567: Follow the Oil w/ Dr. Anas Alhajji

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One of the first lessons you learn as an investor is that the headline is rarely the whole story.

The same is often true in history.

Take the so-called “October Surprise” of 1980. The theory—which remains debated today—is that members of Ronald Reagan’s presidential campaign may have secretly encouraged Iran to delay the release of 52 American hostages until after the election, denying President Jimmy Carter a potential political victory just days before Americans went to the polls.

The hostages were, in fact, released on the very day Ronald Reagan was inaugurated. Whether the theory is true or not isn’t really the point. The point is that major geopolitical events often have layers of motivation that aren’t obvious in real time.

If there has been one recurring force behind international politics over the past century, however, it has been energy. From the rise of the Middle East as a strategic region to the oil embargo of the 1970s, the Gulf Wars, and the ongoing struggle for control of critical shipping lanes, oil has repeatedly shaped alliances, conflicts, and foreign policy.

Yet those motivations are often overshadowed by the political narratives that dominate the news cycle. That brings us to today.

Oil is once again dominating the headlines. The recent conflict involving Iran sent energy prices higher, renewing concerns about inflation and reminding investors that energy remains one of the most important inputs into the global economy. Nearly everything we consume carries an energy cost somewhere along the supply chain.

Like many of you, I found myself asking a simple question:

Why did the United States become directly involved in Iran?

If preventing Iran from developing nuclear weapons was the primary objective, couldn’t Israel have continued that campaign on its own?

Was there another strategic objective that received far less attention?

Whether you ultimately agree with the answer or not, it’s a fascinating question—and one that requires understanding how energy markets actually work.

My guest on Wealth Formula Podcast this week, Dr. Anas Alhajji, is one of the world’s leading energy economists. Throughout our conversation, he separates fact from fiction on everything from OPEC and U.S. shale production to electric vehicles, LNG, and the Strait of Hormuz.

More importantly, he offers a compelling framework for understanding why energy—not politics alone—may explain many of the world’s biggest geopolitical decisions.

He also presents a thought-provoking theory about America’s involvement in Iran that, at least to me, makes more strategic sense than the explanation most of us heard in the news.

Whether you agree with his conclusions or not, I think you’ll come away seeing global events through an entirely different lens—and with a much better understanding of how oil, energy security, and geopolitics influence inflation, markets, and your portfolio.

Listen on Spotify:

Transcript

Disclaimer: This transcript was generated by AI and may not be 100% accurate. If you notice any errors or corrections, please email us at [email protected].

What you’re describing there is not a physical closure of the Straits of Hormuz, but rather a functional one because of lack of insurance. What incentive would the United States have to want this to happen?

Welcome everybody, this is Buck Joffrey with The Wealth Formula podcast coming to you from Montecito, California. And today, before we begin, uh, just a quick reminder, head on over to that website wealthformula.com. Lots of different resources there. It’s also where you can sign up for our various groups, including the Investor Club.

But today, let’s talk a little bit about something that is really, really important, very historically very important as well, and that is, uh, oil. You know, one of the first lessons you learn as an investor, any case is that the headline is rarely the whole story, and history shows that that’s the case in general.

I mean, you take the so-called October surprise of 1980. For those of you, uh, who don’t know what that is, uh, it’s a still debated issue. There’s a whole book on it. Uh, and the idea is that the members of the Ronald Reagan’s presidential campaign had secretly encouraged Iran to delay the release of 52 American hostages after the election, uh, basically denying, uh, Carter a potential political victory just days before, uh, Americans went to the polls.

Well, as it turned out, the hostages were in fact released on the very day Reagan was inaugurated, so you know, that is certainly certainly proof in the pudding. But whether the theory is true or not, it’s not the point. The point is that major geopolitical events often have layers of motivation that aren’t obvious in real time, and if there’s been one recurring force behind international politics over the past century at least, however, it’s been energy.

From the rise of the Middle East as a strategic region to the oil embargo of the 1970s, the Gulf Wars, and, and the ongoing struggle for control of critical shipping lanes, oil has repeatedly shaped alliances and conflicts, foreign policy. Yeah, those motivations really sometimes are overshadowed by the narratives that you actually hear in the news cycle that sort of hides them in the background.

So again, oil right now, it’s dominating the headlines, and it’s not really in the background. I mean, a recent conflict involving Iran has sent, uh, sent their energy prices higher, and then obviously that affected inflation and of course that all reminded us all that energy remains one of the most important into the global economy.

Pretty much everything, uh, we consume carries an energy cost somewhere along the supply chain

You know, and when this Iran thing started, and I think I think I said it on the show, I certainly said it in our Wealth Formula Network, uh, calls with Zulfi Ali, is that I kept asking the question, why did we get involved with Iran? It just didn’t make any sense to me, right? If preventing Iran from developing nuclear weapons was the primary object- objective, which was the set objective, couldn’t Israel have continued that campaign on its own?

Probably. I mean, th- those guys got a lot of powerful might behind them. So was there another strategic objective that received far less attention? It’s a fascinating question and, and one that requires understanding of how energy, uh, markets actually work. Today, I have a really interesting guest on Wealth Formula Podcast.

