Transcription
Trump says oil reserves would run out in 4 weeks. "We run out of reserves at about 4 weeks," Trump said in France while the Group of Seven summit. This was last week, discussing the recent uh memorandum of understanding with Iran. You know, there are reserves all over the world, and we would really run out, and there would be a time when you wouldn't be able to get it.
We are not running out of oil reserves in the next four weeks. Yes or no? Dune is back. He's the head writer of the Doomberg Substack, and uh, it's it's a pleasure to have you back, Doomberg. A lot to discuss since the last time you're on the show, which is late March. Uh, the Iran war had uh had just broken out for a couple weeks since the last time you're on the show. So, um, lots to catch up on.
Let's start with uh recent news. Do we know the current status as of now of the Strait of Hormuz? The Iranians say it's not open. The Americans claim it is. What, what, what is true and what is disinformation right now?
You know, that's a fantastic question. First of all, it's great to be back with you, David. Always a pleasure. Um, one of the things that we have confronted throughout this war is, in fact, that wall of disinformation, misinformation, falsehoods, and so on that have so proliferated online. And throughout this entire episode, we have come to rely on the market as one source of unvarnished truth. And if I look at >> yes >> WTI today trading at 72 or 73 or wherever it is, that kind of tells us that the market believes the Strait is effectively open because it is not that much more expensive than oil was before the war even started, which I think is confounding to many people. We could get into why we think that is, but um, we have seen claims and counterclaims, especially with President Trump >> Mhm. >> who likes to mix things up on Truth Social, post outrageous things just to see how people respond to them sometimes. And so I, I don't think that um, Twitter is not real. It's sort of one of the meta conclusions we've had throughout this war. Twitter's useful for inbound information. You have to filter it very carefully. But you know what the Iranians say and what the Trump administration say says is um, is to different audiences. So the Iranians are not a monolithic society. They have hardliners. They have peace. They have Western-oriented people. They have people strongly aligned to the regime. And everybody involved, I think, is singing different tunes to different audiences. And so in times of uncertainty like this, where you have crisscrossing information that seems, you know, diametrically opposed, um, we always just go back to the market. Uh, for example, when it when it looked like maybe the war was going to break out again, I would just pull up the gold chart, and if gold wasn't tanking, then you knew that maybe the headlines were a little bit misleading. So that, that's our high-level answer to that question.
The the the market, uh, in particular, the futures market for oil is composed of traders and investors alike. So if you are an oil futures trader, uh, and you woke up today or any other day this week, you're picking up a phone call and you're calling whom first to get the information that you need about the current status and whether or not tankers are going through and roughly estimate the volume of oil that is still passing through the Strait?
Yeah, look, if you're a sophisticated oil trader, and we are the first to admit that we're not, um, you probably have access to pretty um, impressive modern array of intelligence um, which the market clearly had that the Twitter verse was missing throughout this war. Look, if we just take a step back and say, how, how did oil navigate this crisis so quietly, really, compared to what everyone assumed would happen, what we assumed would happen? Um, a bunch of things happened. Look, the Chinese have clearly been stockpiling an enormous amount of oil under the radar. There's no market that has been the subject of more sanctions than the oil market, which means the market has learned how to launder barrels, shadow fleets, sanction vessels, all kinds of middle, you know, middlemen and and, you know, interesting characters in this market. The second thing is that China has vastly invested in what we are calling hydrocarbon fungibility. They're able to switch to coal or switch to ethane or switch away from Naphtha um, on a scale that few thought was possible. Um, and then the third is is what your question alluded to, which is that far more oil was clearly slipping out of the Strait than anyone involved um wanted to admit. And in hindsight, the Iranians didn't want to admit this in part because they wanted to project that the Strait was closed. And Trump didn't want to admit this because he didn't want the Iranians to know the means by which oil was being smuggled out. I suppose that's one plausible explanation. But by and large, the real bogey was about 5 to 6 million barrels a day, it looks like. And China offset about four of those million barrels and um, reserves >> hatched in the other two. That's what it looks like. History will will tell for sure.
