Chuck Yates Needs A Job

0:21 I'm a macro portfolio strategist, so I cover multiple assets, but energy is important. And I actually started out as an energy analyst and as an equity analyst. So I've always had an interest in

0:30 the

0:36 sector. And just recently, because of what's going on in the Middle East, I've been paying a lot of attention to sort of the geopolitical risk factor for oil prices And I've been saying that, you

0:48 know, the market isn't pricing in enough risk of a major war in the Middle East. And so that's one of the main themes that I've been talking about at some of the podcasts and in my own YouTube

0:59 channel. So that's something I'm prepared to talk about in a lot more depth and detail than probably, you know, that you'll. Yeah. Because I'm just going to sit here the whole time we talk about

1:09 this and go, at the beginning of my career, a bomb went off, oh, and a 10 bucks, right. And that's not happening You know, it's like, well, what happened sure the And then, and then of

1:20 course, if, you know, I'm also, so I'll probably talk a lot about that, but obviously there's other issues right now going on, which, you know, that are sort of subsidiary to that whole thing

1:31 about, you know, let's say OPEC and what prospects, you know, a lot of the major banks are coming out with their 2025 outlooks. So, you know, you might be interested in touching on that. You

1:40 know, what my thoughts aren't. Do the opposite of whatever I say. That's the one thing we learned. Anytime we were discussing hedging at a portfolio company around the table, what does he eight

1:50 say? Let's do the opposite. So, real quick, what's your company? What does your company do? How does it make money? Okay. So, my company is investor acumen. And we are an independent

2:03 research provider. So, I provide research and consulting services to institutions mainly, but I also have a couple of businesses that are oriented towards individual investors where we have some

2:15 model portfolios

2:18 individual investors sort of structure their portfolios. So I'm a hedge fund, I'll pay you X dollars per year or whatever it is to get a hold of your research. Exactly. Okay, got it. That's

2:28 exactly what it is. Got it. So it's sort of, they'll either pay for just my research or if it comes along with the consulting service, there's an arrangement where they're able to call me up and

2:41 we talk a certain number of hours or they have a certain amount of access Right, yeah, the hedge funds guys like to talk. I don't think they actually read stuff when you send it to him or at least

2:55 that was always - That was always got to my experience. That's very true. Would you say in this piece? Yeah, exactly, they just want the summary. They want to just get to the bottom line and

3:06 kind of get into the questions in the nitty gritty. So where do we level set to kind of start this? Is this, do we level set it with. there's no geopolitical risk in the price of oil today and

3:20 boom, you launch or how do we? Yeah, maybe that might be a good way. You just, I mean, you just suggested something, interesting observation, you know, oil is probably relatively close to

3:32 it's 52 week low, you know, the price of crude oil. And despite the fact that there's a potential for a major war in the Middle East, and that seems a little unusual and markets don't seem to be

3:45 discounting that risk And so, you know, I brought somebody on the show that, you know, has been writing about this and thought we'd, you know, talk to them in depth about the risk of a war in

3:54 the Middle East since the market seems to be disregarding that risk.

3:58 Yeah, no, yeah, I was about to say, just far away on that. I actually, my two cents worth is what we've been talking about would be interesting just if we should and start. I think people kind

4:11 of like the more realistic authentic stuff as opposed to to to to

4:17 to a T-ball question. But yeah, so, yeah, his history of my career and the oil and gas business of bomb went off in the Middle East and oil jumped 10 bucks and, you know, felt like the world

4:31 would stop or, you know, unfortunately, you know, you in the United States, owning assets would go, wow, I'm rich, you know, or whatever. So, so what's going on today? Why are we not

4:43 seeing that? Well, that's an interesting question. I mean, you know, when we were growing up and when we first came into the industry, we were in a sense just coming out of the '80s and the late

4:55 '70s where the oil industry had experienced several major shocks. And so there's still a lot of nervousness in financial markets because people had memories of devastating oil price shocks. So

5:09 anytime there was any sort of news coming out of the Middle East or something that might disrupt the supply of oil, thinking back to '73, '74, thinking back to '79 with the Iranian Revolution, you

5:20 know, basically all those memories were like, Oh my God, here we go again.

5:26 You know, the landscape in the oil and gas industry has changed dramatically, as you know, from every point of view, not just geopolitically, but also just in terms of the supply demand for oil,

5:39 the place that the United States is in terms of major oil supplier, you know, back in the '70s, the United States was becoming more and more dependent on foreign oil. Therefore, the sourcing was

5:50 in a sense more risky and more exposed to risk in the Middle East. So there's so many things that have changed now, and I think that people have forgotten about the risks, the types of things that

6:02 happened back in the '70s in the '80s haven't happened in such a

6:05 long time. In fact, probably most oil traders today, and people that are involved in the industry, never experienced those events at all They may not even have memories of that in the childhood.

6:14 Right. And so I think that psychological backdrop helps explain a little bit why people seem to not be taking very seriously some potentially devastating things could be happening in the Middle East

6:32 that could really disrupt global oil supplies. I think that there's also just a lot of blind spots right now about different trends that are happening in the Middle East, because this is something

6:42 that, again, people haven't had to pay attention to in a very long time, particularly, and this is just overall people, but even people in the industry, I think, haven't really been paying

6:51 attention to some real major changes in politics and society and demographics in the Middle East, Israel. And so I think this situation of a potential war, for example, between Israel and Iran is

7:05 something that's sort of sneaking up on us because people aren't really paying attention to it and therefore not taking it seriously yeah let's let's break this down so uh I have theories on this, so

7:15 I'll throw them at you and Chuck, that's really stupid, is a totally appropriate answer. So, one, it feels like the infrastructure to deliver oil today versus the 70s. Way more complicated, way

7:32 more advanced. And we've gotten to the point where if we embargo someone, that just means the ship goes to a different port. I mean, it's so built out that it really is hard to stop a barrel. Is

7:50 that part of this? I think so, yes. I mean, certainly it's harder to create a supply disruption today. And also, we have to understand that the inventory management is really different, right?

8:05 We also have the strategic reserve, which wasn't around back in, in the early '70s, for example, when the Arab oil embargo happened.

8:15 So there's just a, and so, and as you said, with logistics and with the ability to coordinate, for example, the landing point that ships are at sea and almost immediately change and reroute them

8:27 to different places. All these things have meant that minor disruptions really won't cause a very major problem. But for example, one of the things that I've been talking about is that there is a

8:39 very serious problem when it comes to the Persian Gulf. Because to do the Strait of Hormuz, you got about 20 of global oil supply that actually flows through the Strait of Hormuz. So in the event

8:52 of a war between Iran and Israel, if Iran were to decide to try to block the flow of oil through the Strait of Hormuz, which is something that we'll kind of discuss because I think that's the real

8:59 risk here, then there's gonna be no way to sort of make up for.

9:10 20 of the world's oil supply that actually comes to do the Strait of Hormuz. There's really no way around that. And as you know, who comes out of the Strait of Hormuz, Iranian oil, Iraqi oil,

9:20 Saudi, Saudi, Kuwaiti, UAE, Iraqi oil, pretty much the entire Gulf region, the vast majority of their oil comes through the Strait of Hormuz. And so the war, I always hate the fact that we

9:35 traffic in misery in our business, but it just is a fact. I mean, we have to deal with this. So the war that happens is shooting bombs across each other and just tankers aren't there, or is it

9:55 basically the terrorist offshoot of the war that are taking tankers out? What actually happens war-wise to stop the flow of the tankers out of there. So a couple of things. First of all, the main

10:12 issue here is whether or not Iran would make a decision to try to actually disrupt the flow of oil through the Strait of Hormuz. Okay. My contention is that they will ultimately do this because this

10:25 is the only way they can save themselves. If they find themselves in

10:30 a situation where there's actually an all-out war with Israel, they'll also be essentially in an all-out war against the United States They have very low probability of survival. The regime probably

10:41 won't survive. At that point, the only cards that they hold are essentially to try to blackmail the global economy. And the way that they can do that is by shutting all commercial traffic through

10:55 the Strait of Hormuz. Oil prices would rise to three, 400. It would cause devastating recessions inflation around the world. The entire world would be very anxious to bring a very, very quick end.