Name is, uh, Dr. Anas, uh, Alhajji. He’s one of the world’s leading, uh, e- energy economists, and throughout our conversation, he separates, I guess, fact from fiction on everything in the US shield production to electronic vehicles, LNG, the Straits of Hormuz. More importantly, and I think this is where it gets really interesting, so you gotta make sure you hold on for this ’cause it doesn’t happen till the second half of the interview.

He offers a really interesting, compelling framework for understanding, um, why the US got involved Iran in the first place. And this one makes a lot more strategic sense to me than the news we’ve been hearing in the news cycles and from the administration So whether you agree with his conclusions or not, you gotta hear what he has to say.

I think you’ll come, uh, away from it at the very least seeing global events through an entirely different lens, uh, with a much better understanding of how oil, energy, security, and, and geopolitics influence inflation, markets, and your portfolio. So when we come back, Dr. Anas Alhajji. Hey everyone, if you haven’t done so, make sure you sign up for Investor Club.

Investor Club is Wealth Formula’s private investment community. All you need to do is to go to wealthformula.com and sign up for free. And if you are an accredited investor, you’ll get an opportunity to quickly do some paperwork and meet one-on-one with me and get onboarded. And once you do that, you get access to all sorts of potential private deal flow that you can only see if you’re part of the club.

So join now. Join Investor Club at wealthformula.com. You make a lot of money but are still worried about retirement. Maybe you didn’t start earning until your 30s and now you’re trying to catch up. Meanwhile, you’ve got a mortgage, private school to pay for, and you feel like you’re getting further and further behind.

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The concepts here are used by some of the wealthiest families in the world, and there’s no reason why they can’t be used by you. Check it out for yourself by going to wealthformulabanking.com. Welcome back to the show, everyone. Today, my guest on Wealth Formula podcast is Dr. Anas Elhaji. Uh, he is an e- energy economist and managing partner of Energy Outlook Advisors, specializing in global oil, natural gas, and energy markets.

He’s a frequent commentator and speaker, helps investors and policymakers how to understand geopolitics, uh, supply dynamics, and, and energy policy around the world. His research is widely respected for challenging conventional wisdom and data, uh, data-driven analysis. Welcome, Dr. Elhaji. Thank you. Thank you very much.

It’s a pleasure. You know, it’s, uh, good to talk to you, particularly because of all of the things that have happened recently in the world, uh, with regard to, uh, Iran and trying to understand the headlines. You know, most investors think oil prices are driven by headlines. Um, of course, there is some impact there, but what’s the framework you use to understand what actually moves the oil market?

Well, uh, I’ve been doing this, of course, for over 30 years, and therefore, we focus on what matters the most. And, uh, I focus more on what’s going on on the ground than what’s going on on the screens. And the advice all the time throughout this crisis is ignore the daily news, uh, ignore the flashy news, ignore all of that because, uh, we have too many made-up news, we have contradictions.

And most of the time, the real news basically has to be put within their own context because without context, the be- this news basically could be scary, uh, could be, uh, could mean different things to different people, so you have to put it within context. So and, and we created a certain publication, in fact, just for that.

And many times a week, basically, we say, “This news is not correct. This is, um, uh, a lie,” or, “I believe it when I see it,” and that’s our comment. So for, for your audience in particular, since they are not specialists in the area, they have to be extremely careful with, uh, those who are pushing narratives. What are some of the, you know, examples of false narrative that are out there right now that, uh, people should, you know, ignore?

I will tell you just one from, from a couple of days ago. Uh, uh, there were reports that, uh, uh, United Arab Emirates crude oil exports increased to record high. And now people are wondering, well, this is within the Hormuz Strait, so how they were able to increase their exports to record high? And some people said, “Oh, by the way, they left OPEC last month, and therefore because they left OPEC, they are free to produce and export more.”

But that’s not the case. What happened is they have too many stranded tankers in the Gulf, and those strang- stranded tankers basically left all at once. Oh, okay. And that increase that, um, that increase- Yeah … the exports to record high has nothing to do with production, has nothing to do with, with actual exports.

So this is kind of a recent, uh, uh, a recent example, uh, of that. Uh, the other thing is regarding China, for example Uh, people were saying that China reduced its oil imports significantly by almost a total of six million barrels a day. That reduced the global, uh, oil demand, and that reduced oil prices. And the narrative out there was, “Oh, they are depending on their inventories, and therefore they are withdrawing from inventories.”

But that’s not the case either. You ha- If you get the numbers, you find out that the decline in inventories is very small. Then how do you explain the difference? And the, the story out there that they are withdrawing an equivalent am- almost an equivalent amount, but that is not, uh, the case at all. Uh, China has its own, uh, story.

And now, uh, once they start increasing their own, uh, imports, the impact on oil prices is very limited because people think, “Oh, now they will go back to the market and oil prices will go up.” Why? Because most of their imports are going to be from the sanctioned Iranian oil and the sanctioned, uh, Russian oil, which they get at a steep discount, and therefore the impact on the actual market is very limited.