This is from the EIA. China, the United States, and Japan hold the most strategic oil inventories in 2025. Uh, China being uh, the largest on this particular list. I've been reading reports about how China's strategic reserves or reserves overall have been um, basically the biggest reason for why the oil price didn't go to $200 as some people like yourself could have anticipated. Um, is this true? Is this of, is it one of the major aspects as to why oil is much higher?
Yeah. Yeah, it's certainly one of the three that I just mentioned. The other being China also has a huge investment in coal to chemicals and >> um, a a wild overinvestment in flexibility in its refining assets and its other outlets for the use of oil. Um, and then of course, the third being that more oil was getting out. I mean, I think when the when the last time we spoke, people were were assuming that it was 15 million barrels taken offline, and nobody would would say that 15 million barrels is something the market could absorb. And so, you had this multi-week period where oil, the markets, the price was telling you one of your foundational assumptions was wrong. And in hindsight, it looks as though the true loss supply um, was much lower than um, people feared. And, you know, there was an awful lot of inventory floating around the world, a glut of oil before this war started. And everybody involved in the oil market is probably happy to see huge piles of that inventory burned off at 90 to 100 when it could have been burned off at, you know, 30 to 40 if no war had broken out. And so, um, there's there's motivations at play here to keep that narrative of of significant shortage alive.
This this is uh, speaking of this narrative, this was making the rounds in the news all month. Jeff Curry um, and he was he was a veteran market strategist, Jeff Curry um, from Carla Group, he said that the US, Asia, and Europe, and potentially the US could face shortages by July. >> Um, who's talking about the dwindling reserves? Can you comment on this? Do your own numbers support this thesis?
Well, let's just talk about the US. So, first thing I would say is Jeff Curry's not here, and I, I would refrain from criticizing the guy, and I don't know the context of that. This is, you know, somebody quoting something he allegedly said. In the US, there was never any um, never any possibility of tank bottoms being um, realized here. The US, and and the big mistake I think that many people looking at the US make is they don't, they don't include Canada. Canada, it produces five 5.5 million barrels a day of oil, most of which can only come to the US. It's the grade the US needs. There is, you know, only that one pipeline to British Columbia. Most of Alberta's production, is forced to come to the US. And so when you draw a circle around North America, which is how the oil market actually operates, the US is and Canada combined are vast excess producers of both crude oil of all grades and refined products. And so when you have excess supply, you're never going to run your tank bottoms dry because you could just, you know, uh, taper off the exports and replenish the domestic supplies. And so this >> this fear-mongering, I think, was unjustified. um, at least as it pertains to the US. There's no question that places like Australia and Singapore and the Philippines, Korea, Japan, to a lesser degree because it had a huge amount of of oil in storage. There was certainly a risk that if the war had had prolonged um, those parts of the world would run into some trouble, but North America was always a fortress and was never going to run dry. And the last thing I'd say, you know, this focus on the Strategic Petroleum Reserve, even this sort of >> canard is too strong of a word, but um, fear, let's say, is is um, the, you know, the US Strategic Petroleum Reserve was set up when the US was a massive importer. It was a result of the Arab oil embargo of the 1970s. The US, as an as a net exporter now of significant quantities, just doesn't need the same size of strategic petroleum reserve um, that it once had.
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Okay. Uh, this was the quote from Jeff. I'll just play a few seconds. This was back in May. So, um, I don't know if this turned out to be correct for for Europe. >> When do storage tanks run empty? >> Um, you're parts of the world like Australia, Philippines, Thailand, you are. But the question is when and where? Um, you know, I, I still say that with you, you know, it's going to be, you know, sometime the month of May that you're going to end up with um, Europe hitting um um tank bottoms and in the US it's somewhere in that July 4th time period. >> July 4th time period. Well, that's coming up, if not sooner. Okay. Can you just comment on that? What assumptions is he making here?
