encouraged to kick off against India by China at some strategic point. So, this is a reminder of how strong that friction coefficient really is. Right. Um and obviously you said like not following it closely actually ties directly into this question of do you think that us as the West and you know, looking at geopolitics are too focused on the Middle East like Iran and Israel and not really focusing on the Durand Line, what's what's going on just next door and we could just obviously it's it's not our country, but just let it expand uncontrollably when it may possibly be able to be controlled and deteriorate further or is it okay that it's not really being covered and focused on? So, how can I explain this? I think you make a very good point about seeing the big picture. But the big picture that everyone should see is that China has set itself on a course for war, in its militarized economy, its weapons evolution, its aggressive behavior. And China's confidence in manifesting anti-ship ballistic missiles and hypersonic glide vehicles that challenge American power has since 2020 made them very, very aggressive and confident. That confidence has translated into encouraging Russia to go to war over Ukraine and supporting it to the point of now being almost annexed economically. And the same with supporting Iran and its ambitions to attack Israel. It's kept North Korea in check, although they put their elbows out regularly. And my point here is that don't just look at the rocks being thrown at us in the form of Ukraine and Iran. Understand who's throwing those rocks. And our world needs to understand that's China. And China is a hostile nation. So, accommodating it, trading with it, stroking it is just not going to do any good. We need to recognize it for what it is, eject it from our systems and the infiltration and covert dynamics, and then we can actually start to face outwards. And I think a really good image for that is actually Germany, because Gerhard Schröder, Merkel very definitely, and Schulz, I think were all controlled by Russian intelligence services. And you could see in their decisions they weren't really doing things that were good for Germany. The moment Germany got Merz on board, Merz is, you know, a a German leader for Germany, and Germany's come alive. So, it's a little bit like that scene out of Lord of the Rings in the two towers when the king of the Rohan and the spell falls away. I think that's really what this is about. Well, that's everything I've got for us today. Great questions. Testing your old man again. I do try and I'll come back stronger next time, don't you worry. So, I would just say, you know, um many people coming emanating from the White House, you know, you see it in financial markets, think this is all going to be resolved quickly like a hiccup. And everything that I have studied, and be it the battle for the straits or the Gulf, or the strategy the RGC is executing of durational struggle and attrition, suggests to me this is much, much longer. And the surprise will be continuation. And I just like to remind people how time and time again over the Ukraine war people have thought there was going to be peace and it was going to stop and it was going to end. And here we are over four years later and there's no sign of peace. And why was that predictable based on my work? It's for two-fold. The friction coefficient would increase and the entropy increase into 2030, so peace wasn't going to break out. And at the same time Putin never wanted peace. And Iran doesn't want peace. And the friction coefficient is increasing as well over Ukraine and over Iran. So, don't expect a surprise and a lucky ballot. I'm afraid everyone should be prepared for duration, attrition, and the situation getting worse. Great way to end it. Absolutely cheerful moment to end. Of course, of course. Um I'll see you next week, everyone. We'll see you next week. >> and there's a way to fire them off to H and he'll grill me accordingly. Yeah, I will try. I'll try to test you harder next time and make you really think about it. Hey ho. Thanks, H. You did all right. >> a pleasure. Yeah, as ever. Great job. Hey. Bye. David Murrin is the author of Breaking the Code of History, in which he presents a unified theory of civilizational dynamics. He is one of the world's most precedent and respected geopolitical forecasters. Drawing on decades of multi-disciplinary expertise, David has a dedicated global following, particularly in the Anglosphere spanning on the finance sector, including hedge funds and investment professionals, as well as the military circles and private strategic advisory networks. He provides a deep strategic insight across five critical domains. The rise and fall of empires and war cycles, macro investing and economic cycles, politics and cultural dynamics, constructive and deconstructive patterns in human behavior, warfare past, present, and future strategic tactics and weapons. This framework applies historical cycles to contemporary geopolitical shifts, delivering actionable foresight for leaders navigating an increasingly volatile world with an unparalleled track record for anticipating global inflection points. David's models have become essential tools for investors, corporate strategists, and national security professionals. He has also authored Lions Led by Lions, rewriting our understanding of the RAF's victory in 1918. Now and Never in 2020 warns Britain to rearm or face war. Red Lightning on How China Wins World War III. His analysis not only highlights future risks, but provides clear, forward-looking strategies for managing and exploiting emerging opportunities and navigating uncertain times.