11:08 the war. And therefore, the Iranians know that the entire world is going to be wanting to get Israel off their back at the United States off the back to end the war as soon as possible to end the

11:19 devastating recession. So I think that's the card that they would pull in the event that a war broke out because the alternative for them is to lose and to have a regime change there. Now, how

11:30 would they go about doing that? Because that's another big question a lot of people have You have the US Navy protecting the Strait of

11:38 Hormuz. It's a core competency of the Iranians to blow things up. They're actually really good at that. But keep going on this. Yeah, I mean, they've been preparing for a scenario like this for

11:48 something like 20 years. Their entire armed forces is essentially geared towards the possibility of blocking the Strait of Hormuz. So they're very much prepared for this scenario. And one way that

12:01 we know that they really are capable of doing this, because a lot of people are very skeptical about their ability to But today we shouldn't have any real doubt about it 'cause all we have to do is

12:10 look at what the Houthis of Yemen are doing in the Red Sea. The Houthis of Yemen today, having not even 1 of the military and economic resources of the Iranians have managed to block something like

12:24 75 of all traffic that flows through the Red Sea. They've had to reroute it.

12:30 And which is obviously increased transportation costs and so forth. How did they do this? They simply announced to all to the entire world is that any shipping that comes through here, we're gonna

12:43 sink your ship. So what happens?

12:47 Commercial insurers won't insure the ships. The owners of the ships are going to put their crews at risk and their ships at risk, particularly if they're not insured. So they just won't go through

12:57 there. That's essentially all the Iranians will have to do. The Iranians, if they simply announce that any ship that comes to the Strait of Hormones will be sunk. There'll be no insurance, no

13:08 commercial shipper will dare to go through there. In addition to the fact that they actually have the military capacity to, because again, they have such, they're right there on the Strait of

13:19 Hormuz. They have a huge landmass that they can launch missiles and we've seen that they have very sophisticated missile technology at any ship and basically overwhelm the defense. In fact, I mean,

13:33 they can certainly overwhelm the defenses of any commercial vessel and there's no way that the US Navy can actually protect those commercial vessels. There's actually major questions today whether

13:43 the US naval vessels can protect themselves against the Iranians. There's a lot of military experts that believe that US warships today are essentially sitting ducks against some of the highest

13:57 technology missile systems that the Iranians have been able to develop, particularly the hypersonic missiles So, quick side note, not to derail us, but.

14:11 When blowing up Nordstrom first happened, I thought it was the Iranians. I thought that was kind of there. It's their core competency blowing stuff up. I thought there was a path to get Iranian

14:20 gas into Europe. So there was actually an economics incentive to do it. I don't guess the Iranians did that, but I guess it's still an unknown question.

14:32 Do you still believe what you just said about the Iranians and their sophistication given what we've seen with the missile launches onto Israel? 'Cause that's kind of looked keystone cops. I mean,

14:45 I hate to phrase it that way. Sure. Well, I think yes, in terms of their more low-tech drones, for example, those are easy to shoot out and some of their older model, let's say missiles that

14:60 are using like 20 year old technology, but of one, actually they the things that they were able to prove is that in their second attack, they went after

15:10 a couple of Israeli military installations, particularly in Air Force Base, and they were actually able to get their hypersonic missiles through the Iron Dome. And so that's interesting, because

15:21 the Israelis are protected by the most sophisticated anti-air technology in the world, and yet they weren't really fully able to prevent the most sophisticated Iranian missiles from striking their

15:34 targets So since the Strait of War moves and the shipping there isn't protected by any kind of an Iron Dome, we can know for sure that they'll be able to hit any sort of shipping that they have there.

15:45 And in fact, and also because they're just a lot closer, I mean, just right there. And so, and they can just overwhelm, because it's also kind of a numbers game. Not only do they have like some

15:56 very sophisticated missiles, but they just have an overwhelming amount of production And so there is no, let's say missile defense system that can defend. against hundreds of missiles coming at a

16:10 ship simultaneously. Again, even there's even a lot of concern on the part of the US that if Iran actually decided to take out one of the US's aircraft carriers that it could actually do it, that

16:20 US defenses are insufficient to actually defend against a full Iranian assault with their missiles. But there's no question that commercial shipping they're just sitting ducks. So even if one had

16:33 some doubts about the ability of the Iranians, for example, to defeat the US Navy or, you know, to be able to strike key targets within Israel, there's very little doubt that they have the

16:44 technology to take out commercial shipping. And that's really the key. Because a lot of people say, Well, there's no way that the Iranians can take on the US Navy. Well, they don't have to take

16:52 on the US Navy. They're taking on commercial vessels. They just have to tell the commercial vessels, If you go through, we'll shoot at you And so, that's why it's

17:04 referred to as sort of asymmetric warfare. The Iranians aren't gonna go directly and have big naval battles with the US Navy. They're just gonna go after the weakest link in the chain, which are

17:14 these commercial vessels that are essentially defenseless. Yeah, 'cause I mean, now that you say that, I mean, if you own a commercial vessel, I mean, that's your livelihood and of course, and

17:26 it's very expensive and all that. Yeah, you're not gonna - Even if the US Navy's saying, no, I got you. I'm still like, no, we're good. No. I'm gonna be over in the metro.

17:36 Yeah Absolutely, no, no, no. Nobody's gonna be taking the risk of saying, oh, the US Navy is gonna be to protect my ship against an onslaught of incoming missiles. Because again, the owners of

17:51 these ships would be risking their capital, they'd be risking their crews, and they can't even get insurance for it. Right. So it's a no-go, it's a complete no-brainer. The traffic will

18:03 completely stop. And that's what's interesting. A lot of people think, Oh, well the Iranians will have to do this, that and the other. They literally don't have to do anything. All they have to

18:09 do is just announce, and just with words, and it'll stop all the traffic. Yeah, no, that's, so how does this play into it? If I'm the West, if I'm the United States, and I said this 12 years

18:24 ago at a conference, so I've still got three years left to be right, they said, Give us a take. And I said, with them 15 years, there's gonna be a regime change in Iran, and

18:36 they will be our strongest ally in the Middle East. 'Cause, I mean, generally speaking, I think the take is of the Iranian people, not the regime, they're pretty pro-West, more plastic surgery

18:48 than any other country on the planet. You know, I mean, and so, you know, the struggle we have in the United States, working with Israel on this is, We can damage Iraq by blowing up. their oil

19:05 infrastructure, their new infrastructure, all that, but then if the regime topples, how do they have a life that's not, how do they have an economy of any sort? We've got to balance that 'cause

19:19 if they don't have a functioning economy, you probably get a worse regime at some point. Well, in theory, if they had a good regime, both the United States and Israel would probably help them

19:30 rebuild and try to do so relatively quickly. And I think that the sense is that there's a lot of support potentially within Iran, Iranians understand that in order to overthrow the current regime,

19:44 it'll be a civil war, it'll be a very violent affair. So, and that's actually part of the problem, really, 'cause really the answer to your question that you posed that you mentioned that you

19:55 were at a conference 12 years ago and the question of regime change, I think the interesting issue there is that The Iranians. Several years ago realized that they were weak, that the popularity of

20:10 their regime was collapsing, that the attitudes and the culture in Iran was changing, and that they realized that this was a threat to the Islamic regime.

20:23 This actually happened in one of their key elections where the people actually voted for the candidate that wasn't supported by the Ayatollah. And at that point, they actually felt that they were

20:34 losing control of the population. Now, one of the things that's actually happening in Iran today, which you've probably heard of, is that the population is massively moving away, religiously

20:45 speaking, from the Islamic religion as promoted by the current regime. Massive numbers of mosques in Iran have been shutting down because nobody's attending. There's even actually a fairly

21:01 significant underground Christian revival that's going on there, although most of the people that are abandoning Islam in Iran are simply becoming agnostics and atheists. So there's a lot of

21:15 cultural change happening into the general population. But on the other hand, there's something else that's in a sense even more important, which is that the Iranian clerical regime has a tighter

21:26 grip on the security apparatus through the IRGC, the Iranian Revolutionary Guard Corps, than they've ever had before. The Iranians have developed a very detailed and sophisticated sort of

21:40 ideological indoctrination program

21:45 for the IRGC. It's estimated that something like 50 of the training of any

21:53 IRGC officer is actually ideological training. And by ideological training, just means convincing them that. For example, the words and the will of the Supreme Leader is the most important and

22:09 most paramount thing, and that loyalty to the Supreme Leader is on question. The IRGC we have to understand isn't the regular Iranian army. It's an army that's loyal to the revolution, not to Iran.