>> Well, I'm assuming he must have been assuming that, you know, the the real bogey was 15 million barrels a day, not five or six. >> Mhm. >> And um, again, I think the first part of his answer I agree with. Um, as is as it pertains to Europe, it certainly looked like Europe was going to be destocked out of jet fuel. So, I, who knows like what what he had in his mind. It's the only part I would disagree with and curious to follow up with him on it. Not that we know each other, but um, is this comment that the US would run dry in July, which we actually wrote about without mentioning him by name because we don't like to >> criticize people directly. Lord knows we get lots of things wrong in this business, and you know how you handled it is the biggest issue. But the US was never ever even remotely in danger of its quote tanks running dry. And just to get ahead of any comments, um, yes, I've seen the pictures of Cushing. Cushing is a relatively insignificant tank farm. Yes, it is used for pricing WTI. Um, our friend JJ over at Market Vibes has done a good job of chronicling why that is a bit of misinformation for those that aren't as familiar with the mechanics of North American oil trade. The US physically was never in danger of running out of oil, gasoline, diesel. Parts of the US might have been with California and maybe the US Northeast, but even there um, there were ways to circumvent those challenges like suspending the Jones Act, which the Trump administration did early on. So I, I think the first part of his answer I agree with, the second part of his answer is plausible, and then the last part I, I just disagree with for the reasons I just said.
And I made this point on my show and and other people's as well, that the Sina form's closure impacts the world um differently and depending on where the jurisdiction, where the country is um, there's there's asymmetry in terms of the impact. So the US might have higher reserves than others. Uh, if you look at an article and this is just one example, I'm not picking on Taiwan in particular, but uh, this one is saying that Taiwan, for example, is uh, is going through some sort of uh crisis right now for energy. Uh, countries and regions that import most of the oil um, will have a harder time than others. So can you just comment on this asymmetry and which areas will be harder hit by the Strait of Hormuz than others?
Yeah, sure. And not only is it those that rely on imports, but island nations that rely on imports in particular where they don't have pipeline. So Australia, >> New Zealand, the Philippines, Taiwan, Japan, um, >> if you are reliant on tankers to replenish your oil. So if you compare that with the US, which again, is drilling an enormous amount of oil, Canada is drilling an enormous amount of oil that's trapped. It can only come to the US. The US has refining capacity more than it needs. It has a large strategic reserve. Trump used it. Trump used all of those assets to put a lid on the price of oil for political reasons. Totally predictable, totally understandable, the correct thing to have done. Um, so there's there's a wild chasm between Taiwan and the United States or even Europe, which has plenty of pipeline capacity and lots of ports and, you know um, long-standing relationships with the Middle East. And and so yes, Europe is challenged for all the reasons we've been writing about. But yeah, Taiwan, Australia. So, for example, the Australian government has done a really an impressive job of avoiding a true catastrophe and kudos to them for having done so.
Okay. Uh, I want to come back to those other countries and the global u economy in just a minute, but I want you to fact check this, please. Uh, going back to reserves for just a minute. I know we talked about that, but let's go back to this. Trump says oil reserves would run out in 4 weeks. "We run out of reserves at about 4 weeks," Trump said in France while the Group of Seven summit. This was last week, discussing the recent uh memorandum of understanding with Iran. You know, there are reserves all over the world, and we would really run out, and there will be a time when you wouldn't be able to get it.
>> Yeah. So Trump's an Asian character and um, decoding Trump um, in what he is saying requires more than just the absolute words. It requires the context. So the context of this statement is Trump being under the gun for signing the MOU with Iran that he did. That is our interpretation of this comment. Having signed the MOU, having gotten to the 60-day ceasefire, um, all the heat that Trump is feeling from, you know, the various lobbies in Washington, Trump is probably feeling under pressure. And he's saying, "Look, I had to do this 'cause in 4 weeks, catastrophe would have um, would have befallen the world." And I don't think he's actually talking about the US here. He's probably talking about certain allies that may have been ringing and talking his ear off about the need to reopen Hormuz. And so, um, I would characterize that as um, as management of the narrative around the MOU more than reflecting the physical reality of oil inventories around the world.
Okay. So bottom line then, we are not running out of oil reserves in the next four weeks. Yes or no?
