Global Recession Now Inevitable? (Uncut) 04-18-2025

Global Recession Now Inevitable? Oil Will Collapse, Here’s How Low | Doomberg

A war is not just about how much pain you can inflict on your enemy. It’s about how much pain your enemy can absorb. China has a far better chance of winning the trade war than the current contemporary media coverage perhaps is giving them credit for.

First of all, they’ve had years to plan for it. Oil’s going to 50 bucks. Like you just pulled it up.

I don’t know who’s buying oil at 61, but they don’t like money. Trump wants cheap oil and he’s going to get it. This helps China, by the way, because China is short oil.

And so China is one of the beneficiaries of cheap oil as well. Brent crude is down 13.5% since the start of the year. WTI is down about 16% over the same period.

A lot of volatility in the energy markets. What is energy pricing and what is it signaling for economic growth? We’re talking about what’s next for our economy and for energy with the next guest, Doonberg. He is a head writer of the Doonberg Substack, an expert on the energy markets and geopolitics.

Welcome back to the show, Doonberg. Always good to see you. David Lin, my friend, looking as dapper as ever.

Can’t wait. What a time to be talking energy in these markets. Thank you.

A lot of news happening. A lot of volatility in the news in the markets. That is, let’s start with just broad strokes.

You told me offline China may be winning this trade war. Let’s talk about the trade war itself, which may be the source of this volatility. And then we’ll talk about exactly what you think is going to happen with the energy markets.

Why is China going to win this trade war? At least what it’s looking like now. Sure. Our view is that China has a far better chance of winning the trade war than the current contemporary media coverage perhaps is giving them credit for.

First of all, they’ve had years to plan for it. Second of all, if you look at the distinction between what we buy from China and what China buys from us, China is far more able to find alternative sources for the things they buy from the US. They have been purposely diversifying their commodity inputs, South America, Africa, the rest of Asia.

So things like soybeans and LNG and coal, these things can be acquired from other countries. It might come at a slightly higher price and the rerouting of those commodities might add to the friction costs of their delivery to market. But what the US buys from China, aside from the cheap toys and the commodity stuff that nobody’s going to miss, there is a whole menu of super important, critical supply chain inputs that China holds a monopoly on.

They have proactively worked to gain monopoly status in these critical minerals, for example, magnets for electronic motors and certain metals and alloys that have applications in military supply chains. We have been highly irresponsible in allowing US-based and Western-based companies to offshore even the most critical supply chains to China, and they have greedily accepted that weakness that we have offered them. And there’s another thing to consider.

Trump’s first order calculation is that we could, quote, inflict more pain on China because they export more to us than we export to them. But a war is not just about how much pain you can inflict on your enemy, it’s about how much pain your enemy can absorb. And look, China runs a dictatorship.

It runs a surveillance state. And by definition, unlike the sort of mostly democratic United States, the population is going to absorb far more pain than we would before rising up. And so I just whenever I see sort of this unanimous belief, especially amongst the MAGA right, you see them on Twitter, that Trump has snookered China and we have them cornered and what a great move it was to call off the terrorists on everybody but China.

I think China is far more ready for this war. One of the things the US always does is it overestimates its likelihood of winning wars quickly. And, you know, bluffing China is generally not a glorious track record.

So I just think this could go in a different direction than perhaps markets are currently pricing in. China struck back with 125% retaliatory tariffs on US goods. This comes after Trump enacted 145% tariff.

And it’s just, yeah, neither side is backing off. How far could this go? This is basically embargo type territory, right? I mean, why don’t we just go to 5000% tariffs and call it good? I think there’s a broader deal to be had, whether Trump has perhaps overplayed his hand to the point where the Chinese have decided that, you know, look, they’ve observed what happened with Russia. We’ve driven Russia into China’s arms.

Russia and China are perfectly complementary in the types of goods and commodities that they produce. Together, they dampen their own exposure, their risk profile in a way that perhaps didn’t exist before the war in Ukraine. And China has observed the sanction strategy imposed against Russia and has decided to prepare itself for worst case scenario risks such as these.

And I just think the marginal commentator or the consumer of news is perhaps overestimating the US’s relative strength in this war and China’s ability to absorb pain and to inflict some back. And, you know, anytime you have high stakes negotiations like this, the first thing you have to ponder is who has escalation dominance, who can go all the way to the wall for the longest period of time. And I think China has that in this case.