Episode 7: Oil Wars | The State of It Podcast with David Murrin #Murrinations
Summary
Transcript
Welcome back to the States of It podcast, where I'm joined more recently with my dad. Dad, how you doing? H, I'm a bit tired, long day, but great to be here with you again. And we're almost inside a week as we promised our listeners. Almost. I think it's probably looking about more 2 weeks, but we'll get there. We're getting there. We're gradually coming to >> busy last week, so hopefully these become more frequent. What it is to be astute. Honestly, it's a busy life. It's a busy life. Never mind about the calling included, then. No, of course not. >> [laughter] >> As a rugby player. As a rugby player, of course. But anyways, let's let's crack on. >> Did you see the rugby match with England England and France? I did, yes. It was unfortunate. We almost won. We played amazing. We played really good. >> It was an awesome game of rugby for those people out there who are not rugby fans. Rugby is the closest game to a war without killing each other that we've ever got to. >> It really is. It's really two teams energy against each other. It's great. It's a true sport, I think. >> These are two real feisty teams. One out of one had better forwards and and not so good backs, and the other had not so good forwards and better backs. So, it's a real interesting dynamic. >> And it really shows that the whole Six Nations has been up in the air. You never know who's going to win on what day. It's been some unbelievable scores. I mean, Wales beating Italy on this weekend as well on Super Saturday was I'm quite happy that I think first time in 3 years they've won a Six Nations game. It's incredible. They're over the moon as well. And also the Italians beat us. And yeah, only for a moment. I mean, I do think I think though that game, just focusing on it, for anyone that doesn't follow rugby, it just proves it's the greatest competitive game around. And that was the most captivating 80 minutes I've ever watched of rugby I can remember. It was brilliant. And I trained that, you know, England didn't win. Shame the penalty was a bit iffy, perhaps, right at the end. But that's the sport, and both teams should have walked off with great pride. Exactly. Even though we lost that, I think we played a lot better in that game when we did in in the other part. >> No, I think they I think they should be very proud of the rugby they played. >> we should be proud. Yeah. Right, onwards to a rather larger landscape of battle and war. Exactly. There's a couple things that happened in the last 2 weeks, haven't they? Um I want to start about talking about the Straits of Hormuz and how this war uh to me, what I've been reading, the the US-Israel-Iran is become a war in the Straits of Hormuz and the and and a war on oil, really. Obviously, news to us, you know, we're all kind of everyone's kind of panicking about oil prices going up, fuel prices going up. But just to like what I've seen is there are two workarounds at the moment. Please correct me if I'm wrong, but two workarounds at the moment of the Saudi Arabia Saudi Saudi Arabia's pipeline from the east of the Red Sea is transporting 3.6 billion sorry, million barrels of oil a day, and UAE's pipeline is about half of that. This is the only thing keeping uh oil prices not skyrocket at the moment. Is that super far off? Well, there was roughly 19 to 20 um um um million barrels a day comes out of the Gulf on a non-war sort of environment. Of which, as you quite rightly say, the numbers are right, which the Saudis have diverted a pipeline roughly 4 billion to the Red Sea, although the Houthis might be expected to start up >> by the way. Yeah, 4 bi- 4 billion, sorry. >> Million. Yeah. Million. Go on. >> [laughter] >> We're getting our numbers wrong, right? Yeah, yeah. Yeah, and and the same with the UAE. Although uh there's some of those facilities were targeted recently in the past couple of days by strikes. And then there's about 1.9 which comes out via the Iranian flowing to China. So, you could argue there's roughly 8 billion barrels per day coming out of the Gulf of a total of 19. And if you stop those, you're really in trouble. And you stop them a number of ways. You stop their ship the the the tank the um pipelines from working, and you stop them because you close the straits, and you stop them because you blow up the island um Kharg Island that the Iranians use to export 90% of their oil, or you stop the straits and you stop the flow in the Gulf. I think by the end of this, you mentioned it's become an oil war. It is fundamentally a war that started with Iran trying to destroy Israel, and Israel trying to push Iran back for its existential survival. And part of Iran's strategy was to build a nuclear weapon, and that got America involved because they worked very close, and they also had ballistic weapons that they were hypersonic capable, therefore could slice through most defenses, and be there