So these are some of the narratives that we debunk from time to time. The US shale revolution, uh, changed the balance of power in the global oil market as well. Uh, has shale peaked or does it still have another leg? The shale story basically is one of the most important stories in our lifetime. And it did, it did not only change the United States, it changed the whole world.

And if you look at what’s happening in Ukraine today, or you are hap- what’s happening in Venezuela or happening in Libya or happening in the Red Sea or happening at Hormuz Strait, none of that would have happened without the shale. None. Why is that? You, you would not see the aggressive behavior from the Trump administration against Russia or Iran or any others if we go back to the old days of, uh, oil production declining and shortages and US dependence on imports is three times what it is now.

So it did change the world, whether you talk about economics, you talk about politics, you talk about, uh, anything else. I’m going to tell you a story here because it’s a very- Mm-hmm … fascinating story. Yeah. The, uh, uh, China now, as I mentioned earlier, reduced its imports of oil significantly and therefore reduced global demand and therefore reduced oil imports.

What pundits who were saying that they will use their, uh, inventories are missing the follow-up. Part of that oil import is naphtha, and they import more than four hundred thousand barrels of naphtha. But when oil prices went up substantially, naphtha prices went up significantly. It just happened in the petrochemical sector.

Naphtha, which is a petroleum product, is a substitute for ethane, which is a gas. The United States is the largest producer and exporter of this gas. So what, uh, China did basically is literally reduce imports of naphtha significantly and import more US ethane, and to get the same results in their petrochemical plants, because those are substitutes.

So the, the idea here is this ethane would not have been there and make this a global change and enable China to do that without the shale revolution. Because the shale revolution is producing massive amount of this gas, which enabled its production, it’s enabled its exports, and all of this done on the cheap.

How about in terms of the oil markets itself, though? Is there, um… Yeah. So, uh, he- here is the thing. People said, “Okay, it’s already peaked, it’s going to peak,” et cetera. And our view all along was shale is price sensitive, and it is going to have multiple peaks. And what we saw in April basically is a perfect example of that.

Everyone was saying, “Look, it’s going down, it’s declining,” et cetera, and we got the big surprise two days ago. April production went up, and went up significantly, uh, especially in the Permian. So it did go up in April. So when did the, uh, Hormuz crisis start? It started at the beginning of March. It did not take long, just few weeks.

Until producers in the Permian were able to increase production at higher prices and dump that oil on the market. So this story is going to be repeated over and over and over as long as the prices are going up the same way they went up in, uh, in March and April. We are going to end up with multiple peaks.

And most of US exports, by the way, are from shale. Shale is light sweet crude, and most of the US exports basically are light, uh, sweet crude because of, uh, because of shale. So does shale in a way act as a buffer, uh, of prices because more of it’s- No. No. Uh, we, we call it the, the– in our jargon, basically the term we use is a swing producer.

Mm-hmm. Uh, no, it is not a swing producer in a sense like Saudi Arabia, for example, or some OPEC members. ‘Cause those OPEC members, they have the spare capacity already there. Or China, for example, they have their own inventories there, or the US has their own strategic petroleum reserves. Within a few days, you can increase production.

You need literally to make an investment decision, and you need to de-dedicate the money, and you need to drill until you get the oil. So when we talk about swing producer, we are talking about oil that is almost there in the market, not, uh, when you need to drill for it to get it. Right. So that’s, that’s the difference.

Uh, you know, um, a lot of people not in the oil industry like me, they keep hearing about how the United, the United States has this huge natural resource, uh, that we could produce our own oil. Why do we continue to have so many issues? Why are we so dependent on The rest of the world for our oil and, and the prices and the price shocks.

How do you, how do you tell people who- Sure … you know, help us understand that? When it comes to oil, we have more than 160 types of oil. And even if you want to go, uh, into, uh, like light, medium, heavy, et cetera. So instead of talking about the 160, we are talking about just three, four types of, uh, of oil.

Each one basically has its own products and uses. For example, we have light sweet crude. Most of the production, what most refiners basically make a lot of gasoline, make a lot of naphtha out of it. While you cannot make that much diesel out of it, you cannot make, uh, asphalt out of it, for example, or heavy crude or fuel oil.

You need to go to the heavier ones. Like the medium sour gets a lot of diesel, and if you go heavier, that’s where you get the fuel oil that is used in power plants. For example, we get the asphalt that is used for roads. So these are different types of crude. When it comes to shale, most of the– And we produce, by the way, about nine million barrels a day.

So most of US production comes from shale. It’s light sweet, so it produces a lot of gasoline and a lot of naphtha But we need diesel. We need many other products, uh, uh, the– like lubricants, for example. You cannot get the lubricants from the light sweet crude. We need to get it from the heavier crudes.

And we don’t have enough of that. So what we do is we export the light sweet crude, and we import the heavier ones, and we import them from Canada, we import it from Venezuela, Mexico, and some, uh, uh, from the Middle East. But most– historically, most of US exports since 2010… Sorry. Most of US imports since 2010 are medium, sour, and heavier crudes.

So it’s a crude quality issue. It’s forcing us to export and import at the same time. Got it. Another, um, uh, thing that people talk about, and, you know, they’ve been talking about since, uh, uh, the US went into Venezuela, uh, is what the potential impact of, you know, a, a friendly– a US-friendly Venezuela will look like in the next three to five years.

