The Strait Is Closed. America's Oil Shock Has Already Begun

Added: 2026-05-07

[00:00:00]And what is your assessment of really the situation on the ground? For example, the Strait of Hormuz. Are we currently seeing commercial vessels go through? Is it completely closed? What is your take of the the situation?

[00:00:10]Well, we're 60 days into this war with Iran.

[00:00:14]And let's sort of stop for a minute and consider what's happened.

[00:00:18]You know, our gas prices are going through the roof. Yours are much higher than ours, but ours are now moving up rapidly.

[00:00:25]Uh commercial ship traffic through the Strait of Hormuz, this is the narrow waterway through which a critical share of the world's fuel, fertilizer, feed stock uh must pass.

[00:00:38]And uh that the traffic through that strait is down by more than 90%.

[00:00:45]So, that that's not merely a statistic, that's really a warning signal for the whole world.

[00:00:50]When fertilizer doesn't move, crops don't grow. When feed stock doesn't arrive, livestock don't eat. When fuel doesn't flow, trucks don't run.

[00:01:00]Heat doesn't come uh on its own, food doesn't reach the shelf.

[00:01:04]So, I would say, you know, we have nothing short of a of a catastrophe. If you look at the price increases in your grocery stores in the months ahead, it will be worse than it is now.

[00:01:16]Uh but these rising prices will arise or arrive quietly and mercilessly. Your heating bill will go up.

[00:01:24]Uh you will effectively be paying a war tax. The cost of waging war against Iran is not just us. People in India, uh China, Korea, Japan, everyone is going to be in this in this boat.

[00:01:38]And it's going to be worse than anything we've seen before.

[00:01:42]Now, when you look at it from a strategic standpoint, we have to understand something. A civilization that cannot secure its own maritime corridors and energy flows is a civilization at risk.

[00:01:55]And this is why we were talking the last time and we will be talking I think from now on for many many years about resource sovereignty.

[00:02:04]I would say if you're in business right now, you have to pivot from this thing we used to talk about called just-in-time logistics to just-in-case logistics.

[00:02:14]In other words, we we're going to have to stockpile fertilizer, minerals, rare earths, uranium, gold, silver. This sort of thing is now going to be as vital to us as stockpiling oil.

[00:02:28]A lot of people don't realize it, but after the oil crisis in the 1970s, that's when we began building strategic oil reserves.

[00:02:37]Right now, the country with the the strongest and best strategic oil reserve is China.

[00:02:43]>> [clears throat] >> And China is faring much better than the rest of the world as a result of these shortages. Now, that won't last forever, but it's huge and they've got a couple of more months to go before they run into trouble there.

[00:02:53]We're also in in good shape, but we have problems. Very few Americans are aware that we import enormous quantities of foreign oil into California.

[00:03:04]We have no links to California on the ground in terms of pipelines. So, if we're trying to move fuel or refined gasoline or diesel to California, we we have no pipelines.

[00:03:17]We have to put them in trucks. They have to cross the Rocky Mountains and drive down into California. So, California is very much at risk right now.

[00:03:25]And our farm sectors are struggling because we have a a diesel fertilizer cost shock.

[00:03:33]70% of our farmers say they can't afford to buy a fertilizer.

[00:03:38]We've had a more than 50% spike in fuel prices over the last 10 weeks.

[00:03:43]In other words, resource sovereignty has moved to the center and is going to affect everything. And then of course, if you look at markets, uh I think we're headed into a stock market crash at some point. What's been happening is that President Trump has successfully manipulated markets.

[00:04:02]He was on earlier today, and he said, "Well, you know, this is really a mini war."

[00:04:08]I've never heard of that before, but he called it a mini war.

[00:04:11]Then he went through the usual gene, "Well, we've destroyed their navy, we've destroyed their air force." Over Iran has demonstrated pretty conclusively that they can protect itself. It doesn't really need a navy or an air force anyway.

[00:04:24]Uh and destroying the navy doesn't include the multitude of underwater submersibles or small boats that are out there that are robotic.

[00:04:33]I think uh the truth of the matter is that this is a revolutionary change in the conduct of warfare, and what we're learning is that any nation that invests in persistent surveillance, that means surveillance preferably from space, um is going to link persistent surveillance to any number of different kinds of standoff attack weapons.

[00:04:57]Various kinds of missiles, uh various kinds of unmanned systems.