22:24 It's actually a separate branch. It works a little bit like the SS stormtroopers did and Nazi Germany that were loyal to the fewer, but actually had a complete separate organization from the rest of

22:35 the German army. That's how the IRGC operates. And they control, they're basically the internal police. There's also an external arm to the IRGC, but they control the internal police and they

22:48 actually have a tighter grip on that security apparatus. And then they ever have before. And of course they control the means of violence. So from the point of view of the general Iranian

22:60 population, the culture is moving away from the regime, but the grip that the regime has on the population from the point of view of just the security apparatus and the apparatus of the state

23:11 overall is greater than it ever been. One of the things that's actually happened is that the IRGC has actually been given control of several key industries in Iran So. they have a huge amount of

23:22 money and they also, there's huge economic interests that are not allied with the IRGC So sort of running against the trend of the tendency that you point out is this other internal tendency and

23:35 trend towards greater control and also a greater radicalization of the support structure that the regime relies on. In other words, the types of people that support the regime today, both the

23:50 clergy and the army or the armed forces are more religiously radicalized today than they ever have been.

24:02 They believe in a series of doctrines. For example, I recently had a talk where I was talking about the rise of of modiism within Iran, but particularly in between sort of within the clergy and in

24:20 the military. And modiism, as

24:25 it is currently sort of emerging in Iran, it has a lot of different strains to it. But one of the main strains that's emerging is the belief that in order to pave the way for the modi, which is

24:39 essentially the

24:41 messiah from their point of view, that conditions have to be made right to prepare the way for the modi's return. And it's believed that there has to be a major global conflagration and a major sort

24:54 of war against the forces of evil in the world that'll actually. catalyze the return of the Mahdi. And so a lot of people in the Iranian regime in the IRGC particularly believe that a precondition

25:11 for the return of the Mahdi is actually a war, a major war with Israel as the great evil in the world. And I only bring that up because these are things that I think are a blind spot for the West.

25:27 We don't know that these things are going on, but these very radical tendencies are happening within Iran. I'll give you another example of how significant this is.

25:39 The Supreme Leader of Iran, Khomeini,

25:44 several years ago declared that it was a state objective for Iran to bring about the elimination of the state of Israel in 2040. When this happened many years ago, it alarmed people, but people say,

25:56 That's just talk You know, that just, you know, a guy just saying stuff. But actually, Iran actually has a put in place, serious policies that try to carry out this,

26:11 essentially this edict, because one of the things that's actually happened within Iran is that they've developed a doctrine of infallibility with regards to the statements of their supreme leader.

26:21 This is actually something that didn't previously exist within Iran and in their Shia religion, but they've actually developed this doctrine of infallibility. It's a little bit similar to what

26:32 happened in terms of the Catholic Church and the statements of the Pope. There's

26:38 actually a plan in place. And in fact, one of the things that people in the West don't know is that there's actually a public park in Tehran.

26:49 And

26:52 there's a clock there, and the clock is counting down to 2040, the date of the destruction It's called Palestine Square. So this is a

27:05 state explicit state policy to bring about the elimination of the state of Israel by 2040. It's something that's widely known, understood, advertised within Iran. It's guiding their policy, but

27:17 we in the Western sure are blind to it. It's actually quite remarkable that we don't actually understand that this is going on. But certainly the Israelis have been paying attention to these trends

27:27 and we'll talk about this a little bit more later on. But this is actually one of the main things that's actually motivating Israeli policy towards Iran because they see that the Iranians are

27:37 actually serious about trying to eliminate them by 2040. And so this has caused a major shift in terms of Israeli thinking about how they have to handle Iran. So that's fascinating because it feels

27:50 like there's a public uprising every so often in Iran and you kind of sit there and go, Okay, this time's it You know, I mean, just given. what limited information I have as a degenerate

28:04 alcoholic who sits around and doesn't read much about Middle East stuff. But,

28:10 and it seems like the uprising gets quelled. And it goes away. And so they've actually - Just recently, there's been

28:19 a huge increase in the number of public executions by public hanging of dissidents. But we're talking about minor acts of dissidents in Iran are being punished by death, and people are being hung up

28:31 by cranes. And there's been recently a major increase in that, because obviously, the regime feels a little bit more threatened right now at the possibility of an uprising. And as you know,

28:41 Israel has basically stated that it's their policy right now to seek regime change in Iran. Prime Minister Benjamin Netanyahu has already had two public addresses where he has specifically

28:58 at the Iranian people, speaking directly to the Iranian people, saying, we are the friends of the Persian people. We love the Persian people. We historically had been allies. We've been friends.

29:12 We have no qualms. We have no issue with the Persian people, but we have a problem with your regime that's threatening us and that's also oppressing you, essentially calling for the Iranian people

29:22 to organize a revolt in a civil war. The Iranians understand what's up They understand that they are going to have some internal issues, and they're trying to shore up and basically terrorize their

29:35 population and say, Hey, don't even think about, or else you're going to end up here on one of these cranes. So on a scale of one

29:46 being no way in hell, let's call it aand

29:53 then 10 being aand

29:59 moral certainty actually will happen. What's kind of the range on the shot that there will be a regime change? If you had to kind of handicap it along those lines. 'Cause I'm me less than you going,

30:14 man, there's no way in hell. This isn't gonna happen. I don't think it'll happen unless there's actually a war, an all out war that so weakens the regime that it actually gives rise to, or it

30:31 gives a space and a possibility for internal opposition within Iran to try to take over. And it would actually have to be supported by the United States and Israel with funds, weapons and so forth.

30:41 Because again, internally, in the end, people can, the majority of the population can hate the Iranian regime and the IRGC, but they have all the guns, and they have the weapons, and they have

30:52 the whole apparatus of the state Well and, in the, the. the regime, are they, hey, so long as you don't mess with us politically, you can go have your plastic surgery and party if you want on

31:05 the weekend, is there some kind of semblance of freedom given to the people where, you know, at the end of the day, if I can go home, get a Bud Light, watch a little bit of TV, am I going to

31:18 really revolt and go to war? Or do they push it hard enough that there is a possibility that there's enough rising? Well, yeah, that's a great point. I mean, they're trying to straddle a line

31:33 between not making the population feel that it's overly oppressed, but at the same time, kind of always reminding them who's the boss. So you've probably seen in the news that just, you know, in

31:46 fairly recent times, the Iranians have resumed a crackdown on

31:53 the use of the Islamic headscarf, and women being arrested, beaten, and certainly anybody that openly, let's say, protest or openly speaks out against the edicts of the state are being imprisoned

32:12 and they're being hung up. So I think that the way I would describe what's happening right now is that as long as people stay quiet and don't openly, let's say, challenge the regime, they're being

32:25 left alone. But anybody who is seen or perceived to be openly challenging the legitimacy and the authority of the regime, they're cracking down really hard on that. And so to the point where even

32:37 not wearing the hijab in public is being seen as a sign of rebellion and therefore these folks are being arrested and in some cases actually hung up. Interesting. So I think the other thing that the

32:55 market. is missing. And this is, I think, just a bunch of generalists who look at energy as the Shell Revolution was pretty amazing in the United States. I mean, we had Hubble's peak and

33:11 whatever it was, 1970, '72, and we hit whatever 10 million barrels a day, and we fell to call it five. And then we went from five to where we are today at 13. I mean, pretty amazing that we can

33:24 do that I do think we have an issue with inventory. I mean, there's only so much more of this rock we can keep doing. Now, that being said, I've been saying this for seven years, and I've been

33:37 totally wrong. So, but I mean, it feels like the market saying, Oh, well, if we can't have it in the Middle East, we'll just drill for it here. And one, we have the inventory to do it. And

33:51 then number two, we have they have no concept that you can't just refine. You know, light, sweet, crude here in the United States. So is that part of the reason we're not seeing? Absolutely.

