$250 Oil Next: Why No One Is Prepared For The Biggest Event Of Our Time | Josh Young
TL;DR
Bison Interests CIO Josh Young warns that the ongoing closure of the Strait of Hormuz could propel oil prices to $200-$250 per barrel—a supply shock mirroring COVID's demand collapse in reverse—as markets dangerously underestimate the conflict's duration and policymakers have depleted the emergency reserves designed for exactly this scenario.
⛔ The Hormuz Supply Crisis 3 insights
20% of global supply at risk
The Strait of Hormuz closure has severed roughly one-fifth of world oil exports and significant LNG flows, creating a supply shock proportional to COVID's 20 million barrel/day demand destruction but operating in reverse.
Daily price ratchets accelerating
Oil prices have been climbing approximately 5% daily, surging from $77 to over $86 within days as the conflict extends beyond initial expectations of a quick resolution.
Protracted conflict likely
Historical precedents like the Yemen Houthi Red Sea disruptions suggest blockades can persist for years without ground troops or political concessions, especially given Iran's 30% fervent loyalist base resisting regime change.
📊 Market Blindspots & Mispricing 3 insights
Producer hedging delayed price discovery
Oil producers immediately shorted futures to lock in gains, artificially suppressing initial prices and creating a pattern similar to Russia's Ukraine invasion where markets first retraced then surged $40.
Markets priced for 'two weeks' fantasy
Investors initially bet on swift resolution based on misleading administration timelines, ignoring that unconditional surrender requires ground forces which Trump has explicitly ruled out.
Path to $250 oil
If the conflict persists, inflation-adjusted prices could exceed the 2008 peak of $147, reaching $200 or higher as cyclical commodities historically hit record highs at cycle tops.
🏛️ Strategic Reserve & Policy Failures 3 insights
Depleted emergency buffer
The Strategic Petroleum Reserve holds 400 million barrels but can only deliver 1-2 million daily—insufficient against a 20 million barrel disruption—yet remains unused despite being built specifically for Hormuz crises.
Political mismanagement robbed future security
The SPR was drained by half for election-year price management and budget gimmicks, leaving the U.S. without its primary defense against exactly the type of supply shock it was designed to mitigate.
Official supply claims contradicted
Treasury Secretary Bessent's assertions of 'well-supplied' markets conflict with reports of 329 vessels trapped in the Gulf and Asian refiners already facing acute shortages of crude and jet fuel.
Bottom Line
Investors should prepare for a potentially years-long supply crisis with oil exceeding $200 per barrel, as neither depleted strategic reserves nor current market positioning can mitigate a prolonged Hormuz closure, making energy security hedges and volatility protection paramount.
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