in building longer and longer rocketry, and they could well have easily followed the path like Little Rocket Man did in North Korea, where suddenly America is held at risk to North Korean nuclear weapons. So, you can see it all unfolding, and it's I think that America did have to do something. I would argue that Trump should have done it on day 13 of the 12-day war, and kept going until it was over. To give him a sp- give the Iranians a peace to recover was did, the Americans may be able to win a battle, but they can't win a war if the Iranians extend that war, and their forces and their use of their weapons have been modeled in such a way to survive intense American bombardment and keep at it. And the thing with the Iranians is they just have to keep at it, because time is not in Trump's favor. Just much as the Houthis have kept the Red Sea closed effectively for years by just intermittent actions, and representing and and menacing and danger the global shipping route has effectively been closed, and everyone goes around the Cape. So, they just have to emulate that, and remember the IRGC taught the Houthis how to do this. So, you know, they're going to be good. And only a few mines can cause more damage than not. You don't have to sink a ship, or hit a destroyer, or you know, just one of those things and everything changes. So, the stakes are high, and um the other part of this war which is not talked about is the interception of uh things like the Fattah 1 missile with hypersonic glide weapons. And the only way you intercept them is in space at the apogee of the curve of their flight before they release the maneuvering vehicle. And the Arrow 2s and Arrow 3s are about that process. And for the Americans, SM-3s from warships and THAAD missiles from their batteries do that. But their magazines are running very, very low. And I think there is some sort of concerted action via China to run the magazines of America to absolutely as low as possible, because that opens windows for their hostilities across the Pacific, which I think are looming evermore as naval concentration moves in to the Gulf battle, and the magazine depth gets lower. And if the oil ever flow ever stops flowing, that represents strategic constriction for China, which would be a perfect trigger point. We talked about magazine depth in our last podcast about 2 weeks ago. What is there obviously you look at this all the time is there an update on how the depth is looking? Because we when we when we last talked talked about it, I think we said something like 4 weeks. That I mean at the rate they were going towards the start, it was looking like they could they could potentially run out in 4 weeks. Yeah, well look what we they're very obviously tight-lipped about what those numbers are. We know the rumors are that in the 12-day war last year, 25% of fats and SM3s were used. And most if not all of the arrows. So they ran out in that time and they probably faced something more intense continuing. Because there's probably a higher ratio of fattier ones in these missile barrages than there were in the 12-day war. And they didn't really replace their lost 25% because it's only 9 months ago and they only make about 20 of them. So and then probably got to think the magazine depth is around 40% of what it was at the beginning of the 12-day war would be my guess. Maybe 30 to 40% would be my intuitive feel. Which must be very alarming. It's getting pretty low. And you talked about Trump not having much time. Is that is that what you mean with magazine depth or not? Like why does Trump not have a lot of time? Magazine depth is less a time function than a just a scale function. The time is that he said it would be a short war. The American electorate had disliking him. Oil prices above 100 give him all sorts of electoral grief. He didn't have any permission from Congress and no one agreed with the war. He made poor decisions about it and every day the straits are closed, that becomes a bigger issue. I think the thing that's going to surprise people is every my work you know, price-based modeling on oil. Is this is the beginning of a move you know, to 250, 300. And these are the foothills of it. So judging by price prediction, all of this is going to get much worse. So let's talk about your price predictions, right? You said 250, 300. What what does that mean? Oh, so here in South UK, we've seen some all all petrol stations basically preemptively they've put up their petrol prices already. Even though there's meant to be a time delay, they've done it. They've done it preemptively that they shouldn't. Anyways, what does this actually mean for people's fuel prices? Well, when you think that oil was this is WTI, was roughly you know, at the beginning of the year 60 and here we are roughly around the say we're at 90, we're above it. That's a 50% increase in fuel prices, which should translate to the pumps. More so for heavy oil and heating oil because heavy oil comes out of the Gulf rather than light oil which is part of the heating complex. So you know, some people have reported 100% increases for heating oil and that's probably a bit of profiteering, but it is more more in demand versus its supply because of the Gulf. So what does it really mean is you know, where do I think oil is going? It's going to double again. And