34:05 That's led to a lot of overconfidence. There's this idea that, hey, you know, the United States, if there's any kind of a shortfall, we can produce the oil here. And that's basically been true

34:18 with respect to, you know, relatively minor increases in the supply. But when you're talking about 20 of global oil supply, 20 million barrels per day, the US. industry doesn't have the capacity

34:32 to turn that switch on. I mean, in an absolute extreme situation, the US. might be able to increase production, for example, within, let's say, within a 12-month period of time, I imagine

34:44 that with really high oil prices, let's say, 200 oil prices, you could probably add, a million and a half maybe barrels a day using spare capacity that we have in terms of drilling rigs and so

35:00 forth, and bringing them online, older properties that weren't profitable at lower prices and so forth. But that's a million and a half barrels compared to 20 million. But

35:13 like you said, there's a certain complacency that's been built into the market. And the market just is simply not aware that 20 million barrels could actually go offline. It's just simply not in

35:23 anybody's sort of calculation today that that's even a remote possibility. But it is. Well, and there's another thing to it that I used to get mocked at Kane Anderson when I'd bring this up. But I

35:36 think this is the way you have to look at the world sometimes, particularly when you're an investor. My dad's a doctor and people come to dad and go, well, what are my chances of surviving this.

35:48 And my dad used to always say, It's either a hundred or zero. you either will or you won't, you know? And his point was actually a bigger one is, hey, you fight every day 'cause we cure diseases

35:59 that were incurable and one day boom, we figure it out and you can live. And so you just fight for every day and try to make it 100. But my whole point is like this is very binary. I mean, either

36:13 20 million barrels comes off the market or it doesn't. It's not like, oh, well, there's a 35 chance this happens, so maybe it's 7 million barrels. No, it's either gonna be 20 or it's gonna be

36:25 zero. I think you're right on that. Yeah, but then that's the interesting thing as investors, the way to handle this is that you have to do an expected return calculation, right? In other words,

36:35 you say, okay, what happens in the event that there is a war and the supply of oil is disrupted? To what price would oil rise in that sort of scenario? And then you apply, okay, what's the

36:46 probability that that'll happen? And for example, If you think that there was even only just a

36:54 20 or a 30 chance it would happen, oh, there's less than 50, that would still justify a very high premium in oil prices right now, particularly at the longer end of the curve. And so where you

37:08 really see the complacency is that that's not at all being priced in. In other words, that essentially, if you sort of infer the probability that the market is assigning to a major oil disruption,

37:18 it's got to be very near zero And that's where I think there's actually an interesting opportunity now, because the risk is, or the opportunity relative to the risk is absolutely asymmetric.

37:30 Because if this type of thing happens, we're looking at oil in three, 400 range and above. Let me give you an example, 'cause people can be a little skeptical about this, but during the Arab oil

37:43 embargo of 1973, 1974, 1973 1974 The disruption in global oil supply was depending on what estimate you're looking at, somewhere in the neighborhood,

37:58 about 5. Some people ask me a little bit more, some a little less, but we'll just call it in the middle, somewhere about 5 for about three months. That

38:06 caused a quadrupling in the price of oil at that particular point in time. Why? Everybody in the oil industry understands this, is that the demand for oil is inelastic It's completely inelastic.

38:20 So. In my whole career, it goes up a million barrels a day per year. I mean, that's just what it does, right? You know, maybe a million and a half sometimes. I think it takes like COVID out.

38:33 I think once, maybe during the economic crisis, like '08 or '09, it was down 800, 000 barrels a day. Yeah, and we soldering, you know, right before the '08, '09 how price is absolutely

38:46 skyrocketed demand exceeded supply, even by half a million barrels, prices doubled at that particular point in time. So we're talking about the potential of a disruption in oil supplies today as a

38:60 result of what's going on in Iran, between Iran and Israel, that's even greater, much greater than the disruption that actually happened during the Arab oil embargo of 1973. Much greater, we're

39:12 talking about the difference between disruption in oil supply of roughly 5 versus about 20 here. Much greater than the disruption that happened during the Iranian revolution that caused oil prices to

39:26 shoot up and double during the 80s and caused all the economic devastation that it did here in the United States and around the world. Again, none of that's being priced in, and that's not to say

39:35 that that's certain. I'm not saying and nobody can claim because nobody knows that for sure there's going to be a war and this is going to happen. But the markets are completely asleep and

39:46 completely off guard, because there's not even a risk premium that's currently being built in here. And again, that's where I think that the risks and rewards are very asymmetric right now in the

39:56 market. So, and we'll give all the disclaimers of, this is not intended to be investment advice, blah, blah, blah, blah, blah, but if you're an investor, how do you potentially play this?

40:06 Is this a bucket of majors? And I wind up taking my dividends Do I go out on the NIMACs, play commodities? What are some thoughts there? I mean, there's a lot of things that different people can

40:18 do depending on what types of risks they're willing to take. I mean, one of the easy things about this right now is that if you look at the oil and gas sector and particularly the EMP sector, it's

40:33 the most, first of all, in historical terms, the sector is very cheap and looks very attractive just on absolute terms but on relative terms

40:44 relative to the rest of the SP 500, the oil and gas industry, and particularly EMP, is trading at its lowest relative valuations to the market than it has almost at any other time in history. So

40:56 right now, what you have here is a situation where you have very relatively limited downside, okay, because of the relative valuation, because of the absolute valuation, but you have essentially

41:07 a built-in call option that you're getting for free. That if there is some sort of major disruption in global oil supply that the industry would benefit from by owning EMP producers that are trading

41:20 in very low multiples right now to earnings, to cash flow, to their assets. Then it's very much a very asymmetric profile, which is really what a person really looks for an investment. You wanna

41:32 look for something that has relatively low upside and has a lot of upside. That's kind of the profile right now that you see with EMP. Now there's other ways, more aggressive ways to play this in

41:42 the options markets.

41:45 by using options on producers or just directly in the commodities markets in the futures market. Yeah, it's interesting. We used to start every investor committee meeting when we'd look at

41:59 something. I'd always start with, okay, what do we know that the market doesn't know? That's always something I need, you know, because at the end of the day, consensus leads to you know,

42:10 average returns if you're thinking alike. And I think you've hit the nail on the head, you taught me a lot of stuff today about Iran that I didn't appreciate, that they're literally 2040, the

42:22 destruction of Israel. So this isn't a skirmish that potentially goes away. This also doesn't sound like something Jared Kushner could go in and create an agreement in six months. Now, have you

42:36 heard this too? I've heard that the success he had with the Abrahamic It was literally because with MBS, he sat there and played Call of Duty. I mean, I wouldn't doubt it. Yeah, they sat there

42:49 for hours. And they would play Call of Duty, and when they were in different cities, they would play Call of Duty and stuff. It sounds like this isn't getting solved by that. Yeah. And there's

42:60 so many aspects to this, and maybe I'll just go off on a little bit of a tan in here. Please do. You can tell me if you're interested or not, but because I think that's what's interesting about

43:10 this situation, you just brought up something right now. It's a very important, all of us as investors. We're taught from the time we were young to ask yourself that question. What is it that you

43:18 know that isn't being reflected in the price? And what I find interesting is in this situation right now that there's a lot of things that energy investors should know, but really don't know and are

43:33 not paying attention to, which is very unusual because the reality is The market is actually usually pretty efficient. There's a lot of extremely smart, capable people in this industry and every

43:44 industry that deals in financial markets. That's where I think it's so interesting that we have some blind spots going on. I mentioned the fact that it's essentially state policy in Iran to destroy

44:01 Israel by 2040. The interesting thing is how are the Israelis responding to this? This is the other part of the equation. In order for us to understand the probability of a war breaking out, we

44:13 need to understand how Israel is thinking about this. One of the things that I want to make clear is that from the Iranian point of view, they have a long-term strategic plan to destroy Israel.

