Josef Schachter: Imminent Gasoline Shortages, Tank Bottoms & ‘Much Higher’ Oil Prices for Longer
Palisades Gold RadioShow Notes
Stijn Schmitz welcomes Josef Schachter to the show. Josef Schachter is Founder, Schachter Asset Management Inc. Schachter clarifies that the current energy market tightness is not a crude oil shortage but a severe refining capacity problem, particularly impacting Asia. While US production has surged to 24 million barrels daily, allowing for exports, a lack of refined products in Asia has driven local prices to the equivalent of over $150 per barrel. He attributes the volatility to geopolitical tensions, noting that oil prices swung from the high $90s to $67 before rebounding into the mid-$80s on renewed conflict fears. Schachter outlines three potential scenarios for oil prices. If peace talks succeed and the Strait of Hormuz and Bab al-Mandab reopen, prices could fall back below $70, aided by China’s massive strategic reserves and floating storage. If the conflict remains contained, a trading range between $70 and $94 is likely. However, a significant escalation involving Iran and key shipping lanes could push prices past the previous high of $119, potentially reaching $141.50. He warns that such a sustained spike above $120 would trigger severe global economic headwinds, combining with AI-driven job losses and high government debt to potentially cause a deep recession. From an investment perspective, Schachter sees energy producers as undervalued, trading on long-term price assumptions of $60-$65 oil despite his forecast of $80 average for the year and $90 in 2027. He highlights Canada as a particularly attractive region due to a new, supportive political stance toward fossil fuels, vast undrilled reserves, and discounted valuations compared to US peers. He advises that higher prices will economically transform lower-tier drilling inventory into highly profitable assets, offering significant upside for investors across the energy and service sectors.
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