And they care less about money than we do. They care about power and control. It comes down to also who has more trading partners right now.

China could swap their trading lines from the US with somebody else, but so can the US, could they not? Well, not in the supply chains where China has monopoly, rare earths. Like it’s not just the mining of rare earths. It’s the processing of rare earths into purified metals.

China dominates that. China dominates the solar supply chain. Not that Trump cares too much about that, I suppose.

You know, China has gallium monopoly. You know, there’s all manner of goods. There’s a reason why, by the way, if you look carefully at what Trump is doing, this tariff war is all about preparing for war with China.

The US Department of Defense, the Pentagon has lamented the offshoring of critical militarily sensitive supply chains for decades. Trump has vowed to fix that. I think the Pentagon fully supports him in this initiative.

And if you look at what he is tariffing outside of China, aluminum, steel, automobiles, these are things that have, they’re very military adjacent supply chains, right? You need those materials in order to build tanks. And you convert car factories to military vehicle factories during times of war, which Germany is doing today. So there’s a reason why China proactively decided to do their best to dominate the global automotive market, because it is a militarily adjacent supply chain.

And that’s what Trump is trying to undo. Like this, this is why he wants to get out of the war in Ukraine, but he views China as the far larger threat, correctly or incorrectly. I, whatever you think of Trump, it’s important to try to understand what he thinks.

And I do believe. And if you look at Pete Hegseth’s comments about China and their abilities and how the US is behind, there’s, there’s borderline, not panic. Panic is too strong of a word, but there’s deep concern amongst Pentagon officials about the fact that we have outsourced much of our critical supply chains to China and they have beat us to the punch.

How much of this is actually 40 chests on the part of Trump? Take a look at my screen here. You told me offline, well, not offline. You told me in a couple of interviews ago, a couple of months ago that Trump wants to cripple Putin by lowering the energy price.

Here is, well, that’s the 10-year yield. Let’s take a look at the energy price here. We’ll talk about what had happened on April 4th.

That was the escalation of the tariffs. That was the OPEC announcing more production, OPEC plus that is. But just generally speaking, if the trade war progresses and we can expect oil, if we expect oil prices to drop more on the escalation of the trade war, wouldn’t that be bad for Russia? Isn’t that going to play out in the U.S.’s favor? The time where that would have been bad for Russia was three years ago when the war broke out and before Russia had reoriented all of its supply chains and became largely self-sufficient in critical goods.

Russia’s a huge country, blessed with a huge resource base. They know how to make stuff. They’ve survived many, many wars.

And so it’s going to hurt Russia by that nearly as much as it would have three years ago. They have diversified their budget. And I think a deal was cut.

We can talk about OPEC later, but Trump wants cheap oil and he’s going to get it. And so I think this helps China, by the way, because China is short oil. And so China is one of the beneficiaries of cheap oil as well.

And so when I look at oil, I think that’s an OPEC story. I don’t think that’s a China tariff story. And those giant cascading red bars that you see on your screen, that happened when OPEC put oil on a burning tape out of the blue, which really made us sit up in our chair and say, whoa, what’s going on? Oil went down 7% on the 4th of April.

OPEC announced more production on the same day that Trump escalated tariffs. Yeah, it seemed like the fix was in, didn’t it? I mean, that was an odd day for OPEC to announce that. Absolutely.

So, you know, this is good for Trump. This is also good for people like me who drive a gasoline car, where I’m just speaking on behalf of all people who own vehicles. Consumer expectations for inflation are up.

This is partly the reason why the Consumer Sentiment Survey was so bad last month. But this escalating trade war, I’m wondering if that’s going to actually lower inflation expectations if this continues. We are in a recession.

We have plenty of industry executives that we, you know, check the channels. And for many, many weeks, we’ve been hearing that supply chains are seizing up, reminiscent of COVID, perhaps not to the depth that we saw during the COVID response. But supply chains are seizing up.

Tariffs are disrupting supply chains. Who wants to own title to something that has to cross a border in this environment? You don’t know what that price is going to be, who’s going to pay it. Can you pass it on to your customers? And when there’s huge uncertainty in just-in-time supply chains, you get seizure, you get lock up.