44:25 Their plan isn't to destroy Israel in a major war. Their plan is to bleed Israel out over the long run So their strategy is essentially a strategy where they will ideologically train where they will

44:43 arm with technology and armaments

44:48 that they'll train the forces of various proxy forces and finance various proxy forces that surround Israel. This is Iran's strategy of destroying Israel by 2040. And to take on Israel to asymmetric

45:03 warfare, which involves both the launching of various nations, of various types of missiles into Israel and also cross border like sort of terrorist attacks, kind of like the one that you saw in

45:17 October 6th. This is all part of their longer term game plan. What is it that you're trying to accomplish with this? What they're trying to accomplish with this is frighteningly what they've

45:29 actually managed to accomplish in Northern Israel. As you and some of your readers probably know, there's been an onslaught of thousands of missiles per month

45:41 from southern Lebanon by Hezbollah into northern Israel. It essentially made life unlivable for the population living in the north of Israel. They've actually had to evacuate the entire area. So

45:53 somewhere between 60 and 80, 000 Israelis have had to abandon their homes and their businesses and their livelihood in northern Israel and simply leave the area.

46:03 That is the future of Israel if they don't get a hold of this issue. Because the types of armaments that Hezbollah has right now are short-range missiles primarily. They have a lot of them. They

46:15 have something like between 100 and 150, 000. That's being drastically reduced right now. But before the conflict with Hezbollah, they were estimated to have somewhere between 100 and 150, 000

46:27 projectiles, missiles of various sorts that they can launch into Israel.

46:31 But they're short-term. They're trying those from the Russians. ultimately in the Chinese, or who do they get their missiles? Well, they're getting it from the Iranians, but the Iranians are

46:39 getting their technology mainly from the Russians and a little bit from the Chinese. But they've also, essentially with this technology, they've developed a sort of homegrown production. So Iran

46:48 today, their homegrown,

46:52 let's say acquired the technology, but they're bigger producers in terms of quantity of missiles and things like that right now than the Russians themselves They just became massive producers and so

47:04 they smuggled this stuff and get this stuff into the hands of their various proxies. Now, these missiles that, for example, a Hezbollah had were short, relatively short range and they had a

47:15 relatively small number of guided missiles. But we know, and the Israelis know, that it's just a matter of time before Hezbollah was able to basically acquire the technology that would extend the

47:30 range of their missiles make them accurate through, you know, guided system because this is technology that's pretty much available in the market right now. So it's only a matter of a few years

47:39 before this barrage of thousands of missiles that right now are just hitting empty fields for the most part. And just every once in a while, luckily it hits a building or whatever will be targeted

47:50 directly and they'll be able to hit whatever target they want.

47:54 And when I say it's a matter of time, it's a matter of a couple of years at most before these proxy forces are able to really strike Israeli targets within Israel with great accuracy. And so what

48:08 the Israelis understood, particularly in terms of what has happened in the north of Israel, is that if they don't defeat the strategy of the Iranians of having these proxy forces essentially do the

48:20 dirty work for Iran and just launching missiles and various ground attacks from the Israeli border, It will make life impossible. for Israelis. And this is actually something that again has been

48:31 said by leaders in Iran. Our goal is to make life impossible for Israelis and to get them to leave. And this is a long-term strategy till 2040. And the way that they would do this is essentially

48:43 the way that Hezbollah has operated in the south of Lebanon and what they've done in northern Israel, which is basically get the whole population of northern Israel to evacuate. This has changed the

48:54 thinking of Israelis because this was probably just sounded like a little bit too abstract to the Israeli population that they were going to get wiped out by 2040. But a little bell and a little

49:05 light bulb has lit up as a result of the effectiveness of this strategy as it has been demonstrated by what happened in northern Israel. Israelis right now have very much shifted to think this is an

49:18 existential threat. This threat of getting rid of us by 2040, it could actually work. Look at what happened in northern Israel. Look at the fact that Hezbollah already has some weapon systems that

49:29 were able to penetrate their defenses and hit targets in Haifa, which is, of course, one of the larger cities in Israel.

49:36 They realize that time is working against them in terms of the acquisition of technology on the part of these. And so the thinking is, okay, we can't just go after these proxy forces, because this

49:50 is asymmetric warfare. We'd have to be invading neighboring nations and going after, like, well, it's a whack-a-mole. It would be, you know, it would be, it's the whack-a-mole game that

50:01 there's no way to chase it all down. You can't chase it all down. So the within Israel, there's developed this idea that there's the head of the octopus. Sometimes it's referred to as the head of

50:13 the snake, the head of the octopus, octopus, because there's all these different arms of Iran that are stationed in Lebanon, in Syria, in Iraq, in Yemen, basically surrounding all of Israel.

50:28 these various proxy forces, but that the head of this octopus that's got its arms surrounding Israel is Iran and that the only way to end this existential threat that these proxy forces pose is to go

50:42 directly after the head of the octopus. And this is why various very high profile Israeli leaders in the last couple of months have been stepping up their talk within Israel that they have to go

50:56 after the head of the octopus that it's not going to do any good to just go after Hezbollah because Hezbollah will eventually reconstitute itself with the financial ideological and military support of

51:08 the Iranians. There's not going to be any shortage of folks there that they'll be able to get organized and to reconstitute Hezbollah and they'll be back at square one one year from now but with a

51:20 better armed and more technologically sophisticated force in terms of Hezbollah one or two years from now. So, they have to stop the flow of the armaments, the flow of the financing, the isologic

51:33 flow. That means that they have to go after Iran. And so, the Israeli people, let's say there's been a shift where more and more Israeli people believe that they have to confront Iran directly and

51:46 that they have to do it now because they believe that in one or two years time, it may be too late. Interesting. So, looking into the crystal wall, we have the Trump administration coming on, at

51:58 least the stated policy there is let's starve the Iranian regime, not let them sell oil penalties on China, if China buys it, et cetera.

52:11 Given that lens, walk me through the crystal ball of how you see this playing out and if you want to say two or three different scenarios, great. But, Sure. I mean, this is tough because we're

52:25 in a very weird position right now. you know, because of the transition from the Biden to the Trump administration. So the major players in this conflict are caught in this kind of a gray middle

52:36 and they're sort of wondering what they need to do. Mom, dad said this dad. Mom said that, yeah. Yeah, so the Iranians are having to revisit their strategy in terms of retaliation for the latest

52:47 round of Israeli attacks. The Israelis are also have to sort of rethink their tactics in terms of what they're going to do and what they're going to be able to do as a result of the new

52:57 administration. So let's kind of review some factors that are going to be relevant for this. First of all, I think the single most important thing to note here and something that I don't think the

53:07 people are paying enough attention to is that Trump couldn't have selected a more hawkish cabinet regarding Iran.

53:20 It's extraordinary how hawkish his foreign policy and his defense team. are towards Iran. So, whether we're talking about the Secretary of State, Marco Rubio, who's been a major Iran hawk for a

53:39 very long time, the ambassador to Israel, Huckabee, who's a guy who doesn't even believe in that, that there is such a thing as Palestine, and he's actually publicly stated this, that there's no

53:52 such thing as Palestinians that he believes that Israel should annex the West Bank and Gaza to form part of the biblical Israel. And he's been vocal about this. Of course, he's just gonna be the

54:08 ambassador. He's not gonna make those policies happen, but people know where he stands on this issue. Trump knows where he stands and he's put them in his position, right?