>> Absolutely not. And um, the Strait of Hormuz is not even all that important anymore. And in fact, I think that's one point I wanted to make on the show, David, for you to ponder, which is >> um, the real risk that Iran held over the global economy was not the closure of Hormuz. It was the potential destruction of the oil and gas producing assets in the Middle East, which they proved they could do with their missile and drone arsenal. So you're looking at a singular water treatment facility in Saudi Arabia that supports 5, 6 million barrels a day of oil production. If Iran had targeted that facility for destruction, forget the Strait of Hormuz, you would have had a much more serious problem. They never closed the East West pipeline. The Red Sea kept flowing. There was all manner of escalation beyond the Strait of Hormuz. That would have been a real catastrophe. And that is still the sword that Iran holds over the market in our view. And this is this straightforward Hormuz in a way is a bit of a deflection from that sort of tantamount to an economic nuclear weapon that Iran proved that it has.
Okay. The EIA estimated in 2024 that the US exported about 30% of the energy it produced in 2024. Suppose inventories were to start running low. Could this number be much higher? Would it have to be much higher, do you think?
>> Well, it would be lower because it would save the energy for the homeland, wouldn't it? I mean, did that export that export number, you know >> global allies and other partners be like, hey guys, we we need more oil >> right. So in a crunch coming up ahead of the midterms, is Trump going to feed Australia or is he going to feed Ohio?
Makes sense. Okay. So bottom line then, um, you, you don't expect because you don't expect this, the percentage of domestic consumption versus exports to change?
>> Well, I mean, I, I, exports are a luxury when you are a um, integrated hydrocarbon producer like the US. Don't forget, it was illegal to export oil up until the Obama administration. Um, it's only because of the shale revolution and the slight mismatch between crude grades and so on um, that the refinery slate has that Obama okayed the export of oil. There was many decades where it was against US law to export oil. And then, you know, when you are, that's that's the power of producing your own hydrocarbons. If if you're Russia and you're having your refineries attacked, you just stop the exports of diesel and keep the diesel for the homeland. Um, that's the first thing you do.
Okay, let's take a look at the oil price itself. Uh, we mentioned that the market will tell us what's going on. So let's take a look at the market. WTI currently at $74. Um, spot. Yeah, here we go. That's that's my chart. Now, uh, I want to draw your attention to uh, the day, uh, or the, yeah, last week, last weekend, when the Strait of Hormuz was opened following an MOU signed with Iran. As you know, that MOU has has since been moved because the ceasefire is broken. Now, uh, the point I'm making is that as that was signed, oil did not fall to its pre-war level of about $58, $60. Uh, why not?
Well, it's, it's on the way, I would say. So, if you, if you look at that chart and you just sort of get the halfway point of the war, we're kind of at where we were at the beginning of the war. Um, and again, you have this edge case that you have to price, which is hostilities break out again. I don't know. Imagine, you know, Israel launches a full invasion of Lebanon, and the Iranians launch, you know, dozens of missiles into Israel, and Israel launches dozens of missiles into Iran and attacks its water treatment facilities. And so Iran does the same, and then Iran accuses, you know, the Gulf countries of of participating in these attacks and attacks their oil and gas producing facilities. That could still lead to a very bad outcome. I think the big drop in oil that you saw after um, the MOU was announced, you know, that drop from the 80s to the 70s is because that edge case has been deemphasized as a possibility. It doesn't mean it's zero, but it's a lot lower than it was when it looked like the hostilities were going to break out again. You know, when there was that limited exchange of fire, um, you know, the US attacked some ports in Iran, and Iran attacked some, you know, who knows what they attacked in the United Arab Emirates or some radar station in Jordan or who knows what they did because all this is, you know, disinformation. Um, but the fact that catastrophe has been taken off the board, and look, the Strait of Hormuz is a card that can only be played once. There are going to be pipelines built and circumventions made and rail tracks laid and so on. And um, and again, the real, the real leverage is not Hormuz, it's it's attacking Saudi Arabia's oil producing assets, for example.
What one of the more interesting indicators for me in terms of what's going to happen next may or may not come from the bond market. Uh, here's a CME FedWatch tool predicting a 36% chance of a rate hike by the July FOMC meeting, which is end of July. That rises up to 70% of at least one hike by September. That goes up to uh, nearly 80% by October, and by the end of the year, uh, that goes up to 85%. It actually was 90% a couple days ago. So it's come down a little bit. The point I'm trying to make is that that the markets are anticipating rate hikes this year. They wouldn't be anticipating rate hikes if they thought the Fed would be less hawkish and not respond to heightened inflation expectations. In other words, the pro, I'm, I'm making it, I'm jumping ahead of myself. Maybe I'm, I'm making the deduction that the markets don't believe the Strait of Hormuz is going to be reopened this year. Otherwise, inflation expectations would come down and these probabilities will probably be not as high. Is that fair to say?