And we’ve seen that. There’s going to be a recession. I think Trump is gambling on a V-shaped recession.

We’re on the back end of it before the midterms. We have a smaller federal government with less regulations and cheaper energy. And the tariff wars will have been, you know, successfully completed.

That’s a gamble. He has a window of political opportunity where he has largely still strong public support, the classic honeymoon period after becoming president. We’ll see if there’s a timing mismatch between what he thinks would be a victory in the tariff wars and the U.S. emerging from a recession in time for the Republicans to not get wiped out in the midterms.

Are there any second-order effects that this trade war may have on the commodities markets and oil in particular that maybe some people have overlooked thus far? It’s not bullish for demand, that’s for sure. And so, look, I’ve been on your show multiple times. We’ve tried to, you know, talk down this cheap oil nonsense.

And, you know, I’ve been cautious on the price of commodities. I believe last time we spoke, I said that Trump was bearish for energy prices, which is bearish for equities, which is, you know, bullish for volumes. Great for consumers like you, like you pointed out.

Trump is not good for oil prices. Look, the oil and gas industry builds stuff during Republican administrations, and then they make money during Democratic administrations. That’s just the nature of the beast.

It’s forever thus. I’ve been in and around this industry for decades. There will be, Trump will give them some candy.

They’ll get long-term leases of federal lands, and they’ll refill the Strategic Petroleum Reserve, termed out in a way that they have guaranteed profits, and they will be taken care of. But oil’s going to 50 bucks. Like, you just pulled it up.

I don’t know who’s buying oil at 61, but they don’t like money. Trump wants $50 oil. The Saudis have agreed there was clearly a deal with OPEC, which I think we should talk about.

That’s a shocking day to announce that. In my view, it’s the end of OPEC as a functioning cartel that has the ability to manipulate crude oil prices higher. Yeah, tell us about April 4th.

What happened? Why is that the end of OPEC? So April 4th was peak panic in the S&P. Everybody was shocked by Liberation Day and the size and scale and depth of the tariffs. And there was blood on the street, as you would say.

Classic sort of panic sell. And into that tape, OPEC announces that they are bringing forward the release of previous production cuts, basically accelerating production into a slowing economy. And it crushed oil prices, as you can see on the screen.

You don’t do that unless you’ve cut a deal with Trump. And look, Russia, Saudi Arabia, and the United States have been engaged in high stakes diplomacy for weeks. The cover story for those meetings, of course, was the war in Ukraine.

But in reality, those are the three largest oil and gas producers in the world. What the three of those countries decide to do together is going to determine the fate of energy prices in the medium and long term. And something was decided behind closed doors.

And look, the history of this is the contemporary coverage of what’s going on never quite matches what historians later discover what was really going on. Something happened in Saudi Arabia between these three massive energy producers. And I think Saudi Arabia put the knife to OPEC.

I don’t know how OPEC continues to exist. You know, its whole effort to artificially inflate crude oil prices was undone by co-product economics in places like the Permian, where yes, they’re producing crude, but they’re also producing natural gas liquids and natural gas. And those could be given away at their cheap prices because crude was artificially high.

Well, people started substituting crude with those very products, either by changing the molecules or changing the engines, and that undercut the demand for crude. So as OPEC was pulling demand from the market, natural demand for oil was also being undercut molecularly and by swapping engines. And ultimately, OPEC’s very existence made it impossible for it to continue to exist.

And functionally, it no longer does. Who is going to take OPEC’s place, if anyone or any bloc? I mean, I think Russia, the U.S., and Saudi Arabia are going to determine the fate of energy prices going forward. Look, $50 oil is fine for many producers.

It’ll hurt some of the more levered producers and some of the, you know, those on the higher end of the cost curve. Russia will be fine at $50 oil. Saudi Arabia will be fine at $50 oil, depending on a few other parameters.

And China will love $50 oil. So there’s a grand bargain to be had here, perhaps. I don’t know what was agreed to behind closed doors, David.

It’s just one of those headlines where you sit up in your chair and you think, whoa, this is important. Something fundamental has changed. And it was reminiscent of the price war declared by OPEC and OPEC Plus in 2014 to try to put the shale producers out of business.

That was a momentous day. I remember it well. You knew something had changed.

The pieces on the board had changed. That was a very similar feeling day. Like, you’ve been around markets long enough.