54:18 Pete Hegseth has said some extremely hawkish things about Iran, the current. The guy who's nominee for Secretary of Defense, the national security advisor, for example, when Trump went after

54:37 Soleimani, he thought it wasn't enough that the US. should have actually bombed the Iranians and gone after their nuclear and their oil facilities. So he's extremely hawkish The entire team, the

54:51 CIA Director, a guy who has said that you can't really negotiate with Iran. The only thing that you can do with them is put your foot on their neck is the term that he used in terms of dealing with

55:05 them. So

55:08 with that background, and we also have the background of Trump having publicly stated during the campaign, as you recall, that he was shocked at the Biden administration for trying to restrain

55:20 Israel from going after Iran's nuclear facilities. That's exactly the wrong approach. The Israelis need to go directly after the nuclear facilities because this is actually the biggest threat. So

55:35 take care of that first and then worry about the rest later. Two things I'll say about Trump and whether you like him, dislike him, setting that aside, he truly seems to be frightened by nuclear

55:50 war I think he rare among politicians actually understands the gravitas of it. And it's kind of been that way his whole life. I mean, he's always that. The other thing I find interesting about

56:04 Trump is he has always been an anti-war guy. I mean, I don't know if you describe it. I wouldn't necessarily describe it as an isolationist because he'll go bomb ISIS into a Bolivian and stuff like

56:22 that, but at the same time. He's always been very measured in terms of committing US. troops and going to war. So it's interesting to throw that into the stew you just laid out. Absolutely. And

56:35 I think that's a real, it's a huge tension there and it's a huge tension within sort of MAGA because MAGA would rather not see the US. get involved, for example, with Iran. A lot of MAGA,

56:47 there's at least a wing within MAGA that's very, I don't know, charitably put it as being skeptical towards Israel and they don't want, for the United States to be dragged into a war by Israel in a

57:01 war that some people believe that the United States has no interest in. But I think what Trump has signaled goes to what you're saying. He has said consistently that Iran cannot be allowed to

57:13 possess a nuclear weapon. In fact, he recently gave a speech just a couple of weeks before the end of the campaign He says that, you know, I like the Iranian people and, you know, We have no,

57:23 even said, you know, we don't have any interest in, in regime change there, the reigning people are going to determine their destiny. But the one thing, and we want to have trade with them, we

57:30 want them to be prosperous. But the one thing that we will not allow is for them to have a nuclear weapon. Because I do think that Trump is legitimately scared that if they acquire one, they'll

57:39 actually use it. Because he thinks, you know, rightly or wrongly, that they're crazy enough that they might actually use it. And so there's, he's already publicly stated that he believes that

57:51 the right policy from the point of view of the Israelis is to actually go after their nuclear facilities. I mean, it couldn't be more clear than that. That implicitly means that he will have

58:03 Israel's back if Israel actually goes that route. What does that mean? That actually means war. The United States will actually be at that point dragged into a war between Israel and Iran, which

58:13 is something that Trump doesn't want from many points of view

58:17 and not the least of Israel can't. I mean, they'd have to use our bunker buster bombs, right, to go after the nuclear stuff. And Israel can't drop those. I mean, it would be US ships, right?

58:31 I mean, is that the way the technology works? Well, Israel will definitely need US support, both in terms of its offensive operations, but even more important defensively, because the Iranians

58:42 are going to unleash a massive barrage of missiles into Israel that much more dangerous than sort of the show that they've been putting out to this point, what they meant to do there was just to sort

58:53 of scare people and show their capacities a little bit. But the Iranians have the capacity to send three times or more in terms of the amount of missiles at any specific point in time and could

59:06 actually overwhelm the Israeli defenses So the Israel is very much going to count on US. protection in terms of defensive measures. Now, the other thing that I think is going to happen

59:19 interestingly is that, to the extent that the Trump is going to support Israel in a war scenario, a war scenario happens. And by the way, I'm not saying, you know, I'm going to actually kind of

59:29 go over a little bit, the potential peace scenario, right? But just talking about the war scenario, if a war breaks out, it's going to be in Trump's interest to get this war over with as soon as

59:41 possible. Because as I said, the first thing that's going to happen is global oil prices are going to shoot up. And the Iranians are probably going to try to block the Strait of Hormuz. That could

59:49 literally destroy the Trump presidency, if oil prices go up, inflation, I mean, it'll destroy any presidency. But maybe even more so, in his case, because he's been promising in a lower oil

59:59 prices

1:00:02 and so forth. And so the last thing he wants is a war. And the last thing he wants is a war in the Middle East and even less does he want a war that's going to cause oil prices to rise Therefore,

1:00:14 if it really comes down to it. and the Israelis end up attacking Iran's nuclear facilities.

1:00:23 That'll trigger an all-out war between Iran and Israel. What Trump wants to do is to intervene so forcefully, probably with overwhelming force that it gets the war done quicker. And that's the

1:00:34 irony of this, right? Trump doesn't want war, but if there's gonna be war, I think that he may opt for the application of overwhelming force to try to get it done quickly And so there's a little

1:00:46 bit of a contradiction there. But I think that that's sort of where things are heading. If in fact, we end up in a situation with a war. Now, I think that he's gonna try to do whatever he can to

1:00:57 try to prevent that war. And what do I mean by that, whatever he can? I think that Trump, he has a good relationship with Netanyahu. And also a lot of, let's say, people in

1:01:10 Israeli government that are close to their policymaking circles there And they've basically told Trump, says, look, This is existential for us. If we have to go it alone, we will go alone. We're

1:01:20 not gonna allow them to acquire a nuclear weapon. They're gonna be telling things like, which a lot of people in the US believe this as well, then in the long run, you really can't prevent Iran

1:01:33 from acquiring a nuclear weapon. Sooner or later, just like North Korea did and Pakistan did, they will end up developing it clandestinely. It's just a matter of time So for the Israelis, it's

1:01:45 existential for them that they not be allowed and that they not be allowed to implement this 2040 strategy. And they've said, you know, we're gonna stop this regardless. And at that point, any US

1:01:57 administration, not just Trump, Biden would have been forced to as well, or Kamala Harris, if she'd been elected, is that if Israel goes to war with Iran, the US will be put in the position as,

1:02:07 are we gonna back them or not? And I think that in the end, There's a lot of reasons to suppose that the US. will end up coming in and backing Israel. And I think that Trump has given all the

1:02:19 signals to the Israelis that if it comes down to it, he will back them in a war. So the question really is right now, can it even be prevented at this point? Because the Israelis have already

1:02:28 decided that from a strategic point of view, they must get rid of Iran's nuclear capabilities within the next year or two. Because within the next year or two, they could literally come up with a

1:02:37 nuclear weapon. And at that point, game over for Israel in terms of their overall strategic vision and trying to protect themselves against the 2040 strategy. Because at that point, to be clear,

1:02:51 Israel will never be able to go after the head of the octopus, right? At that point, the head of the octopus will be able to continue to finance and arm all of Israel's proxies, and Israel will be

1:03:02 forced into only fighting against these proxies, and will never be able to actually go after Iran itself, which is actually behind all this, because Iran will be protected by the nuclear umbrella

1:03:12 and the nuclear deterrent of possessing a nuclear weapon. the in order to prevent the strategy, which is a non-nuclear strategy, by the way. That's the other thing that people have a misconception.

1:03:23 Iran's strategy is not to launch a nuclear bomb on Israel and destroy Israel with nuclear weapons. Why? Because that would actually be suicidal. The Israelis have a lot of nuclear weapons

1:03:37 themselves. So if they launched any kind of a nuclear weapon at Israel, it would just be mutually assured destruction The Israelis would destroy all of Iran. That's not what the Iranians are aiming

1:03:48 for. The Iranians, what they want is they want to have impunity to finance conventional asymmetric warfare by their proxies in a way that the Israelis can't go after the Iranians because they would

1:04:03 be in this position of mutually assured destruction. So anyway, I just went off in a little bit of a tangent there, but getting back - But I mean, if the Iranians do have a nuclear bomb, If we

1:04:13 just want people to move. That's another arrow in the quiver, you know, so exactly so and they are pursuing and the belief is in policymaking circles, both in the US intelligence community and in

1:04:26 Israel that the Iranians are getting close and they're getting dangerously close. It's just a matter of time, possibly a matter of a year or two, probably more like a year before they if they

1:04:38 actually decide to go forward full force, they can acquire that nuclear weapon So the Israelis say, hey, the clock is ticking in terms of our ability to get at their nuclear program. The clock is

1:04:51 also ticking in terms of the development of these other missile technologies that the Iranians have been developing and that have been

1:04:59 distributing them to their proxies, such as the Houthis. The Houthis of Yemen actually already have hypersonic missiles. I mean, so this is a very, you know, this is an existential threat. And

1:05:10 I think what the Israelis have told the Americans and specifically Trump, they've We're gonna be, we need to stop the Iranians from developing nuclear missiles and we need to try to affect regime

1:05:20 change because that's the other thing there. It's like, we can't just defeat them militarily and allow the same regime to stay in place because they'll just be coming after us even harder, two

1:05:33 years later. Part of their strategy is to actually try to get regime change done. And they've informed the Americans about this and the United States essentially gonna have to decide whether they're

1:05:45 gonna be with Israel and they're gonna back them in eventual war or not. Now, the possibility is that, well, what if this can be done diplomatically? And I think that Trump is gonna try to go all

1:05:56 out on this regard. He's gonna implement this policy of maximum pressure, but it's gonna even be much more intense than what happened. I will say this too, again, whether

1:06:10 you like Trump or not, put it aside. I actually, this is one of the things I don't like about Trump is I think he bluffs and goes with maximum pressure and stuff way more than I would feel

1:06:24 comfortable. I mean, the word is, is that he told Putin, I'm going to take that palace you sleep in and bomb the hell out of it and the two women on both sides of you are going to realize missiles

1:06:36 are a lot bigger than your deck I mean, that is supposedly what he said to Putin. And to me, I mean, I don't say that to somebody that has nuclear weapons, but that is the way he operates. Yeah.