>> I would, I would take a different view of those probabilities. I would say >> that um, there is a bulge of inflation that's coming even if things normalize and peace >> is achieved and um, you know, there's a new Fed chair. He gave a very interesting press conference. I think you saw a lot of those numbers swing on the back of that press conference, which I think was perceived by the market to be more hawkish than u perhaps um, was anticipated. And um, anytime you have a new Fed chair um, you have to um, give that that chair some leeway to establish their sort of uh credibility with the market that yes, they're going to stare down at inflation. We'll see just how hawkish the new Fed chair is when um stocks drop 5 or 10% or there's a a market crash of some kind um for whatever reason, because that's when the Fed ultimately intervenes, when things start to break. Um, we'll see. You know, Jerome Powell came in talking awfully tough too um, at the beginning. And so I think the market is reflecting the tone and specifics of what was said at that press conference, not so much the Strait of Hormuz.
Ultimately then, uh, how much does it actually matter for the economy, the US economy in particular, if the Strait of Hormuz remains opened or closed?
>> I think obviously it matters. I, but it doesn't matter as much as we once thought it did. um, and the market is telling us that that situation is mostly resolved.
Okay. What about other sectors? So here we have, for example, helium is a uh, is an input u for semiconductor manufacturing. Most of the helium that South Korea and Taiwan uses, almost half of it comes from the GCC countries, and the Strait of Hormuz is an important choke point. We have not seen shortages of chips yet. I wonder if this will have this and other examples. I wonder if raw materials will eventually be u at a deficit and either push prices up or slow production down. Have you looked into this?
>> Yeah, we, we wrote wrote a whole piece on helium. Um, there's there was an awful lot of helium in the world, David. Um, and before your semiconductor fab will be shorted helium. We, we won't be filling balloons with it. I could tell you that. Mhm. Um, and um, there's pretty sophisticated recycling technologies being installed in these fabs. I think this is a market that will correct itself. Um, the one caveat to helium is, you know, we had this explosion um, in the past 36 hours at Ras Laffan in Qatar. Qatar is the major supplier of helium out of the Middle East because of its LNG trains and some uniqueness there. Um, but, you know, assuming they get a handle on things, then they they ramp back up supplies at a rate at which they said they would. um, helium will resolve itself. The US is a major producer of helium. It's the world's largest producer of helium. There's plenty of it to go around and um, this will resolve.
What about LNG itself? Uh, here is the price of LNG. I'll just leave this on the screen, let you comment on that. Ever since Ras Laffan was attacked a couple months ago, the price has been on the uptrend. It hasn't exploded like it has last year though. So I wonder if uh, the rest of the world that depends on LNG from that area will be at a shortage.
>> Yeah, you're actually looking at um, Henry Hub natural gas in Texas. Yeah, that's not LNG. I can comment on LNG, which would be about $14 a million BTU today, depending on which one you pulled up. Um, that is Henry Hub. >> Um, just based on the curve in my memory of it. >> Yes. Okay. Yeah, you're right. Yeah, that's the wrong chart. Yeah, above the right chart. >> Yeah, TTF is probably what you're looking for or JKM. Um, those would be the two >> tickers. Um, yeah. So, um, I would say that the LNG market is actually pretty well behaved. Um, and not signaling a significant crisis. Prices are almost back to >> pre-war levels without seeing the chart. Um, but once we pull it up, I'm sure >> that will reflect. Yeah. >> EU natural gas. >> Yeah. So, this is in euros per megawatt hour, um, which is a different unit than what you just showed. So the 42 number shouldn't spook you too bad, but yeah, you can see it was trading around 30 to 35 before and spiked above 60 and now it's down to like 42. Um, it's traded in euros per per megawatt hour because um, the primary use case for LNG is to produce electricity. And so that's the way the market >> um, prices um, LNG imports that um, on my screen today um, in uh, in Europe, that same number is $14 per million BTU versus the Henry Hub price of $3 that you had just shown. Um, and and so as a rule of thumb, I suppose, then you could just divide that number by three and you could see what the price, the price would be in the US in those units. Um, I would say we're coming into a critical time for Europe um, refilling season ahead of the winter. They're a little behind. They're they're playing, you know, um, the sanctions game with Russia. Um, and so there's there's a lot of crosscurrents in the LNG market today. And then then the last thing I would say is if you pulled this exact price up for uh, Asia, the JKM contract, you'd see that um, Asia is outbidding um, Europe for the incremental cargo of LNG today, which was one of the more interesting observations from the war. You won't be able to pull it up here in the same unit, so it doesn't matter. But when we normalize across units, um, we can see that since the beginning of the war, Korea, you know, Japan, China, the the Asian buyers of LNG were outbidding Europe, which is pretty pretty interesting.