[00:05:02]And as soon as something comes within range, you can destroy it.

[00:05:06]So, I mean, this is this is a fundamental change in the way we've always seen things. So, on on the battlefield, you you usually looked up to see whether or not there was an aircraft in the air.

[00:05:16]Well, today, you don't have to see an aircraft, but you're viewed by everybody everywhere all the time.

[00:05:23]Your position is always known, and with thermal signatures, it's very difficult to hide anybody.

[00:05:29]So, all of these things come together, and we have an enormous uh strategic disaster on our hands if you're Washington, D.C.

[00:05:38]But I think Trump is is discovered that he can manipulate markets. He can say, "This is a mini war.

[00:05:45]Uh this won't last too much longer.

[00:05:48]Uh, the Iranians, they really want a deal. All of that is nonsense, but it's worked. And it's worked, Stein, because the people in New York City on Wall Street that are involved in these trades don't know anything about warfare.

[00:06:03]By the way, the people on Wall Street don't know anything about mining, either, because they've probably never seen a mine.

[00:06:10]Uh, they've never been to the field. One of the first things that you've got to do is you've got to go out and see what you're dealing with.

[00:06:16]Uh, when I first became involved with coal, I got on the plane and I flew to southern Kentucky and I started walking into and out of mines and all over the countryside to understand what I was dealing with. Most people don't do that.

[00:06:29]Uh, so all of these all of these failures in the past and in the present come together and leave people not understanding what's really going on.

[00:06:39]But here's the rest of the story.

[00:06:42]President Trump can't conceal this much longer.

[00:06:45]Uh, two more ships tried to leave the Persian Gulf. They were turned back. We sent two uh, surface combatants towards the Persian Gulf. They were warned off.

[00:06:55]We the Iranians fired warning shots effectively in their direction.

[00:07:00]>> [clears throat] >> And in the meantime, the Iranians took under fire some more oil infrastructure uh, in the United Arab Emirates. And people need to understand that the United Arab Emirates have been allied with and supportive of Israel and anything that it could do that was damaging to Iran for decades.

[00:07:20]So, this has been an opportunity for Iran to pay them back for all the damage that they've inflicted on Iran.

[00:07:26]The real question is, what's next? And I think President Trump is trying to make that decision.

[00:07:32]And the problem for him is that the right decision is not the decision he wants to make. The right decision is to say, "Look, this isn't working.

[00:07:41]There is no good military solution to opening the Strait of Hormuz.

[00:07:47]And I understand that there is a humanitarian question now. We're we're facing famine in many parts of the world over the next 6 to 12 months.

[00:07:56]Uh I don't want to see that. I don't think anybody does. And so, as a result, uh I'm going to suspend our military operations, and I'm going to disengage our forces from this war. We will have to find a different way to resolve our disputes with Iran.

[00:08:12]But there are two problems with that.

[00:08:14]First of all, that demands a certain amount of humility, and humility is a word that does not exist in President Trump's vocabulary.

[00:08:23]And then secondly, uh you know, you've got Israel. And Israel's ultimately the catalyst for this entire war.

[00:08:31]Uh there are no vital strategic interests driving Washington to war against Iran.

[00:08:38]Washington has has gone to war with Iran because that's what Israel and its lobby in the United States and its agents here, its billionaire supporters want.

[00:08:48]And Trump has responded to that.

[00:08:51]But he was misinformed at the beginning.

[00:08:53]He was told this would be quick, three or four days, maybe five, maybe 10 days.

[00:08:58]Uh it'll fall apart. He believed what the Israelis told him. We did not tell President Trump that. When I say we, I mean people in US military uniform or intelligence. But he's in a tough position now because he expected an easy win.

[00:09:14]>> [clears throat] >> He thought the government would crumble.

[00:09:16]Then we went through the decapitation strikes, killed the leadership. That didn't work.

[00:09:21]And so, now we've fallen back on the simple task of trying to destroy Iran.

[00:09:26]Well, this Iran's the size of Western Europe.

[00:09:29]I mean, that's like saying we're going to destroy the Netherlands, Belgium, Luxembourg, France, Spain, Germany, Austria, Switzerland, Italy.

[00:09:40]Really?

[00:09:41]And you plan to do this in what, a few days?

[00:09:44]So, this whole thing is out of control, and the strategic initiative has passed to Iran.

[00:09:50]Because the Iranians can absorb more punishment and endure more pain for much longer than we can.