You had to know that that was not a coincidence, that of April 4th of all days, this is where they pour hot oil on a tape already on fire. You know, this is a change in trajectory that everybody needs to take serious note of. Yeah, because Trump already announced prior to April 1st, remember, he said, I wasn’t going to announce reciprocal tariffs on April 1st.

I don’t want people to think it was a joke, right? He purposely delayed it to the day or the day after. So people have plenty of heads up to make any announcements on the same day. Anyway, let’s take a look at oil surplus.

Global oil surplus to persist in 2026 as demand sags, says the IEA. I think I know what you’re going to say to this, but I’m going to ask you to respond anyway. The IEA slash forecast for global oil demand this year amid the brewing trade war and its first detailed assessment of 2026.

The advisory major economies projected chopped projections. Yeah. For 2025 demand growth, 300 barrels a day of supply, almost a third to 730,000 barrels a day, according to a monthly report released on Tuesday.

Half of the reduction was concentrated in the US and China. So, you know, this is a huge drop in demand. Consumption growth will be even slower in 2026 at 690,000 barrels.

And where did they? Yeah. Market slump takes a toll on oil. US drillers, the IEA, lowered estimates for new supplies outside the OPEC countries this year to 200,000 barrels a day.

By 200,000 barrels a day, rather, to 1.3 million barrels a day. So do you agree with the projections, both in the demand and supply side? Yeah, I think that’s probably correct. I think they’re playing a little catch up in their analysis.

One of the big challenges with this entire piece and with this whole line of thinking, and I see it on FinTwit and in contemporary media, they’re analyzing crude oil as though it’s a standalone product, unimpacted by other energy sources. And one of the reasons why demand for crude oil is going down is because they’re using natural gas and natural gas liquids to displace the work that burning crude oil had done previously. Be it LNG for long haul trucking in China displacing diesel demand.

Be it ethane in ethane only crackers displacing demand for NAFTA. The tsunami of clean burning, dirt cheap, light hydrocarbons coming out of co-producing regions like the Permian is dragging demand for crude down. A week before this April 4th announcement by OPEC, natural gas was trading for $23 a barrel oil energy equivalent and NGLs in the US was trading for $46 a barrel energy equivalent and crude was at 70.

If I can switch an engine and capture a 100% arbitrage or a 50% savings, I’m going to do that and it doesn’t take much. Look, 750 or 730,000 barrels a day sounds like a lot. It’s 0.7% of global demand.

It doesn’t take much in the way of switching to drag crude oil prices lower. In the long run, all hydrocarbons will trade for the same price corrected for energy content and logistics. There’s a tsunami of cheap hydrocarbons.

We just need to switch the engines and we don’t need to switch many of them for the arbitrage to close. One of the fallacies of pieces like this is they automatically assume that the observed decrease in demand for crude oil, which is a subset of oil, is due wholly to the economy. When in fact, the demand for crude oil is slipping because of switching and that’s not considered in this document.

And I think if your field of analysis for oil is limited to crude oil only, you are missing seriously important trend shifts under the surface that are actually determinative and you might get a false read on the global economy based on arbitrages being closed in the energy sector and changes in demand for crude oil not meaning what they used to. It’s like counting rigs and thinking that is what it used to mean. No, because you’re not correcting for advances in technology and how much incremental oil you could get out of a rig.

And so there’s a very superficial first order level of analysis that organizations like the IEA does and that many so-called energy experts on social media cling to. But you have to be aware of what’s changing. We just put out a promotional offer for new Doomburg subscribers.

If they subscribe to Doomburg, they’ll get a 64 minute webinar called Hydrocarbon University Fundamentals that every energy investor should know. We go through this converging trend, the trend from coal to crude oil to natural gas liquids to natural gas. In the long run, all these things will equalize in price.

And crude oil is the most expensive product on the board. So it’s the one that people are going to target for switching. Okay.

One thing that I haven’t read, at least, well, I haven’t come across is that people haven’t been talking about the possibility of oil tankers stalling or not being able to deliver because of supply chain issues or because maybe it’s too expensive to charter freights across the ocean. Basically what happened during the pandemic. Is that in the cards? I don’t think so.