It seems to me like Europe and many regions around the world, but Europe in particular, seeing higher energy costs, higher LNG costs, and um, the ECB just raised rates. Now, I know that the ECB raised rates because the inflation print is showing signs of either continuing to go higher or is already higher, and they're reacting to past data, but this is a supply shock, not a demand shock. I wonder if this is the right policy given that this is a supply shock.
>> Yeah, I'd long ago given up trying to ascertain the logic behind much of European policy, including geopolitical policy, energy policy, and interest rate policy. Um, I assume that um, the ECB knows what it's doing, sees an inflationary pulse for sure. Not being back integrated into hydrocarbons, the European Union was susceptible to an energy shock more so than say the US or Russia or other countries that are, you know, net exporters. And so I suppose that can make sense in theory, but I, uh, interest rate policy is is sufficiently outside of my domain expertise that I, I don't feel comfortable pontificating on it too much.
That that's all right. Um, do you see the tech sector being impacted significantly uh, by what's happening in Iran currently?
>> No. Um, if anything um, you know, they, the tech sector is going to be the the highest bidder for energy anyway, driving up prices for electricity and natural gas as we're already seeing around the world. Um, the the the biggest input into the tech sector that matters is US natural gas, and um, there's been no blip in US natural gas production. Um, and if anything, you know, these data centers that were built um, in Qatar and various other places um, where they intercepted the gas before it was frozen and put on LNG cargo ships, that they had plenty of gas to pick up on the cheap on on the other side of the wall. So, um, we, we think this is mostly a non-event for big tech.
What about fertilizer prices? Global fertilizer prices have been on the uptrend. I'm seeing various stories of farmers in different places uh, really struggling here. Are we going to see not food shortages per se, but food costs going up because of this?
>> Sure. I would say that um, fertilizer prices are starting to come back in, of course, with the rest of the energy complex after the the war, you know, and the MOU was signed. Um, we're going to see, you know, the rich countries pay a bit more, and some of the poorer countries go without. And so to the extent that there will be some food shortage issues, it's not going to be on the shelves of um, Iowa. It's going to be in the sort of bottom quartile of, you know, global South countries that may have been caught or going through some kind of currency crisis, and they can't get hard dollars to outbid other people for their fertilizer or their corn or their soy um, or their wheat. And so um, that's a tragedy. It's it's a huge tragedy, but for most people listening to your podcast um, I, I don't think it's something they should worry too much about, but again, is certainly an input into that inflationary pulse that we talked about.
Okay. So ultimately, what is your view on oil going into the end of the year? There's several roadblocks as to um, or roadblocks for the Iran deal being reached immediately. One of which is right now, there's a dispute over whether or not UN inspectors can go in and inspect uh, Iran's nuclear facilities. And of course, uh, Israel and Lebanon uh, are still in conflict, and Iran wants a complete ceasefire there as well, which Israel has not agreed to. Uh, so several roadblocks are still in place. Uh, but beyond that, can oil go down on its own, even if Iran and the US do not make a deal anytime soon?
