Show Notes
Tom welcomes Josh Young, CIO of Bison Interests, to discuss the potential for a prolonged and sticky energy shock stemming from the closure of the Strait of Hormuz amid the Iranian conflict. He emphasizes the profound uncertainty surrounding the conflict’s duration, noting that neither military participants nor analysts can predict its timeline, which explains recent oil price volatility. Young challenges the prevailing view that global oil inventories of roughly 8.4 billion barrels are insufficient, arguing that the system can absorb a much larger drawdown—potentially another billion barrels or more—before facing severe physical shortages. He warns that as inventories deplete, the relationship between supply and price becomes nonlinear, with prices potentially accelerating from $125 to $200 or $250 per barrel if the strait remains closed for several more months.
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Young also addresses the resilience of energy infrastructure, observing that refineries and export facilities often return to operation faster than expected due to spare equipment and skilled labor, though LNG facilities face unique supply chain constraints. He notes that general equity markets have largely ignored the crisis, partly because energy stocks represent only about 4% of the S&P 500, but also due to institutional underallocation and a persistent belief that oil is a declining industry. This creates a favorable environment for energy investors, as companies buy back stock at discounts and pay high dividends.
Finally, Young highlights the risk of AI-generated misinformation, particularly in financial markets, and stresses the growing value of original, critical analysis over algorithmically produced content. He concludes that while high oil prices could devastate emerging economies, the current moderate prices suggest significant upside potential remains.
Timestamps: 00:00:00 – Introduction 00:00:26 – Strait of Hormuz Closure 00:01:53 – Market Ignoring Conflict 00:03:43 – Oil Inventory Drawdown 00:07:33 – Non-Linear Price Dynamics 00:17:13 – Recent Infrastructure Attacks 00:20:21 – Global Energy ‘Explosions’ 00:23:33 – Infrastructure Resilience Analysis 00:26:24 – LNG Crude Recovery Differences 00:29:19 – Fuel Shortages Impacts 00:39:25 – UAE Leaving OPEC 00:44:34 – Equity Markets Response 00:50:29 – Gold Leading Oil & Fiat 01:00:00 – AI Info Feedback Loop 01:09:06 – Concluding Thoughts
Guest:
Josh Young — Chief Investment Officer & Founder, Bison Interests Joshua Young has been professionally investing in publicly traded oil and gas securities for nearly two decades, achieving benchmark outperformance as Bison’s CIO. Josh possesses a deep understanding of the E&P business model and operating environment, with notable experience as Chairman of Canadian E&P company RMP Energy (rebranded as Ironbridge Resources). Under Josh’s leadership, the company achieved a successful turnaround, outperforming peers and ultimately being acquired at a 78% premium. Josh is the author of numerous articles on oil & gas investments and is a frequent guest speaker at various energy industry conferences.
Prior to Bison, Josh began his career as a management consultant for Fortune 500 companies and private equity firms. He later worked as an investment analyst for a private equity fund and served as an energy investment analyst at a multi-billion-dollar single-family office, which was nominated as Institutional Investor’s Single Family Office of the Year in 2008. Josh holds a B.S. in Economics with honors from the University of Chicago. Substack X Website
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