I’ve seen similar concerns. Part of the deal that may have been cut with the Russians and the Saudis is that the sanctions on the so-called Russia’s shadow fleet might be lessened a little bit. Europe probably won’t play ball in that regard.

I don’t think I’ve not yet seen evidence that tanker issues are on the board. Look, the only thing that could change the trajectory of prices. I want to be 100% clear is war with Iran.

If we have a war with Iran, you will see a short-term spike in the price of energy. You should not try to gamble on when that war will arrive. It’s far better to try to fade those spikes because they always fade.

So you wait for the spike, wait for the worst of the news to be over, prices come down a fair bit, and then you buy six or nine months out of the money puts and you’re going to have a pretty good trade because they always fade. Why would oil spike if Iran goes to war with the US or anybody else? If we’re launching high-powered missiles and weapons all over the Middle East, then you’re talking about tankers not willing to sail in various seas. The classic war premium, if we see a kinetic hot war between the US and Iran, of course, oil prices are going to spike.

Is it fair to say then that the oil and energy markets are not pricing in a hot war potential between the US and China on the back of escalating trade wars then? I don’t see it. You know, we do have some concerns in that regard, again. But you show me on the WTI chart where people are pricing in more risk.

Yeah, because people were talking about, you know, this trade war escalating into full-scale hot war, but the markets don’t seem to think that’s, at least the energy markets aren’t thinking that’s the case. I don’t know about the stock markets, but yeah. Yeah, I agree.

Okay, let’s take a look at some other forecasts. Goldman Sachs said oil could crash below $40 per barrel this year in an extreme scenario. The global economic slowdown and an unwinding of OPEC plus output cuts.

$40, is that a bit low for you? Does that make sense? No, if I see too many of those headlines, I think we’ll be close to the bottom. That’s sort of a classic. That’s not the type of headline you see at, you know, at the top, let’s put it that way.

And so, you know, Goldman Sachs, there’s a lot of really smart people who work there. But when I start to see projections like this, one wonders whether the bottom might be near. Our base case equilibrium price for oil is around $50 to $55 a barrel.

At that level, natural gas producers in the US can make money and LNG exporters who use natural gas in the US as their product can land it in Europe for around $10 a million BTU and make money as well. That’s kind of the gating function right now. All these markets are interconnected and fungible in the medium term.

And so I think much below $50, then you’re going to see people curtailing supply. And don’t forget, $50 today is not what $50 was five years ago. We’ve had this bout of inflation in between.

$50, you have to think of $50 as more like $30 oil or $35 oil a few years ago. And that’s getting below the breakeven price of production for most people, unless natural gas becomes more expensive, in which case the Permian’s breakeven price on oil comes way down. And that’s a whole different ballgame that we wrote a piece about as well.

Yeah, Goldman’s base case is actually in line with yours. $55 WTI and $51, sorry, $55 Brennan and $51 WTI. In an extreme case, they said $40 a barrel.

It would basically mean an unwind of global growth, a full unwind of OPEC plus cuts. I mean, what would need to happen for that kind of a scenario to play out? Sure. I think one thing that they don’t mention in this piece that we have on our radar that would drive prices to perhaps those levels is a regime change in Venezuela and an unlocking of the massive hydrocarbon.

Look, Venezuela has the largest proven reserves in the world. It’s a basket case domestically. It used to produce 4 million barrels a day.

It barely produces one today. With the most advanced technology of the chevrons and the supermajors are assembling right next door in Guyana. If we see a regime change, if Maduro gets knocked over, which by the way, the US is hopefully calling for and we wouldn’t be shocked if we see it.

That’s the kind of headline that could be the next down draft because that’s a huge amount of supply that has been, quote, artificially taken offline that is relatively easy to exploit. And it’s right there along the US Gulf Coast, heavy crude, just what those refiners like to process. So that’s one that’s not in that goal.

At least I didn’t see it as I was scanning it. That’s one milestone to look for where if you’re thinking about positioning a regime change with a sort of US friendly puppet installed in Venezuela, which of course will be marketed quite differently in the propaganda will be all about democracy and overturning a dictatorship and there’ll be all kinds of stories about all the torture and all the prisons and things like that we see all the time. From our perspective, from an energy perspective, there’s millions of incremental barrels per day of potential crude to be brought out of Venezuela in record time.