>> Well, what really needs to happen is that there's no huge escalation. So my my first answer to your question is yes. The milestones to watch we believe begin and end in Lebanon. Um, and this is, as you can probably observe, triggering significant questions, debate, outrage um, about the US-Israeli relationship um, in and around Washington and whether Trump made the correct decision. And Trump has been making some interesting remarks about Netanyahu, and Vance has been making some even further remarks in that regard. And so how that plays out, in our view, is not a direct impact on the oil markets, but it is a measure of the risk of that tail event that I was talking about earlier. You know, a a full-blown reescalation. The gloves come off, missiles start flying again, and um, critical infrastructure starts getting hit. Um, and in that case, sure, you know, you could see a spike in oil. Absent that, which is our base case, that that won't happen, you're going to see uh, the oil markets calm and drift lower and achieve pre pre-war prices here pretty soon, all things being equal, which of course, they rarely are.
Is there a reason for why oil doesn't retain its geopolitical risk premium for long? That's what history has shown.
>> Um, every time you, every time you have one of these spikes, the world becomes more resilient. Engines get switched, feedstock alternatives get developed, people switch out of hydrocarbons altogether. Electric vehicles in China, um, you know, coal to chemicals in China, the the whole fungibility part, what we're seeing, and and we showed this plot in one of our recent pieces. If you look at the last three super spikes in oil, just before the global financial crisis, after the war in Ukraine, Russia 2022, and now, if you plot the Bloomberg inflation-adjusted price of oil over that time period, what you're seeing is lower highs incrementally. That elasticity framework, you know, that arc of elasticity is changing significantly for oil. Alternatives are being developed. The market is more efficient. The speed to bring new oil to market is shorter. The quantities of oil in inventory are larger. The market doesn't like it when oil spikes too high because it triggers economic issues, GDP contraction, recessions. And so, you know, we're kind of in that sweet spot now between 70 and 90, where the oil industry likes it. Whether they keep it there remains to be seen.
China, let me just end on this note. China is the world's largest oil importer. Uh, the country imports roughly 70% of its to total domestic consumption. It's also Iran's largest customer. I'm just curious to get your opinion on the Chinese adaptation strategy. Over the last 10 to 15 years, China hasn't had a fracking boom like the US. China doesn't produce most of its energy, like I just stated. But instead, it's done two things. It's hoarded the world's largest strategic oil reserve, like we talked about earlier, and it's transformed its entire national infrastructure to have the world's largest EV production and EV fleet ever assembled in human history. Why haven't other nations followed this playbook?
>> Very few people can copy the Chinese playbook for a variety of reasons. And look, China is a story of coal. Like more than half of China's primary energy consumption is coal. We're doing a deep dive on China for our July Doom Zoom for our Pro tier um members. Um, crude oil is but one input into the Chinese energy complex. They have a very well thought out all-of-the-above strategy. Crude oil, natural gas, coal, hydro, wind, solar, batteries, EVs, nuclear, all of the above. And they have overbuilt a lot of this capacity, and therefore they have a lot of flex in the system, which they just demonstrated. The ultimate real-world pilot of their strategic resilience was was on display for the world to see, and you have to give them passing grades so far.
Okay, good. Excellent thoughts. Thank you. Dune, tell us what you're working on now. And I understand you're not writing solely on energy all the time. So give us a teaser of your upcoming piece and some of the things you've been writing about recently.
>> Yeah, sure. We got a piece coming out this week on fusion and perhaps how like the next SpaceX trillion-dollar IPO might come from that technology. We've got a piece on NGLs and how the natural gas liquids markets fared during the war. Um, we've got a few other things in the hopper like that China presentation that we just um referenced, where we do a deep dive on on all things China. But, you know, everything's at doomberg.com, as you know. We we publish about eight articles a month and a dooms presentation. We publish um four recordings a month over at Classics Read Aloud, which is our new sister publication, a great Substack for those that are interested in outstanding classic literature. Um, you know, well-polished people like yourself. And so, yeah, lots of great stuff happening over at doomberg.com. Thanks for the opportunity to come on your show, David. Um, and really appreciate it.
We always appreciate the opportunity to speak with you, Duneberg. So thank you for educating us. Do follow Duneberg and his work. Links down below, and uh, we'll stay up to date and get Duneberg on again soon. Thank you very much for coming on today. Thank you for watching. Don't forget to like and subscribe.