Do you see any material differences, uh, based on what’s happening there and what could be coming online in a few years? Historically, we’ve seen that before. There was a regime that was friendly of the United States. It opened up Venezuela for foreign, uh, companies, for foreign investment. It worked for a few years until the economy collapsed and Chávez won the election in, uh, 1998, and, and then everything changed after that.

So we’ve seen that before. The problem now is completely different. So what happened in the ’90s, that Venezuela increased its production substantially, and it did not obey by OPEC quota. So what OPEC did at that time, it just flood the market. To punish Venezuela. So if you go back to 1997, 1998, they increased production by two million barrels a day while the market couldn’t handle the two million.

So the market crashed, and oil prices declined to below $10. So they did decline to a single digit. And as a result, all those investments in Venezuela basically, uh, be- became worthless, and people lost a lot of money. And the economy of Venezuela basically was suffering, and that allowed Chávez to win the election and make all the changes that he made later on.

So we’ve been there. The only difference now between what’s going to happen and, uh, the past is that the demand for oil is going to be way higher than before, and as a result, we are not going to see the collapse. So I’m going to give you a few examples. It will take about three years for Venezuela to add another one million barrels a day.

But in three years, oil demand is going to increase by at least two million barrels. And at the same time, because of the decline rates in the fields, I need an additional 12 to 15 million barrels a day replacement. Yeah. So all of a sudden, within three years, I need 16 to 17 million barrels of fresh oil.

So for Venezuela to add only one million, that is a welcome addition to reduce the pressure that we have. That was not the case in the ’90s. In the ’90s, we had a lot of, uh, a l- a lot of oil, but that is not the case going forward. Uh, especially because of all those climate change policies and the ban on fracking and all these issues in various countries that are going to limit, uh, the growth in some areas.

But the idea here is any additions coming in the future out of Iran and out of Venezuela are welcome additions. You, you bring up an interesting, uh, point of just, you know, oil demand increasing, uh, a lot over the next few years. I think that’s worth talking a little bit about because I think there’s a narrative about potentially, you know, alternatives and other types of energy transitions which may decrease, uh, the demand for oil.

Could you talk a little bit about that? Sure. The first fact is, uh, the audience must realize that the level of substitution between solar, uh, uh, and wind on one side and oil on the other is extremely limited. And the reason is very simple. We use solar and wind energy to produce electricity, and we rarely use oil to produce electricity.

So if you look at Europe, you look at the United States, even India and China, less than 1% of generation is done by oil. Less than 1%. Globally, globally is less than 4% of total oil demand basically goes to power generation. And mostly it is in the oil-producing countries and in some islands that they are far away from everyone, so they need, uh, that as a source, so they need to import it.

So they are not, in a sense, they are not a substitute. So in a sense, Europe, for example, or India or China can double or triple their solar and wind, and the impact on oil in the p- in power generation will be almost zero. So that’s number one. That leave, leaves the transportation sector and electric vehicles and electric buses and, uh, trucks, et cetera.

That’s where the impact is. The problem we have is that there is a lot of hype and exaggeration on the impact. So if you look at everything being said since 2015 until today, uh, especially for what I call the narrative pushers, uh, none of their predictions came true. Remember that even BP told us that oil demand peaked in 2019, but between then and now, we have an additional seven million barrels a day of increase in demand, despite the fact that we have more electric vehicles than ever So I– when we started the discussion today, we were warning your audience about kind of being attached to the news and being careful with the news, being careful with social media, et cetera.

So here is a true example they need to pay attention to. Notice that when car companies or auto companies publish their quarterly reports, they publish everything. They show you this brand, this type of a vehicle, we sold, let’s say, five thousand vehicles, and they show you the number, and they show you the percentage, and percentage growth, percentage of production, et cetera.

So in the actual reports of the auto industry, you have all the information. Now you start reading what the media is writing, and I’m going to give you a true example here. The media, Ford basically released its quarterly report, and, uh, the media basically was reporting an increase in, in electric truck sales by a hundred and fifty percent, but they never mentioned the number.

So notice that in all the media, basically, when it comes to electric vehicles, they focus on two things. They show you the percentage growth in sales, they don’t show you the numbers, and they never tell you how many EVs on the road, which really what matters. You want to know how many EVs on the road.

It’s not the percentage of sales. So they say, “Well, uh, this quarter, uh, uh, forty-five percent of sales were electric.” Okay, but give me the numbers and tell me how many cars on the road. And why this is important? It is important because when we talk about oil demand, the oil demand is affected by the number of EVs on the road, not by the sales.

So what if those forty-five percent, uh, basically twenty percent of them are replacement of all– of old electric vehicles? They have no impact on oil, but they’re still counting the whole forty-five percent as a result of that. So, so this is just a perfect example of how the media basically misleads you by this.

So for, for Ford, when they said the sales of this truck increased by a hundred and fifty percent and they ignored the number, for the whole quarter, the total number of sales of that truck was nine hundred. That’s it. But they don’t want to say nine hundred because other cars increase in, in tens of thousands, and they don’t want to say nine hundred.