[00:09:59]Do you think the next logical progression in this war, you know, with Israel being the clear incentive behind it, like you outlined earlier, would be desalination plants, infrastructure, power plants, like Trump already hinted at it just a few weeks ago?

[00:10:14]Yes, I think so.

[00:10:16]When you escalate, [clears throat] one of the things that happens in air and missile campaigns is that you begin to destroy whatever you can find.

[00:10:25]Remember, we've already failed to destroy the underground facilities, where not only missiles and drones are stored, but where they're actually manufactured.

[00:10:34]And these facilities are spread all over the country.

[00:10:38]So, it's very difficult to find them.

[00:10:39]When you do find them, it's very difficult to penetrate them.

[00:10:43]And we're pretty confident, based upon what's happened during the so-called ceasefire, that virtually all of their critical assets have been replenished or replaced.

[00:10:52]Now, we've done the same thing, but I think there was hope that Iran might be too severely damaged to recover. That's not the case at all.

[00:11:02]Apparently, the damage we thought we did inflicted was not nearly as great as we'd hoped.

[00:11:08]So, the Iranians are quite ready to fight, and they I see no evidence that they're going to submit to Israel's demands, which is really why we went to war.

[00:11:19]It's a It's a very It's a very bad thing because of the larger position of the world, and I think that's the piece that people are missing, you know.

[00:11:29]Washington D.C. and New York City, to a large extent tend to run a lot on drama and hot air.

[00:11:38]But the world runs on diesel, you know?

[00:11:41]How do you How do you get people to understand that uh diesel is bread on your table and the steel in your buildings?

[00:11:49]You know, business strategies have to change now. They've got to account for massive physical scarcity of food, feed, fuel, and fertilizer caused by these uh closures.

[00:12:02]People in Washington do not yet completely understand that you cannot print money or excuse me, you can print money, but you can't print uh energy or materials. You can't print the diesel that moves your trucks. You can't print the fertilizer that grows your crops.

[00:12:19]And you certainly can't print the natural gas that powers your factories.

[00:12:23]And once again, we're back to this issue that's very dear to my heart, which is all of the rare earths.

[00:12:30]Uh we got lots of them. There's there The greatest concentration probably in the world is in North America, but that's not the problem. It's refining.

[00:12:39]We've got to refine it. We need to be able to refine our own uranium.

[00:12:43]We don't do a very good job of that.

[00:12:45]These things now have to happen.

[00:12:47]So, where are you going to spend your marginal dollar? On another missile?

[00:12:52]Involved in a campaign that quite frankly, for reasons of geography and topography, you can't win?

[00:12:59]Uh when you're bringing the whole world to its knees essentially economically and financially? That seems rather stupid.

[00:13:07]You're better off putting your marginal dollar into building rare earth refineries. You're better off looking at all the transportation networks, water and rail, as well as air, figuring out what makes the most sense. You need to look at hydrology, hydroelectric power.

[00:13:23]Are there ways to power things that don't require carbon-based fuels? If so, where do you put them? Where are those waterfalls? Where do you where you built these massive dams? Do you put things there to harvest energy so that you can run these refineries? All of these things need to be examined carefully.

[00:13:42]And then you've got to figure out what you're going to do with farmers.

[00:13:45]I mean, 70% of our farmers say they can't even afford to buy fertilizer.

[00:13:51]Uh the numbers of bankruptcies are up by almost 50%. We can't go on this way. So, people ask all the time they say, "Well, Doug, you know, we've heard everything you said. You're the military guy, how long can this last?" I said, "Well, it's a question. Which happens first? Do we collapse financially and plunge into an economic recession or worse depression?

[00:14:13]Or do we simply exhaust ourselves in the Persian Gulf trying to make something happen that can't happen with the tools at our disposal?

[00:14:22]You know, the Chinese have now built a connection into Iran from Pakistan that goes down to the port, I think it's called Gwadar.

[00:14:32]Uh it's on the coast of Pakistan, not far from the Iranian border. In fact, it's about 50 to 60 mi from the Iranian border, the the road.

[00:14:41]That means you can truck things from that port directly into Iran, and you can also export through that port. That port was built by the Chinese as part of a large Belt and Road project.

[00:14:53]Okay, are you going to attack that port now?

[00:14:56]Are you going to attack the ships that move in and out? I mean, this thing this thing can go as far as you want it to for some period of time, but you're going to exhaust yourself militarily, and you're not going to change the outcome.