next we're going to have scarcity issues. Because if the Gulf, you know, gets more friction, becomes more hostile, let's assume there's 20 billion barrels that don't actually flow at all. And that's a big constriction over time because the release of strategic reserves, which I think in America were already very very low by the way, because no one bothered to fill them up again having sold and sold and sold all the way you know, down into the lows on the argument that you're constraining the Russian economy, they made the fundamental error of not replenishing their reserves. So I think all of this the longer it lasts, the worse it gets in short. And I think we should be preparing for 3 to 4 months, not you know, 3 to 4 weeks as Americans would like. And you you're saying that the heating prices are uh going up more than actual petrol, diesel prices. As you said, people have reported 100% increase. Obviously we're going to summer now. Going into winter you said you see about 6 months in advance, you see this getting far worse than going into winter. Is this something that the general public should seriously be concerned about? Look, I I think you know, in a world where the cost of living is really hard already, superimposing this type of price inflation is a killer for people because it affects food prices, transportation, it affects everything. And I think what we are about to witness is the constriction of the oil price through events around this issue. And then the knock-on effect to fertilizers, food, transportation. So it's going to be a tough time and the corollary of this if I use my half war cycle, contrarian cycle, was in the '70s when oil went through the roof with an OPEC squeeze. And it caused immeasurable grief to a much stronger economy in America for example than today in many ways. So I think we need to brace ourselves for a very big economic shock. All right, going back to um we said about Trump's administration not agreeing with him. Today I believe Joe Kent has resigned. Is that is that happened today? He did, yeah. Apparently. >> And he resigned out of protest. It's not like an like an another person who dislikes Trump. He's he was a long time supporter in a position of power. He was uh remind me of his title. He was the head of anti-terrorism of the US. Is that right? Yeah. He said his words were that Trump started the war and there was Trump started the war from pressure from Israel and that Iran posed no threat. What do you think about that? The US has obviously dismissed his letter of resignation due to that. Do you actually think that he's lying or why would someone he's in such power, why would someone lie about that? And Well, obviously you know, please please help me out. Yeah, yeah, yeah, it's a really good pick up, H, because so much you know, so there's a bit of truth and there's a load of bollocks. So there was clearly a threat to American interests if Iran built a nuclear weapon, period. And American interests include the continuation of Israel and the threat Israel was just not acceptable or to Saudi Arabia. I mean the Saudi Arabian MBS has been encouraging the the destruction of the Iranian regime because it sees a long-term threat. So when someone says there was no threat to America immediately, they're right. But in a year's time, those fattier ones might be you know, intercontinental missiles ballistic missiles. Then you have a bunch of mullahs who have a completely different concept of risk and life putting America at risk. So I think it is a reasonable strategic statement to see the imperative is that America had with Israel to do this. Tick. Do I think that Netanyahu has an unbelievable hold over Trump? Yes, I do. Because the Epstein files were Mossad. Trump is willingly steeped in the evidence and similarly Putin has the same evidence through crossover in '06, '08 and essentially both of them are semi or complete puppet masters of Trump's behavior various times. So was there influence from Israel? Without doubt. Was there a threat to America? Absolutely. Why is this guy resigning? Well, that's really interesting. The whole MAGA movement feels betrayed. If he was a MAGA-ite, what Trump said he would do and what he's doing is diametrically opposite. And his justifications and behaviors are really alarming. I mean even those all them person has got to see the extreme behavioral changes we've seen in him in the short period in office. And when he let loose the dogs of war and he was destroying drug running boats and killing people who were surrendering or stationary, that was just like I think it's a real low point in international law and illegal action from Hexeth and Trump and Co. just was a marker of the dogs of war the dogs of war were loose. And they got away with Venezuela with skilled special operations. And then they thought they could do the same to a country of a completely different magnitude halfway around the world. And the strategic thought behind it was completely absent. And the understanding that the Iranians if they lost their toys and their nuclear weapons and they were bombed would flip to plan B, which was an endurance attritional conflict, which is what we're seeing. And they just happen to own a very very important piece of waterway that feeds you know, 20 20% of the world's world's oil. It's