They want to fool you and say, “You are the only one who did not buy electric vehicle.” Now, then it comes to China. Now, more than half of the world electric vehicles are in China. People are taking the numbers and say, “Well, here are the sales. Here are the numbers.” Well, tell me how many actual cars on the road in China.

How many actual cars in the– on the road in the world? Right now, probably we have about, uh, sixty-five million vehicles on the road. Assuming no oil goes into their production at all, do you know by how much the replacement of oil of the sixty-five million? Less than two million barrels a day. Global oil demand is about a hundred and five million, and this two million happened over fifteen years.

It did not happen yesterday. So you can see where, where the exaggeration is. But at the same time, those Chinese numbers basically are questionable because they are– they, uh, they, they get subsidies for that, and there are all kind, all kind of scams being run there to benefit from those subsidies. For example, I’m gonna tell you a true story here.

A manufacturer of EVs who wants to send twenty thousand EVs to multiple African countries. Twenty thousand. Before he send them to Kenya and Tanzania and, uh, other countries, he will call his friend or c-colleague and say, “Look, before we send them to the ship, I want to issue license plates for each, and I want to issue insurance on each, so we can get the subsidies as if they are being sold in China.”

So they get the subsidies within a couple of days. They, they, they get the paperwork done to be eligible for subsidies, and on day three or four, all those cars will be on a ship going to Africa. So we have double counting of the twenty thousand in this case, and this is just one of the scams that goes on.

There, of course, there are more. When you look out five to 10 years, what is the biggest structural change coming to the global energy markets that you’re paying at– you’re paying attention to that maybe might surprise us? In all our publications since last March, uh, we’ve been saying this, and I think you, you asked the right question here, and I will answer it in details if you allow me.

The Hermez crisis is one of the biggest events in, in, uh, in history, and it could be the biggest even-event in our lifetime. We have not seen the extent of it, by the way, until now, because the government numbers for the second quarter are not out yet. So we need to wait and see what’s happening. So the impact is severe.

And the Hermez crisis is not only about energy The biggest Hormuz crisis is not even in energy. The biggest Hormuz crisis is in AI, it is in data centers, it’s in computers, it’s in chip making, it is in semiconductors, it is in the agricultural sector. Why? Because we lost one-third of the helium out of Hormuz, one of the third traded helium in the world, and you cannot make semiconductors without helium.

So Chi– Uh, basically, uh, Asian countries, especially South Korea and Taiwan, got hit extremely hard. And that’s why Taiwan all of a sudden coming to the United States, investing $150 billion in semiconductors within the United States, because the United States is not only the largest helium producer in the world, they are the fastest basically to increase helium to replace Qatar.

And then one-third of the world traded fertilizers come out of Hormuz. India, for example, depends heavily on fertilizers from Hormuz. Uh, many African countries depend on fertilizer from Hormuz. So it’s not only about energy, it’s about a lot of other things. But the biggest outcome of this Hormuz crisis is something that is going to change our lives forever, which is the– Trump and Netanyahu by attacking Iran and the closure of Hormuz.

And by the way, I still stand by what I’ve been saying all along that Iran could not close the Hormuz Strait and Iran did not close the Hormuz Strait. And that’s probably another show we can go on, on, on explaining why, but it’s not Iran that closed the Hormuz Strait. Uh, and if you look at the lesson when this happened, the lesson that every country in the world right now is going to use the Chinese model.

So Trump and Netanyahu literally globalized the Chinese model. What is the Chinese model? China realized long ago that something is going to happen and the West might attack China. That’s kind of a general framework But in June last year, when Israel and the United States attacked Iran, when Israel attacked Iran, that was not a big deal for China.

People were waiting for this for 20 years, and finally it happened. So Israel attacked Iran. What was the shock? When the Trump administration decided to attack later on and join the war. And all of a sudden, we start seeing a number of articles about Iran blocking the Hormuz Strait. And you follow those articles, and you follow the names, and you follow everything else, and you find one conclusion, that there was a PR firm that hired literally the media to publish those articles because the same talking points exist in all those articles And China got the message.

And whatever I am saying, this is written in our report since June and July. So, and, and I’ve, I’ve been on TV and I’ve been other things all of it saying, so I’m not saying this now, and you can go back and, and see the previous statements. China realized that Hormuz Strait will be closed, but not by Iran.

It would be closed by the United States. The surprise in Phil– in, in March, how quick it happened, because we were thinking it will happen like couple of years later from June. But it happened so quick. But China knew because they started building inventories of almost everything at a higher pace than before.

So they built this massive oil inventory, massive gas inventory, coal inventory, and everything that can be stored. So what happened is, Hormuz crisis basically hit every country, especially a country like India, extremely hard. But China was just watching and laughing. They were not hit as hard. Why? Because they linked energy sources to national security.

And what they’ve done is, they emphasized domestic production of oil and gas regardless of cost. They emphasized solar and wind regardless of cost. They emphasized EVs and battery storage regardless of cost, because it’s a national security issue. It’s not about climate change. It’s not about reduction of CO2 or anything else.