[00:15:10]And you don't want a larger war that puts you into confrontation with China or Russia or anybody else if you can avoid it.

[00:15:17]So, I I don't know which happens first, but I I they're both going to happen. We're going to exhaust ourselves and we're going to have a terrible financial crisis, much worse than 2008.

[00:15:28]Is perhaps losing this war and also the financial ramification that could occur will occur on the back of this the wake-up call that the West might need for resource sovereignty like you outlined earlier to really reindustrialize, take back the supply chains home and start processing our own critical minerals.

[00:15:47]Well, that's right.

[00:15:48]And one of the questions that we all have in the United States is how much gold do we really have?

[00:15:54]No one really knows the answer to that.

[00:15:57]In theory, we're supposed to have more gold than anybody else.

[00:16:00]But when our European friends asked to uh have their gold repatriated from the United States and most of it is in under the streets of New York City.

[00:16:10]Uh believe it or not, there's a large cache of it under the West Point US Military Academy.

[00:16:16]Then you supposedly have it in Fort Knox.

[00:16:19]Then we're beginning to hear things about, well, some of this gold is uh Uh what did they what did they say? It's not tradeable. It's not pure enough. I have no idea. So, we need to take stock of gold. Now, the interesting part is that I'm sure you're aware of it, there are countries around the world, the Russians included, recently sold some gold in order to become more liquid.

[00:16:42]Uh right now the Japanese are probably going to dump large numbers of our treasuries because they need liquidity in order to deal with threats to the end.

[00:16:52]Uh this is the other aspect of this problem that we haven't really understood very well.

[00:16:56]And that is the de-dollarization.

[00:16:59]That more and more of the world is going to do business in currencies other than the dollar. A lot of people are obviously going to move to the yuan. That's clear.

[00:17:08]No doubt about it.

[00:17:10]And I guess the yuan at some point is going to be more directly linked to gold. I think that's that's the goal.

[00:17:18]Now, maybe there's somebody out there that wants a basket of uh of precious metals as backing. I don't know.

[00:17:25]But, I think gold is going to be the centerpiece of everything. I think gold is already the the effectively the reserve currency.

[00:17:33]Not the dollar.

[00:17:34]I believe Luke Roman makes a very interesting argument that getting yuan from US dollars is actually the easiest through gold. You would buy gold, sell US dollars, and through gold acquire the Chinese yuan.

[00:17:47]Which is an interesting interesting tidbit.

[00:17:50]I think I think Luke's right. I also also personally think the Chinese stock market is a much better place to invest right now for a whole range of reasons.

[00:17:59]And Americans are beginning to discover that. The These are sad developments.

[00:18:04]You know, the underlying fundamentals of any economy are always critical.

[00:18:09]And it's very difficult to find people that are credible that can talk intelligently about those fundamentals.

[00:18:16]But, my perception is, and I think there are others coming around to this, is that our fundamentals are weak.

[00:18:23]They're not strong.

[00:18:25]So, the future does not look great. But, the future would be better, let's get this straight right off the bat, if we suspended operations in the Middle East and got out.

[00:18:37]And I don't care how President Trump wants to dress this up uh to tell the world that he's a great humanitarian who cares about people and therefore I'm ending this. That's fine with me.

[00:18:48]It's also fine with me if he says, "Well, we've done all we can. We'll revisit this at some point in the future, but not this year. We're leaving." That's fine with me. But, this ought to stop, Stein.

[00:19:00]It really ought to stop.

[00:19:03]I would love to talk about the disruptions that we're currently seeing in the energy market specifically.

[00:19:08]Depending on which analyst you ask, we're missing anywhere between 12 to 15 million barrels a day seems to be the consensus. Recently we saw a strike on the Fujairah terminal which was previously transporting about 1.8 million barrels a day uh past the Strait of Hormuz. It was a a bypass route.

[00:19:26]Do you know what damage occurred to the terminal and does that add on to the to the you know the missing barrels that we already had before this?

[00:19:34]No, I don't, but I would expect that whatever damage has been done there will be far more damage coming in the future.

[00:19:41]You know, you look at the East-West pipeline that runs from Al Shuqaiq effectively in that vicinity all the way to Yanbu on the Red Sea.

[00:19:52]Uh I've driven that pipeline and it's above ground.

[00:19:56]There's nothing confusing about it and disrupting that would be easy.