interesting. >> No, I think he was I think he was part of something wholeheartedly and he's backed out of it and tried to make himself look good in the process. But just remember, you know, he was part of the MAGA not jobs that that oppressed this American regime and he would have been thoroughly sick of >> not make his story feel a little bit more believing now because he is a big time supporter? Well, it does I think. I think if you're a big time supporter and you're witnessing two things, Trump's behavior and an absolutely disastrous war scenario. But you've taken you've said you never wanted a forever war, you'd never take America into a forever war and you've got stuck in a war that is just awful with no clear end and no clear strategy from the outset. That would tip the balance with anyone who understood the problems. Yeah, it's interesting, isn't it? It is. It brings it brings some more cards to the table where You know, people don't like to believe that. I saw an interview with Piers Morgan and you know, a a a a woman who was interviewed and uh she just basically said, "I've known Trump all my life, but I don't recognize him right now. So, he's obviously had a personality transplant and that is either uh dementia possible or other things which are difficult to fathom, but what we've got is someone who shouldn't be holding the levers of power. Do you think Trump has dementia? Because I've also seen stuff flying around saying he does. There's I mean, obviously, you know, social media can skew stuff. But there is more evidence showing uh appearing that he might Well have it. So, you know, extreme narcissism like the before he has is never going to age well, ever. And he so you you would expect him to get worse with age. And he's definitely worse with age. He just sprouts and lies at every minute. And I think there he is old enough that that is possible. The dementia isn't manifesting in memory loss, but more behavioral change. And if you look at dementia qualities or early symptoms, character changes and extreme shifts in personality are parts of that. And certainly, he is not the same person that took office, you know, only a few months ago. So, I can see why supporters are alarmed and I think all of us should be alarmed that the leader of the free world is really, you know, shouldn't be in that seat. But I think MAGA supporters aren't alarmed because they see him like a god. So, they they think whatever he does is the best thing in the world that anyone has ever done. Yeah, half on and half off. And the half that continue have sort of like almost like a slavish adherence that you're describing. No amount of evidence will change their view. Much like the Nazis, the die-hard Nazis just didn't change their view about Hitler, even though their country was in rubble. But then some of the people did flip and there are cases of, you know, die-hard MAGA rights who just saying, "This is a MAGA. MAGA's dead." And it is because they were duped. Trump rode to office. He hijacked the MAGA agenda so he could get power. Now he's in, doesn't need them. How is he still getting away with this though? Because basically everything he said to get into office, he isn't doing. Or he's done wrong, differently. >> Democracies require accountability. They require processes that held parties and leaders to account. So, legal, law uh opposition parties So, you know, the legal system is not functioning. He's delivered his way through numerous court cases and you know, evidential trails against him. Obviously, the Epstein fell falls sit over him like the sword of Damocles because I'm sure the evidence him would would depose him. And the opposition party in the form of Democrats is just diabolically weak. It is, you know, are insipid. And so, no one is there to call him to account. And as a result, he's created a existentialization of his brain. And his brain is full of fantasy and lies that place him at the center of the universe as a man of brilliance. And what's so interesting if you just watch him around his cabinet and people since he got into office, that sort of sycophantic, malignant, narcissistic language has spread across the administration, spews out of the White House through Levitt. And you listen, it's really toxic. And that comes from him. And he's distorted their reality as a function of his distorted reality, like a cancer spreads it through a body. So, he is a malignancy, I'm afraid. And he's got some very good people protecting him because they feel duty-bound as a Secret Service and and the and the intelligence services to act as as if to protect him and yet he's a cancer on American society. >> he'll lose this whole time? Uh if I had to give odds I think his behavior is so bad. But one of the things you really learn about people that are dark and use dark dark energy is they're incredibly survivable. So, if they bend the fabric of the universe to their will. I mean, Hitler was at them to assassinations when I 28 or something ridiculous and he walked away from them all. So, I think there's a, you know, yes, I think he will be exposed to something to remove him with his extreme behavior, but history talks about how hard it is to remove people like him. And once he is out of office The reason I'm asking so many questions about Trump and the administration is because what's