It is about national security. And now every country in the world is looking at China for that example, and they will do exactly the same. So sorry for this long introduction to answer your question about what is the major change. That is the major change. The major change is, we are going to see countries in Europe that they are going to look at their failure of climate change policies and say, “Okay, I failed when I talk about climate change.

Now what I’m going to do is, I’m going to adopt the same policies, but I’m not going to mention climate change. I’m going to talk about national security, and I’m going to convince the parliament and everyone else to pay for it because it is a national security issue.” So what we are going to see is, we are going to see more money going to EVs, battery storage, solar and wind.

But this is not about climate change because there will be more money going to oil and gas and coal, but all domestic sources as a result. So that is the major change. Can you– Um, you mentioned it and it sounds more, uh, complicated, but I think a lot of people are wondering about your comment, uh, that, that Iran did not close the Hormuz straits, that it was the United States.

Can you, can you give us sort of the high level of that comment? Yes. So gen-gen-generally speaking, there is no– Iran does not have the power even before the war to close the Hormuz Does not have the navy, does not have the, uh, uh, the even the political clout or anything else to, uh, to do it. Uh, some Iranian elements or Iran can cause problems.

Causing problems in the Strait is different from closing the Strait. These are completely two different things. So we have a history of forty-five years since the Iranian revolution until, uh, February. We have a war of eight years. We have three wars in the region. We have m-massive number of attacks on ships.

Never ever during those times we’ve seen the insurance companies revoking the insurance on the spot. Never happened before. Despite all this chaos, all of a sudden in March, early March, the insurance companies, especially the London-based insurance companies, they decided to cancel the insurance policies.

So if you have an oil tanker in Kuwait, for example, you got stuck because you don’t have war coverage and there is no coverage So they canceled this. So why they cancel? And this is where, where it gets really interesting. They canceled not because of the war. We’ve, we’ve been there in June last year.

There was no cancellation So why this time? The reason why, because few days into the war, the US Navy sank a, a, a navy boat for Iran that killed, like, 80-something soldiers. Now, the story basically is, you– I mean, it’s a war. You would think it’s in Hormuz Strait or somewhere in Iran, close to Iran, right?

That was not the case. That was in Sri Lanka. So what happened here is, there is a law in the EU, and the law says to… Because, uh, as you know, the EU, if you look at especially Western Europe, they’ve been experiencing very weird weather in recent years, and the damage as a result of it, especially when you talk about floods and other things, is very severe.

So there was fear that insurance companies will go bankrupt. So to avoid bankruptcy of insurance companies, they created laws saying that you have to have enough cash that matches the risk as you go. So if there is a fire in this area, immediately you have to have cash on hand to prepare for any damage, and they created a formula for that.

If there is a flood, immediately you have to have something cash or near cash. So we had the June war last year, and companies basically abide by it. They say, “Okay, here is the risk assessment. I’m going to have this much cash or near cash just in case.” We have this war, and the companies basically prepared the same way.

But once the ship was attacked in Sri Lanka, now the coverage, the war coverage, is not going to be only around the Hormuz Strait, it’s going to extend throughout the Indian Ocean, and every ship in the whole area has to be covered, and insurance companies do not have those capabilities. So it was better for them because the EU, when they changed the law, they did allow them to cancel within seven days, and they basically, they canceled.

Seven days is not enough for a ship that is filling in Iraq to fill and leave the Hormuz Strait. So basically, they got stuck. That’s why we’ve seen countries within the GCC doing ship-to-ship transfer before the MoU. So they were doing what Iran is doing because what happened is, as long as you don’t cross the Hormuz Strait, you don’t have to pay the insurance, and they had those dark Greek shippers who do not carry the insurance, basically carry the oil.

At the same time, and this is the last one, uh, of course, I mean, we can go on and on, uh, discussing this, but there are many things here. As I mentioned in our publications in June and July last year, we did mention that China believes that the US will close the Hormuz Strait, not Iran. So we know that. Then in, um, uh, in November- The United States released its national stra- national security strategy.

And in that national security strategy, there was something that’s kind of very weird about it, because the United States historically always emphasized the freedom of navigation in any choke points or, or waterways, always. All of a sudden, for the first time, they are talking about keeping the Hormuz Strait open.

That was three months before it’s closed. So why all of a sudden this? And there is more to that. In the same statement, they brought up the security of Israel. So while you are talking about the GCC countries, you are talking about the Hormuz Strait, and all of a sudden you bring Israel to Hormuz Strait.

Well, Israel was the one who made the attack in the first place. So you start connecting those dots, and you will see that what Iran did, Iran said, “Okay, ships are not leaving right now because they don’t have insurance. I am going to claim that I am the one who is, uh, uh, preventing those ships from going on.”

And at the same time, they knew that if they launch attacks, then those insurance companies are going to continue their policy of no insurance or very high premiums. So launching the attacks basically guaranteed that this insurance problem will continue. So a couple of follow-up questions on that. So, well, for one thing is, so what you’re describing there is not a physical closure of the Strait of Hormuz, but rather a functional one because of lack of insurance.