1:06:49 And I think he's going to be, that's exactly what he's going to try to do. He's going to try to scare the Iranians into a nuclear deal where essentially Iran agrees to disarm itself in terms of

1:07:02 their nuclear capability, probably in exchange for other things where Trump will say, Hey, we'll do business with you. We'll buy your oil from you guys. But the one thing that you can't have is a

1:07:12 nuclear missile, and you also have to do a couple of other things.

1:07:18 I think that's the fact that he selected the cabinet that he did in terms of his foreign policy and defense team shows that he's coming in with a huge stick. That's a direct threat to Iran saying,

1:07:31 We're coming after you guys. If you guys don't play ball with us, we're going after you militarily and holding a lock step with the Israelis Trump, again, has already signaled his very firm

1:07:45 support for Israel and that he actually supports them if the Israelis actually decided to attack the nuclear facilities.

1:07:53 I think that Trump, his play over the next few months during the transition and also during the first few months of the administration, is he's going to try to see what can get done diplomatically.

1:08:05 He's going to tell the Israelis, Look, I'm behind you guys 100, but Trump is a little Eric I said let me see if I can get a deal done. Let's see if I can get a deal done by bluffing, by showing

1:08:17 strength. Let's see if we can get a deal done with the Iranians, where you guys get everything that you guys want in terms of your security, we're gonna get them to stop the flow of arms and stop

1:08:27 their support of proxies in the region, which is what you want, and we're gonna get them to give up their nuclear program. And if I can't get that done in X amount of time, then I'm gonna be

1:08:39 behind you in going after the Iranians I think that that's my interpretation of where we stand right now. That the Israelis are feeling very confident that they have Trump in their corner, and

1:08:51 they're gonna give him the benefit of that. They're gonna say, okay, we're not gonna actually start this war right off. We're gonna give Trump a chance to see if he can get this done

1:08:58 diplomatically. I think the thought is that it's not gonna happen. The Iranians aren't gonna roll over that way. They're too proud. And they've already invested too much in, for example, their

1:09:09 relations with all these proxies and so forth. And it's sort of, again, part of the IEDL-ology of the IRGC. I don't even, even if the Iranian leadership wanted to stop support for their proxies,

1:09:22 the military wouldn't even allow them to do it this way. But again, I think the Israelis are going to try to give Trump an opportunity. And so that's why we're going to have a little bit of a lull

1:09:32 here probably over the next few months where the Iranians are going to stay put They're going to be like, OK, we know that if we attack the Israelis, the Israelis are coming after us with

1:09:44 everything and they're going to have full US support behind them. So it's not in their interest to provoke a major war right now.

1:09:54 And at the same time, you know, Trump is going to come in. He's going to try to there's going to be some sort of diplomatic overtures. So nobody's going to start a war when there's, you know,

1:10:02 sort of diplomatic negotiations going on. And there's this effort on the part of Trump to try to, you know, get a deal done. But ultimately, I think when you look at the larger picture, the

1:10:11 Israelis have decided that getting rid of Iran's nuclear capabilities, getting rid of their financing of these proxy groups is absolutely existential to the state of Israel. Israel will not exist a

1:10:22 few years from now if they continue to allow Iran to finance these proxies in the region. So it's existential and they're saying, and the clock is ticking against them. They have to do this now.

1:10:32 They can't wait for two or three years and diplomacy to play itself out or wait for maybe regime change in Iran, God knows when. They've decided we can't do that. We have to provoke a confrontation

1:10:44 within Iran, with Iran now, while we still possess the strategic upper hand. We still have nuclear weapons. We have more sophisticated weaponry. We have the support of a US administration. Right

1:10:56 now, if there's going to be a war with Iran, we need to have it now and not three years from now So last question, because I can talk this all day, but.

1:11:22 Does Ukraine play into this? I mean, you know, it would seem to me that Putin's at least got to be consulted on the Iranian-Israeli issue. And it's really bizarre to me. I grew up in life where,

1:11:25 you know, we sat and we talked to the Russians or the Soviets all the time. There were our mortal enemy, I mean, Cold War or all that, but we talked to them all the time There were, you know,

1:11:37 China went to China,

1:11:41 you know, Reagan sat out with Gorbachev, et cetera. Now it seems like you're a Putin sympathizer if you talk to Putin, but I do think we're gonna have to talk to Putin about the Iranian-Israeli

1:11:54 issue 'cause doesn't he have a lot of influence on Iran? Absolutely, he's been trying to position himself for years to be influential. And, you know, there's been the Putin through his

1:12:05 intelligence services have been. instrumental in getting sophisticated weaponry to some of these proxy groups like the Houthis. They couldn't have done this without the Russian help and obviously

1:12:17 the Iranians have been arming themselves with Russian help. The Russians see their relationship with Iran as their means of gaining influence in the Middle East and being a major power broker. So

1:12:31 you're right that Putin plays a role here. And so indirectly, the issues in Ukraine become indirectly important. I think it's impossible to kind of predict

1:12:42 exactly how the Ukraine situation factors in here, but I agree factors in. So one way that, for example, it could factor in is that one of the thoughts might be is that Trump might see as part of

1:12:57 a package deal, let's say, he says,

1:13:01 that tells the Russians, he says, okay, guys, we're going to kind of give you fair bit and your negotiations with Ukraine in terms of, you know, taking, you know, swaths of territory and so

1:13:14 forth. But we need you guys to completely lay off the Iranians and let us handle that. And you need this little alliance that you've been building up with Iran. We need you to completely back off

1:13:24 there because we need to isolate the Iranians and get them to bow their knee and to get rid of their new, because right, because the Iranians feel emboldened as long as they have this flow of

1:13:34 technology and missiles flowing in, they feel that they consider to defend themselves. But if they feel that Russia no longer has their back, they're going to be more likely to cave. So I think

1:13:44 that Trump probably sees the possibility of an arrangement in Ukraine is also catalyzing a more favorable position with respect to Iran. I think that's one of the things that may play out and

1:13:58 something that they're probably thinking. But the opposite is also true a lot of voices and they've actually been coming out this week within Trump's team. that are actually quite hostile to

1:14:12 Putin. And

1:14:15 that are sort of supporters of Ukraine. He brought in a lot of folks in his foreign policy team that have been supporting Ukraine. And in fact, you know, Seb Gorka, who's one of the advisors he

1:14:28 just hired, said that what Trump is gonna do is that he's gonna increase military support for Ukraine fivefold Again, as a means of bluffing Putin and getting Putin to sit to the table and have a

1:14:41 reasonable deal.