going on is truly fascinating. Obviously, I like it it's just it's there's so much going on that there's it feels like you could talk about it forever. But do you think Trump will be tried when he's done? Oh god. >> think he'll be tried for war crimes? Yeah, he'll be impeached. There'll be an investigation on whether this this invasion on Iran was relevant or necessary rather than just complete completely out of the his will. Okay, so I think how come he's not >> is like what people are talking about. Yeah, okay. So, so you're exactly right and if you had a midterm election now instead of the end of the year he'd get wiped out. I mean, people and his popularity is really bad. And so, the house would fall to the Democrats uh both houses and they could impeach him. So, this war is not just a war to him. It's the very war for his survival. And the only way he's going to get through this in his own mind cuz if he goes through the Democratic route of midterms, he will be found out. Cuz, you know, it'll got so much worse by then at the end of the year. So, his real decision is can he follow through on Project 2020 where his plan which is essentially to ensure that he becomes a dictator. So, you can assume that in terms of his domestic policies, they're going to become more extreme in my opinion as his popularity decreases. And that's a very dangerous threshold. In what way? How I mean, obviously, he's said that he wants to run again next next term, but is that is that even possible? Well, I I think his mental acuity is probably going to prevent that. But what we're really talking about is the Project 2025 people are not quite the same as Trump's agenda. You've got to think if they have this like gradient between democracy and autocracy in the new American form, it's a straight line and Trump's behavior does this, but actually oscillates around the line. So, we think it's all chaotic, but underneath Trump's chaos, there is a wretched system closing on democracy in America. And I think Trump will definitely do all he can to complete that because then he doesn't have to go to the midterms. So, his instead of his unpopularity being a thing that constrain him and shape his behavior, he's more likely to accelerate something even more extreme. Yeah. I'd quite like to talk about um Pakistan and Afghanistan. Um which is now being classed in news articles as an open war. Uh Pakistan has claimed to strike a technical support infrastructure, declared it a success. Was Afghan the Afghan Taliban government obviously said that they didn't or it was a failed um strike. They said they hit a bomb uh sorry, a drug facility. Obviously, like the governments are producing different information and I found it hard to research what's actually going on. So, what news source or what can we actually know about what's going on at at the moment? To be fair, I haven't followed it very closely. Um as you say, grumbles on. And I think the key thing here is two things that, you know, I would observe is one is the the Taliban is a creation of the Pakistani intelligence services, ISI. And you reap what you sow. As a little amusement because, you know, it was them that helped and supported the Taliban against Britain and America and its allies in the campaign that lasted almost 20 years. So, there's there are irony with that. Why this continues is because the Pakistanis at least believe the Indians are helping the Taliban. And so, it's a proxy war for the other two, India and Pakistan. So, and they are in a super grumbling state and they're sort of chomping at the bit in a strange way each for each because you've got Hindu nationalism and you've got Pakistani nationalism. So, you know, as we talk about this pulse of entropy surging through into 2030 we're seeing it manifest in that region. We're seeing it manifest in the global region. So, all in all, it's just part of that mosaic of increased conflict dynamics. And as we sort of joked a bit, I wonder whether families actually, if you could trace them and, you know, companies and basically smaller social units than countries versus countries are all suffering this increased friction between people. Which creates polarization, difference of views, intolerance, and conflict on the larger level. You describe it as like a round round and round tumbling. Um Pakistan's accusation that the Taliban is harboring the TTP, the Pakistani version of the Taliban, which they have some serious history with. Obviously, Afghanistan is denying that. Does this Like you said you don't follow it you aren't following it closely right now, but I'll ask you about that in a minute. But >> [clears throat] >> do you like do you see this expanding elsewhere than what's going on at the moment? Because obviously they're so close to the Middle East. India is indirectly, directly involved. Well, I think it's it is a friction coefficient between India and Pakistan. And at some stage, they are going to kick off. And Pakistan will be encouraged to kick off against India by China at some strategic point. So, this is a reminder of how strong that friction coefficient really is. Right. Um and obviously you said like not following it closely actually ties directly into this question of do you think that us as the West and you know, looking at geopolitics are too focused on the Middle East like