Is that right? Absolutely. Yeah. So why would– what, what incentive would the United States have to, to want this to happen? Uh, I’m probably, I’m going to mention some information, Juan, that could, that could be, uh, right here, that could be, uh, shocking to some people. The benefits to the United States from closing the Hormuz Strait are priceless.

Literally priceless in every sense. After the Hormuz Strait, the United States became the largest exporter of crude, the largest exporter of jet fuel, the largest exporter of gasoline, the largest exporter of LNG, the largest exporter of diesel. And why this is important? Because look at what Trump said since he came into the office in his second term, energy dominance.

Then you come to the issue of helium. Iran has so many targets to hit in the region, and all of a sudden, just the LNG plant that produces the helium in Qatar get hit and destroyed. And therefore, you go back and look at the AI industry and that– what the idea of Trump and Bassant and others basically been saying all along, that we are going to bring the semiconductor industry from Asia to the United States.

Without helium, that industry cannot survive. What we’ve seen? We’ve seen companies from Taiwan basically investing fifty billion in the United States. After the helium crisis, they added another hundred and twenty billion of investment to the United… So the industry is moving to the United States. The AI industry is moving back to the United States.

And then you go on fertilizers, for example. Who is the largest fertilizer producer in the world? The United States. You control fertilizer, you control the agriculture, uh, sector of the world. You go to, uh, uh, other, uh, other things, for example, to, um, uh, methanol. The largest, uh, producer of biofuel is the United States.

You cannot produce meth– uh, biofuel without methanol. Who are the competitors? Malaysia and Indonesia. Where do they get their methanol? From the Gulf. They couldn’t get it. Brazil basically tried to diversify their energy, and they decided that they want to go for biofuel, only to be shocked that they don’t have methanol, and they have to import methanol from the Gulf.

If you go back and look at, uh, what the United States did in Europe to gain the r– the market share, the gas market share from Russia United States exports to Europe in terms of gas was zero. Right now, it’s almost thirty percent. One third of European gas come from the United States. Russian gas almost, like, ten percent right now.

It used to be fifty-five percent. So what happened? The United States planned this since two thousand and fourteen, that they wanted to replace the Russian gas in Europe, so Putin will not have the grip over, uh, over Europe, and they’ve been extremely successful with that. It is what I call the LNG war. And if you look at or who is going to dominate in the future, if you look at the projects that are there, who is going to dominate?

Qatar. What happened to Qatar? They, they did not only get blocked, their plans got destroyed. So when you talk about energy dominance, when you talk about AI dominance, and you go back to that national security, uh, strategy, it does link AI to energy dominance. And you go to even President Trump’s statements, he mentioned the link between AI and energy dominance.

So the whole idea here is the benefits to the United States were priceless. Yes, there are some costs, but those costs are only in the short run. If you look at dominating AI, dominating fertilizers, and, uh, uh, dominating, uh, in energy. Because what happened right now is, look at the long term. No one in his right mind in Asia is going to depend heavily again on the Gulf.

No one. Everyone is going to diversify, and diversification by nature means more dependence on the United States And the United States had the capability, whether you are talking about oil, we’re talking about refined products, talking about natural gas, LNG or ethane or anything else. So yes, it’s domi- dominance over the world through energy and AI.

It’s fascinating, but in, and essentially what you’re saying is that the United States had a plan knowing that there was short-term pain coming. The short-term pain meaning transient increase in energy costs resulting in increased inflation in the United States. But knowing that that transient pain would result in a significant boom to the energy sector into the United States going forward because of all of the power dynamics- Not only the energy sector, not only the energy sector, everything else- Mm-hmm

too. Right, including the- AI and fertilizers and everything else. Right. Correct. Now- But a big boom in part because the paradigm includes this risk-averse element, you know, just staying away from the, anything involving the Straits of Hormuz. Let me phrase it this way, and, and I’m talking to the, to your audience right now.

Think about it this way. There are only two choices when it comes to this war. Either you believe this war is about Iran and its nuclear program, and therefore the solution is known and what comes out of it is known. Or you look at it as part of the larger picture. What is the larger picture? Trade wars, sanctions, tariffs, Panama Canal, Venezuela, Greenland, Red Sea, China, Russia.

You put all of this big picture, you put Iran and the Hormuz Strait in the middle, you can have a completely different outcome as, as a result of this. So it’s up to you. You believe it’s about Iran and the nuclear program, or Iran and its nuclear program basically is just a catalyst basically for something larger, such as the control of the Hormuz Strait, and that’s part of the Panama Canal because the United States right now control the Red Sea, by the way.

And controlling the Red Sea, basically they are controlling the k- Suez Canal on one side and Bab-el-Mandeb on the, uh, on the other. What’s left right now is Malacca Strait. And Malacca Strait, basically the United States have control over it in various ways, but what about Greenland? Why the United States wants Greenland?

People think, well, it’s Trump, Trump going crazy, he wants Greenland. No, it’s not. Look at what’s happened, going to happen in the next few months. In the next few months, China is going to get its oil and LNG from Russia through the northern route. And the United States has no control over the Northern Route.

And Northern Route is very dangerous for the United States. It’s a threat to national security simply because it’s cheaper. Europe and R– and Asia can trade, uh, uh, or, or increase trade. The shipping distance is way shorter. The cost is way, way smaller than before. In fact, just every tanker that goes from Russia to China through the Northern Route saves a million dollars.