And that would be pretty bearish for oil prices as well. If there is a regime change, what would need to happen for a new regime to rebuild infrastructure and get oil production back up at the same levels? I mean, Chevron’s been in there for a century. They know what to do.

They know where to go get it. There would have to be, of course, security and the US military would, of course, be playing a significant role. Look, you have all the supermajors assembled next door in Guyana.

I think that’s important. In the oil and gas sector, you need a certain critical mass of companies and technologies in an area to fully exploit that area. And unless you have it, you don’t.

So Argentina is a perfect example. They have this amazing shale resource down there, Vaca Murta, and for years it was underdeveloped. And now all of a sudden under Mele, people have some confidence and there’s a crowd assembling.

And once you reach a certain tipping point in services and pipeline companies and midstreamers, and you have this whole armada right next door in Guyana, in disputed territory, by the way, that Venezuela claims as its own, which is the spark that you would need to have the sort of the escalation to topple the current president of Venezuela. They’re all right there. And so the incremental cost of just looking next door, this is the opportune time to do it.

And so when we look, we were not condoning it. We don’t think this is the proper practice of foreign policy. There’s all manner of ethical issues and national self-determination issues that those have never mattered in the past.

I don’t know why they would now. If you ask me what is a bearish development that could make the Goldman Sachs worst case scenario risk materialize, that’s one of them. But by the way, it wouldn’t last long because I think people would would curtail.

They would take production offline. The industry is not the most disciplined, but at those price levels, they would they would be forced, I think, to take some action. OK, well, let’s go back to Iran now, since we’re talking about we were talking about bearish cases.

Let’s revisit your bullish scenario. This is this is from March 30th. Trump threatened to bomb Iran if it does not make a nuclear deal.

As you’re aware, Iran has in the last couple of weeks rejected Trump’s proposal to come to terms with the nuclear deal. We’ll see how things develop there. But Trump threatened at the end of March, rather, to bomb Iran and impose secondary tariffs if Tehran did not agree or come to an agreement with Washington over its nuclear program.

Trump’s first remark since Iran rejected direct negotiations with Washington late March. He told NBC News that Iran and U.S. officials were talking, but did not elaborate more. What is what why would he make a remark like that? That’s Trump being Trump, I would say.

It’s never quite as it seems. He’s all over the place, as you know. The grand bargain I think he has in his head is peace in Ukraine for peace with Iran.

Russia facilitates a nuclear deal. Iran eliminates its nuclear weapons program. Maybe it gets a civilian nuclear reactor set from Russia that Russia operates in overseas.

Russia provides Iran with defense umbrellas. And and in order to sort of run cover for what is acknowledging basically a defeat in Ukraine, Trump has something to offer the American people for a grand bargain with Russia, which is we’ve eliminated the threat of a nuclear Iran. We’ve secured Israel’s peace and prosperity.

And now we could all focus on China. And so there’s a grand bargain there to be had. And by the way, if you don’t think China is going to be in a hot war, maybe they come to a sort of a detente over Taiwan with the U.S. and settle the trade war.

While China is pretty happy with a peaceful outcome in Iran, too, because they get an enormous amount of oil from Iran. So our base case, our hope is that Trump is angling for the grand settlement with no wars because he does brag about not ever having started wars. And in his first term, he didn’t to his everlasting credit.

And he is trying to end the war in Ukraine again, as clumsy as he might be going about it to his everlasting credit. At least he’s trying to stop the war. A world where you have peace in Ukraine, peace with Iran and peace with China is a war where the U.S. can reindustrialize with cheap energy prices.

And it’s kind of, I think, Trump’s dream scenario. And I think that’s what he’s working for. I hope it’s what he’s working for, because a war with Iran would be disastrous.

And a war with China would be even worse. And so let’s both pray that neither of those circumstances develop. On Taiwan, because you mentioned Taiwan.

People have been talking about the possibility of China now moving more aggressively towards Taiwan, because if we get a complete decoupling between the U.S. and the Chinese economies, then in theory, China doesn’t really need to deal and or negotiate with the U.S. anymore. They’re more free to do whatever they please, which is to move on Taiwan. Does that logic make sense? Yeah, but I have a little bit of a nuanced take on it.