Iran and Israel and not really focusing on the Durand Line, what's what's going on just next door and we could just obviously it's it's not our country, but just let it expand uncontrollably when it may possibly be able to be controlled and deteriorate further or is it okay that it's not really being covered and focused on? So, how can I explain this? I think you make a very good point about seeing the big picture. But the big picture that everyone should see is that China has set itself on a course for war, in its militarized economy, its weapons evolution, its aggressive behavior. And China's confidence in manifesting anti-ship ballistic missiles and hypersonic glide vehicles that challenge American power has since 2020 made them very, very aggressive and confident. That confidence has translated into encouraging Russia to go to war over Ukraine and supporting it to the point of now being almost annexed economically. And the same with supporting Iran and its ambitions to attack Israel. It's kept North Korea in check, although they put their elbows out regularly. And my point here is that don't just look at the rocks being thrown at us in the form of Ukraine and Iran. Understand who's throwing those rocks. And our world needs to understand that's China. And China is a hostile nation. So, accommodating it, trading with it, stroking it is just not going to do any good. We need to recognize it for what it is, eject it from our systems and the infiltration and covert dynamics, and then we can actually start to face outwards. And I think a really good image for that is actually Germany, because Gerhard Schröder, Merkel very definitely, and Schulz, I think were all controlled by Russian intelligence services. And you could see in their decisions they weren't really doing things that were good for Germany. The moment Germany got Merz on board, Merz is, you know, a a German leader for Germany, and Germany's come alive. So, it's a little bit like that scene out of Lord of the Rings in the two towers when the king of the Rohan and the spell falls away. I think that's really what this is about. Well, that's everything I've got for us today. Great questions. Testing your old man again. I do try and I'll come back stronger next time, don't you worry. So, I would just say, you know, um many people coming emanating from the White House, you know, you see it in financial markets, think this is all going to be resolved quickly like a hiccup. And everything that I have studied, and be it the battle for the straits or the Gulf, or the strategy the RGC is executing of durational struggle and attrition, suggests to me this is much, much longer. And the surprise will be continuation. And I just like to remind people how time and time again over the Ukraine war people have thought there was going to be peace and it was going to stop and it was going to end. And here we are over four years later and there's no sign of peace. And why was that predictable based on my work? It's for two-fold. The friction coefficient would increase and the entropy increase into 2030, so peace wasn't going to break out. And at the same time Putin never wanted peace. And Iran doesn't want peace. And the friction coefficient is increasing as well over Ukraine and over Iran. So, don't expect a surprise and a lucky ballot. I'm afraid everyone should be prepared for duration, attrition, and the situation getting worse. Great way to end it. Absolutely cheerful moment to end. Of course, of course. Um I'll see you next week, everyone. We'll see you next week. >> and there's a way to fire them off to H and he'll grill me accordingly. Yeah, I will try. I'll try to test you harder next time and make you really think about it. Hey ho. Thanks, H. You did all right. >> a pleasure. Yeah, as ever. Great job. Hey. Bye. David Murrin is the author of Breaking the Code of History, in which he presents a unified theory of civilizational dynamics. He is one of the world's most precedent and respected geopolitical forecasters. Drawing on decades of multi-disciplinary expertise, David has a dedicated global following, particularly in the Anglosphere spanning on the finance sector, including hedge funds and investment professionals, as well as the military circles and private strategic advisory networks. He provides a deep strategic insight across five critical domains. The rise and fall of empires and war cycles, macro investing and economic cycles, politics and cultural dynamics, constructive and deconstructive patterns in human behavior, warfare past, present, and future strategic tactics and weapons. This framework applies historical cycles to contemporary geopolitical shifts, delivering actionable foresight for leaders navigating an increasingly volatile world with an unparalleled track record for anticipating global inflection points. David's models have become essential tools for investors, corporate strategists, and national security professionals. He has also authored Lions Led by Lions, rewriting our understanding of the RAF's victory in 1918. Now and Never in 2020 warns Britain to rearm or face war. Red Lightning on How China Wins World War III. His analysis not only highlights future risks, but provides clear, forward-looking strategies for managing and exploiting emerging opportunities and navigating uncertain times.