So Greenland is important to the Northern Route and to the Arctic, and that’s part of the controlling the waterways around the world. And Iran, they knew this. That’s why they keep insisting on charging. They keep insisting on controlling the Hormuz Strait because they know the United States, it’s the fight is over the control of it, not about Iran nuclear or anything else.

That’s why Iran keeps saying, “Oh, we want, uh, to charge for it.” What they ne– It’s not about charging for it. The cost of charging, by the way, is very small. It’s not a big deal. But charging means everyone is going to pass by your permission. That’s control And then we’ve seen P- President Trump has said, “If someone is going to charge in the, in the Hormuz Strait and control it, it’s going to be us.”

So it is about controlling the waterways around the world, because whoever controls them basically controls everything else. Absolutely fascinating, uh, stuff here. So I guess I’ll leave you with one question, which, you know, uh, given all that we’ve talked about, uh, it’s actually very simplistic. When investors think about what’s going to happen with energy costs over the next few years, what, what do we make of this?

So we are bullish on LNG, and we are bullish on LNG names in the United States. So all American LNG basically we are bullish on. We are bullish on– And we produce reports, by the way, on this. We are bullish on the whole supply chain of LNG. Uh, simply gas is going to be the future, no matter what. Uh, so we are bullish on shipbuilding for LNG.

We are bullish on the c- on the companies that transit or carry the LNG around the world. We are bullish on that too. We are bullish on cons- bullish on construction company that build the, uh, plants, uh, everything else. We are bullish on the companies that rent their ships to regasify the LNG. So that’s one way to go, uh, to it.

This is kind of a, a one way to invest in energy. On the other side is, if I said this over a year ago, people would laugh at me, but all of a sudden coal is hot. Coal, it retained its throne, uh, uh, as the king of energy. So out of Hormuz Strait, basically, coal is going to be, to be a game changer for the next few years simply because, uh, again, national security trump climate change policies.

So that’s, that’s, uh, another one. Uh, the oil market- How about energy prices in general? Of energy prices in general, do we anticipate them going up significantly over the next several years? Uh, for– Uh, this is, this is really, uh, f- from an investment point of view, it’s not really about prices. It is really about the difference between your cost and the price in the market.

That’s where the money is. So when it comes to oil, oil is very volatile. So for those who are not really well aware of these things, et cetera, playing the oil market is extremely difficult. But the safer bet basically will be the LNG or the, uh, coal. It’s less volatile, basically, and you can look at the seasonality and look at other things, and you can, uh, you can figure it out.

The, uh, the related, uh, issues to that is, uh, storage batteries is going to be the thing. We are going to see more demand for storage batteries than ever simply because of that national security issue. So that’s another, uh, sector to, to focus on Tell us a, a bit about your, uh, where people can find your, um, your newsletter and the other services you provide.

Yes. We do have a, a newsletter that we publish on Substack. It is mostly oriented toward institutional investors or high net worth individuals where we do things in depth. Like we published a report yesterday on China. Uh, we, we just kind of, kind of explained everything about China. Um, and then we have the daily energy report.

The daily energy report’s kind of, uh, for anyone. Uh, it’s not a big deal. It’s, like, $420 a year. It’s not a big deal, but you get a daily report where we really go over the news and we evaluate the news and explain to the audience what it means, how they can benefit from it, and what’s going on. And if the news is not correct or it needs to be modified, et cetera, we explain that.

So again, that’s on Substack. And then we have most of the stuff basically for those who wants to follow me is on Twitter, uh, Anas Elhaji, my first name and my last name. And, uh, of course, I have a website and other things. Most of my work basically, aside from research, is speaking engagements. So for those who have big events like conferences or board, uh, meeting or et cetera, that’s where I travel most of the time.

And for those who are basically interested in, like, one-hour or two-hour, uh, presentation, we can do this on Zoom, which I almost do on daily basis with, uh, major, uh, financial institutions and, uh, other funds around the world. So we can do that too. Thank you very much for all the information you’ve provided us today, El-doc-, uh, Dr.

Elhaji. Thank you. Thank you. Thank you very much. Appreciate it. Wealth Formula Banking is an ingenious concept powered by whole life insurance. But instead of acting just as a safety net, the strategy supercharges your investments. First, you create a personal financial reservoir that grows at a compounding interest rate much higher than any bank savings account.

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Hope you enjoyed it. Wow, that one kind of blew me away, to be honest. Uh, sounds like a conspiracy theory, but it’s an, uh, a, a theory that really makes a heck of a lot of sense. I, I gotta say, I, I’m, I’m kinda buying into it. I’m curious what your thoughts are. Reach out to me, [email protected], and let me know what you think ’cause again, that one is really, really fascinating and makes a lot of sense.

Anyway, hope you enjoyed it. Hope you learned something. That’s it for me this week on the Wealth Formula Podcast. This is Buck Joffrey signing off. If you wanna learn more, you can now get free access to our in-depth personal finance course featuring industry leaders like Tom Wheelwright and Ken McElroy.

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