1:14:43 It basically, you know, under this theory, you know, Trump believes that if he comes in with guns blazing and sort of, you know, come in with a very strong kind of position that he can force

1:14:54 Putin into an acceptable deal that, you know, that can be acceptable to sort of all parties, you know, or at least it won't be a complete cave into the. the Russians in terms of their territorial

1:15:09 claims and so forth. So that's the other side of this, because if

1:15:16 Trump is not able to get a deal done in Ukraine, and this war continues and US continues to provide support for the Ukrainians, and basically the US is involved in a kind of proxy war against Russia,

1:15:32 Putin is going to say, okay, you want to have your proxy war against us in Ukraine, we're going to have our proxy war, and we're going to arm our proxy, which is Iran, and we're going to support

1:15:43 them, and you can't do nothing, because if you're arming the Ukrainians, we can arm the Iranians,

1:15:53 and they will, and that's a very, let's say, powerful card, because if they just provide the Iranians with a little bit more technology in terms of hypersonic missiles. They don't, they don't

1:16:08 need nuclear. With just, they don't, they don't need nuclear. I mean, the hypersonic missiles by themselves are enough to really wipe out like a lot of Israel and certainly, you know, their

1:16:20 major city and military infrastructure and so forth. 'Cause there really no defense against it. And so the Iranians already possess hypersonic missile technology, obviously the Russians have even

1:16:30 more sophisticated stuff that notch it up a little bit more. And it would completely change the balance of power, therefore in the conflict there between Israel and Iran. And that's a card that the

1:16:39 Russians hold. Say, hey, we can completely change the balance of power there if you don't play ball with us over here. So I do think that you're right that what's going on in Ukraine will

1:16:51 indirectly impact what's happening in this conflict between Iran and Israel. And I actually think it's very unpredictable. I think it could go either way. In other words, a lot of people that were

1:17:03 expecting Trump to come in and just caved Putin.

1:17:07 in the cards, that's apparently not what's gonna be happening. There's gonna be at least some initial, let's say, confrontation and show of strength, and there's gonna be some very, very

1:17:18 difficult strained negotiation relationship probably there, or at least there's a potential for that, and that could very much affect kind of the whole calculus that we've been talking about here in

1:17:31 terms of both the timing and the sequencing events. Because one of the things that we have to understand is that the sequencing of events is very important. For example, the Israelis need a pretext

1:17:43 to be able to attack the Iranians. They won't have the support of the United States, and certainly they won't have support of the global, the international community, if they just sort of are seen

1:17:53 as an aggressor that unilaterally is gonna go after Iran and initiate a major war. The Israelis want to be able to initiate their attack under the cover of some. prior action on the part of the

1:18:09 Iranians that justifies sort of them initiating an all-out war. So the sequencing is very important because as long as the Iranians are a stay-pat, they can kind of, the Israelis will kind of have

1:18:25 their hands tight, so to speak, and the Americans will have their hands tight, so to speak. But again, in terms of sequencing, if the Israelis get wind of the fact that they're starting to

1:18:36 receive more sophisticated weaponry and technology from the Russians that will actually endanger them, the Israelis will definitely have to start considering preemptive action at that point.

1:18:48 Because they can't just allow the Iranians to acquire this strategic technology that will literally change the balance of power. Because remember, the whole idea is that Israel wants to have this

1:18:58 war with Iran while they still have a strategic advantage. That strategic advantage could vanish like this if Putin provides certain

1:19:06 in that scenario, what the Israelis need to do is to preemptively attack. So there's a lot of moving sort of parts and pictures here. And again, the interesting thing is that the markets, general

1:19:18 equity markets, but in the industry that we're discussing here, the energy markets are really just completely asleep on all of this. It's not subject to conversation very much. It's almost sort of

1:19:30 business as usual. Yeah, there's stuff in the Middle East, but there's always stuff going on in the Middle East, right? There's always like the potential for threat And usually when people get

1:19:37 all excited about that, nothing happens, it's all the same thing. They'll work it out. That's the attitude. But I think right now, what people don't understand is that things have changed. And

1:19:47 there's existential issues at stake here for the Israelis that have changed the whole way that they look at the threat from Iran. And I think, again, this has been a blind spot. People don't

1:19:58 understand the shift within Israeli strategic mentality that has basically forced the Israelis to approach this in a completely different way. So I always hated it whenever a management team walked

1:20:10 in and would say, this time it's different. I think you just walked in and said, this time it's different, but I believe. Yeah, I do think it's time to do it. How do people get in touch with

1:20:19 you? Investoracumencom is probably the most direct way to get in touch with me. I also have a service on seekingalphacom

1:20:30 that's called successful portfolio strategy. And it's, and I have a different service that I just offer on investorcom, which is called the Crisis Opportunity Portfolio, which is a very specific

1:20:43 portfolio that I'm designing around the possibility of this sort of major conflict between Iran and Israel. So it's a kind of a niche, let's say portfolio, it's a niche opportunity, but also one

1:20:55 that has a lot of potential upside. Awesome, appreciate you coming on. Yeah, thank you very much for having me. Anything we didn't touch on that we should have?

1:21:07 I mean, we could have rabbit hole kind of all day 'cause we didn't even bring in North Korea into this and that dude's a weird cat in China. I mean, one of the things I talked about some of the, I

1:21:19 mean, I don't think this is necessary, but you can tell me,

1:21:24 changes within Israel, there's a lot of demographic and political changes in Israel that I think are a big blind spot that are also pushing this change in policy And so if you want, I could talk a

1:21:36 little bit about that, about the fact that the Israeli population is experienced a major sort of demographic shift towards a much more conservative, hawkish and sort of aggressive policy towards

1:21:52 their Middle Eastern neighbors. And that's something that, you know, it's kind of interesting, but I don't know, it's a little bit getting into, you know, an offshoot. But again, I think it's

1:21:60 a little bit of a blind spot for because we're used to

1:22:05 the Israeli leadership that Americans have been used to for 50 years

1:22:13 and the same type of, let's say, outlook in terms of their leadership that reflected the population there, which is basically Ashkenazi descendants of Western Europeans,

1:22:29 Eastern Europeans, sort of intellectuals.

1:22:33 Today, the Israeli population is really shifting

1:22:37 in terms of their outlook and that shift in outlook means a completely different outlook in terms of how they see their relationships with Arab countries. And it's a much less friendly, much less

1:22:52 diplomatic, much less hesitant to use Well, and just my anecdotal experience with Jewish friends that are much more knowledgeable than I am about all this. October 7th mattered. Sure, it was a

1:23:09 game changer. Sure. I mean, it was nine. It was 911 like in kind of its ability to, yeah. There's a red pill type of a moment. Totally. And so it's sort of interesting because again, these

1:23:22 demographic changes have been very gradual, but then there is this singular event, October 7th. And then in the aftermath of October 7th, what happened in Northern Israel with the fact that

1:23:31 they've had to evacuate the entire population in Northern Israel It's completely changed the way the Israeli population is thinking. And so if you couple this along with these very clear demographic

1:23:43 trends, where the younger Israeli population is much more, let's say, militarily aggressive, and let's say anti-Islamic, anti-Arab, willing to confront the Arabs directly,

1:23:59 that makes for a different Israeli politics And this factors into the possibility or greater probability. of a war, because a war was something that maybe 10 years ago, certainly 20 years ago, was

1:24:12 something that the Israeli, let's say the center of Israeli politics would have wanted to avoid at all costs, I mean, to the point where they even allow the Iranians to acquire a nuclear weapon,

1:24:25 that's no longer the case. The new generation of Israelis are, they're like, No way in hell will we ever allow the Iranians to acquire a nuclear weapon. I've got, she's a friend of a friend,

1:24:39 more so than, but you know, by the Transitive Property Act, consider her a good friend, her parents weren't volunteered for the military. And I would have said they were kind of left of center on

1:24:53 the politics scale and in October 7th said, I mean, they're in their 70s, so they were doing logistics type stuff weren't picking up a weapon, but they might have sure if they Yeah, this is

1:25:06 galvanized

1:25:09 the population or a huge portion of the population and it's shifted the consensus in terms of consensus thinking about how Israel has to deal with its relationship with its neighbors, how it has to

1:25:22 deal with Iran. It's a real sea change. And again, I think this is a blind spot for Americans because we don't actually know or understand that there's this sea change going on in Israeli politics,

1:25:31 but that sea change is going to be the one that could actually trigger the war And that war is the one that Americans will ultimately end up participating in one way or another. Yeah.

1:25:42 Appreciate you coming on. Thank you for having me.