[00:20:03]It would take a couple of well-targeted intermediate-range ballistic missiles and you're out of business.

[00:20:10]That would be catastrophic.

[00:20:12]Then the Saudis have nothing to export anymore.

[00:20:16]And it would take a long time to repair that damage. So I think these kinds of things are doomed if this war continues.

[00:20:23]And I don't see why there is an unwillingness to admit this.

[00:20:28]I mean they the Iranians have been very straightforward. You continue to do this to us, we will do this to you.

[00:20:34]And they have followed through exactly as they promised. So if we know what can happen, let's look for a different way to do business in the future, but that's not the attitude in Washington.

[00:20:45]You still have lots of foolish people demanding, you know, this dumb idea of unconditional surrender.

[00:20:51]And that really means unconditional obedience to Israel.

[00:20:55]And that's not going to that's not going to happen.

[00:20:59]What I find incredible is that the Brent futures only trading at about 110 $110 a barrel, WTI at about $102 a barrel. When you walk through the amount of barrels that were missing in the Middle East, how long it takes for one of these very large oil tankers to actually transport from there to, for example, Europe or Asia, it sounds like we are looking at a barrel of a significant problem that's not being recognized by the futures market right now.

[00:21:28]Well, that's because there's a gap between physical reality and what I would call paper reality.

[00:21:34]Uh and remember, these people in Wall Street are always keen to listen to the president.

[00:21:41]Well, the president says this will be over in a few days. And what happens?

[00:21:45]Zoop, up goes uh the stock market.

[00:21:48]Uh oh, the you know, this is minor. This is a mini war. What happens? Things go up.

[00:21:55]You can only do this so many times, and at some point the physical reality catches up.

[00:21:59]And I think that's where we're headed, and we're looking at $200 a barrel before we're through, I think.

[00:22:06]I think we'll be at 150 before the summer's end, and probably by the end of the year close to 200, maybe more.

[00:22:13]And you know, the other thing is we have to look at the time lag.

[00:22:17]Uh most of the tankers that filled up and left uh the Persian Gulf have arrived where at their destinations.

[00:22:27]There's nothing else coming.

[00:22:29]So, you have to take that into account.

[00:22:30]There There's nothing to replace it.

[00:22:33]We have large numbers of tankers now in the Caribbean Ocean trying to tank up at our terminals there.

[00:22:40]And people in Washington are already talking about banning the export of our oil so that we don't run into the same shortages that is a that are afflicting everybody else. So, there's no easy solution unless you stop the war.

[00:22:56]That's the thing. Come on. That ought to be the demand. Everybody ought to be in Washington D.C. in front of the Oval Office saying, "Stop the war.

[00:23:06]Find another way."

[00:23:08]And that's not happened yet, but the Americans will eventually come around to that. Unfortunately, there's going to have to be a lot more pain before they get there. Our pain threshold is higher than many people think.

[00:23:21]Right now, you know, if you're paying more than $5 a gallon for super, you know, if you drive a high-end automobile, that's no big deal. When you pay 10, that's a big deal.

[00:23:34]If you're paying four for something else, and then you have to pay seven or eight, that's a very big deal, especially if you're on a a fixed income of any kind.

[00:23:44]And then we haven't even talked about the numbers of jobs that are lost.

[00:23:48]And and many companies or corporations in many places in the world that are heavily involved in plastics and other things are shutting down. Not not for a month, not for 2 weeks, but shutting down.

[00:23:59]And then you got to go back to the the oil wells in the Persian Gulf, and if you're not extracting oil, eventually the pressure drops, and you deal with the water getting into the system, and it no longer becomes profitable to reopen the well. Now, maybe they can drill new ones in the future, but that requires investment. Investment capital flees crisis zones.

[00:24:24]So, who's going to come in there and invest? How do you stop this from happening in the future? And if you listen to the Iranians, they understand this. They want guarantees of no future conflict.

[00:24:35]In other words, if they sign on for a set of terms, they want those terms to be permanent.

[00:24:41]And if you want them to give up control of the strait, which they did not have before this war began, they want certain guarantees. I makes perfect sense to me. I agree completely, but for some reason, everybody says, "Well, that would be defeat." Well, uh maybe it is. Call it whatever you like, but the world needs to get back to business.

[00:25:02]We need to restore our standards of living, and our standard of living is falling.

[00:25:07]And it's getting worse with each passing week.