What China is really racing to achieve is the ability to produce its own semiconductor chips. And once it has that, and it’s getting very close, then the risk of, quote, moving on Taiwan becomes far less of a risk for China and far more of a risk for the rest of the world. Because if China is self-sufficient in semiconductor chips and the rest of the world is heavily dependent on Taiwan, there is a real window of opportunity for China to move on Taiwan with maximum pain for the rest of the world before the rest of the world becomes self-sufficient in semiconductors.

And look, we’re writing this in a piece. It’s a bit speculative, but in the latest exercise, the PLA published a very disturbing video, which few commentators have picked up on, but what we’re going to write about. And in their war games drill, they showed a video of the PLA simulating the destruction of Taiwan’s largest LNG import terminal and one of its largest natural gas storage facilities.

Of course, the two are very related and nearby each other. And if China did take out this facility, it would cripple Taiwan almost immediately. If they just announced an embargo on Taiwan, no LNG carrier is going to go anywhere near a war zone.

It’s basically a giant floating bomb as it is. And so Taiwan imports 98% of its fossil fuel needs. It imports all of its natural gas and it shut down its nuclear power plants and it’s heavily dependent on coal and natural gas.

It only has 11 days of natural gas supply domestically. And for the PLA to provocatively publish a video like that was a strong message, I think, to the U.S. and to the Taiwanese leaders that we can knock out your energy sector. You know, maybe the missile technologies have been exchanged with Russia and a Resnik missile or two is put into a import terminal like that and then suddenly you’ve crippled the country and the war would be over rather quickly.

This is the scenarios that we worry about that a hot war developing between the U.S. and China would not quite go the way we think it might. You know, the U.S. has not won a war in a very long time, David. And it’s weird that we keep getting into them.

Well, what do you mean the U.S. has not won a war in a very long time? Can you elaborate? Would you name me the last one we won? OK. I guess Iraq, I suppose. We won the kinetic part of the war, but we lost the peace.

Sure. We got run out of Afghanistan. Right.

I mean, I guess Granada counts, but, you know, we’ve lost the war in Ukraine. NATO has lost the war to Russia and Ukraine. We get into these wars thinking they’ll be quick and easy.

We overestimate our abilities and then we get stuck. You know, we got run out of Iraq. We got run out of Afghanistan.

We’ve got run out of Vietnam. We’re going to get run out of Ukraine. The war in Ukraine will be settled militarily if a big, large peace settlement that I just described is not achieved.

And yet here we are talking about going to war with China and they make all of our military supply chains. It’s crazy. Final question then.

Since you brought up Ukraine, what happens to commodities and energy if and when the war in Ukraine gets resolved? Any impact at all at this point? Sure, it’s bearish because supply comes onto the market. You know, assuming it gets resolved relatively peacefully, diplomatically, I guess is the word that I’m thinking. And that it’s not just an imposition by military force of Russia’s objectives.

And we see a lifting of the sanctions and all of the frictions that have been imposed upon Russia. That in isolation would be bearish for energy prices, for sure, because Russia is a very large producer and anything that brings more molecules to market dampens the price. Well, here’s your sub stack.

I encourage people to check out Doomberg on, you know, I’ll put the link down in the description below. Here’s one of your recent pieces as a preview. Early thoughts on how to play energy in a post-OPEC world.

We talked about the post-OPEC world a little bit. Can you summarize this particular piece for us and what we can find? Yeah, the heart of this piece is the conjecture that natural gas in the U.S. will become more valuable than oil. There’s a huge amount of natural gas in the Permian.

Today, natural gas is the nuisance that is given away in pursuit of oil, which has been artificially propped up by OPEC. In a world where natural gas is more valuable than oil because of AI demand, for example, oil could become the nuisance that is given away by the incremental driller in the Permian and you could really see a crash in prices like Goldman articulated. That’s why I pointed that out as the one hedge when we talked about the Goldman article.

But if you read that piece and the introduction to it, at least you’ll see the type of work that we do. If anybody listening subscribes to Doomberg and it’s not for you, we have a 100% refund policy. The last thing we want is unhappy subscribers on our rolls and we’ve always refunded everybody 100% of their subscription if they express disappointment with the product.

Well, I encourage people to check it out. Doomberg sub stack link down below. Thank you very much, Doomberg.

We’ll see you again soon. You bet, David. Excellent as always.

Really enjoyed it. Yeah, really enjoyed it as well. Thank you for watching.

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