Fundamentally, what's changed? Why is the oil market moving up?

So I'm American, and I'm a patriot, and it pains me to say this, but the American strikes look like they're mostly fake.

And so I don't think the price is moving almost at all based on that.

The US has been bombing the same, like, what is it, Larak Island and Sirik and a couple of other spots.

We can just keep bombing these things over and over again, the same spots with no, at least as an outside observer, without national security intel, um, without any real apparent impact.

So the US has not been attacking strategic targets intentionally, um, because we're treating this as sort of a tactical thing and not a war that we're trying to win.

We declare victory all the time, but we're not actually trying to win.

Anyway, the, um, if Iran's, um, kinetic situation, so to speak, US attacks on Iran aren't the most important drivers, at least for the short term, then what are you watching for and ultimately where is this headed? I'm talking about the oil price.

Why oil's at 86 and not 106.

Yeah, it's a great question.

I think it starts to go down.

You have to try to avoid the tinfoil hat on this one because there's not a lot of great explanations.

I wouldn't call it vexing.

I mean, we're doing extremely well this year.

Energy stocks are up a lot.

I'm just curious, Josh, if you have kind of a thought on that, that how do we get a sense of the total impact this is having, not just by looking at the price of WTI? Yeah,

[laughs]

And I often tell people this is a great depiction of behavior, because behavior is actually a mask.

And when you take the mask off of behavior, what you find underneath is the true source.

And I believe that source is something called belief.

There's a belief that drives every single action that we have in life.

It's, it can be a belief of smallness, it can be a belief of being scared or being intimidated.

It can be a belief of confidence.

That's your business as imagined, but your culture actually reveals what it is." So all those different organizations that you work for in basketball and just the, the ones you consult with now, what are some underlying factors to say, hey, the ones that close the gap, what are some commonalities that they all did to be successful?

How do you think about that?

Yeah.

I think, I mean, I'm friends with people who run very similar funds in other sectors that run billions of dollars.

And so I actually don't think the problem's the style or the performance.

I think it's just that most of the folks who would allocate to this are not allocating in oil and gas, or don't like that the sector's done so poorly for so long, and therefore they're worried that the sector is going away.

And I think weirdly, a lot of the fundraising process is just convincing people, even though oil demand has risen by about 1% a year for the last 40 years, which seems like a very, very, very long trend that you could just sort of ignore the headlines and say, "Hey, that's been going on for a real long time.

I'll just, you know, uh, benefit of the doubt to the 40-plus year, 1% growth a year trend," despite all the doomy headlines and whatever.

Um, what are some of the things you do to consistently, I guess, maintain your edge and even sharpen it in, in, in cases?

What are your thoughts there, both on your two hundred and fifty dollar, I know it's not your personal target, but your hat's, uh, target, [chuckles] and, um, and the, the impact, the potential impact of tri-- high triple digit oil on the economy, and how could-- that could affect the price?

Yeah.

So the, the hat, it's sort of this idea that in every cycle for a cyclical, that you get to a new inflation-adjusted all-time high.

And it's not a hundred percent of the time, but maybe more often than not, you know, you pick it, gold, silver, uranium, copper, whatever, you get to your sort of new inflation-adjusted all-time high at the top of a cycle.

And at that point, people are expecting even higher prices.

They get disappointed.

You get-- basically, you go from underinvestment leading to higher prices to overinvestment leading to oversupply and much lower prices.

What are your thoughts?

Okay.

Um, so what we found is that real R&D teams are kind of currently in a hybrid transitional phase more than, let's say, a fully autonomous mode.

And so I'll sort of try to explain why that is by walking you through what it means to do autonomous discovery.

So the first part of this, let's say, fully autonomous workflow is often thought to be AI-accelerated computational screening.

And so that's where we at Matlantis sit.

So you take thousands, hundreds of thousands, millions of materials, simulate their structure, simulate their properties in the computer, and try to narrow down the focus to only a couple of good candidates.

So our survey right now shows that many researchers are blending these emerging AI simulation tools with the more traditional physics-based methods like density functional theory to try and ex- uh, achieve acceleration of the material screening process.

Uh, if we check back in five years, uh, what will materials R&D teams be doing routinely with AI and simulation that would feel radical or impossible today?

go ahead.

That isn't...

That isn't it's oil market related, but it's also there's this weird open question.

There was a lot of stuff that happened today and in the last few weeks where it seems like the Trump administration's really getting dragged along by the IRGC, by Iran's sort of military leadership.

And it raises some really uncomfortable questions as an American and as a human living in 2026 of what were we lied to about during this war? How bad did it actually get? And so there were there were these weird things, even in these interviews of these oil supermajor CEOs where they talked about how there were unreported attacks as recently as this past week.

And then I came across one just trolling around on X this morning.

This commodities trader I follow in Switzerland, they do a lot of sort of They do a lot of GPS work where they sort of like look around at some of these open source satellites and they publish a lot of it.

And I'm not saying that we have high oil prices for the rest of our lives here, but it does seem like we got an oil problem is what I'm trying to get at.

Um, so what, how much different was the storage situation coming into this than it was coming into the Russia-Ukraine situation?

Yeah.

So, um, the EIA data shows a very slight build at the start of the year, uh, th- this year.

And so January and February, it looks like there was, um, inventories were rising by a little, plus or minus a million barrels a day, which was very, very far off from the consensus, sort of four to four and a half million barrels a day, and was frankly seasonal.

That's what you would expect.

You'd expect, um, you know, post, uh, holidays, you'd expect to start to see some inventory builds.

You need to start seeing inventory builds, first on the crude side, then on the product side in the spring so that you have plentiful gasoline and jet fuel for summer travel.

Mm-hmm

Mm-hmm

... forecast previously.

And then the sort of second factor is that with the sort of fake ceasefires and fake peace proposals and sort of these headlines where oil prices fall 10% in a day and then they sort of bleed back up, we've seen the, the volatility for oil skyrocket, and we've seen essentially the value at risk from owning one barrel or one contract of the futures for oil, uh, we've seen that rise a lot, which essentially the way people speculate on oil generally is via CTAs or via hedge funds.

And so their budgets aren't actually in dollars like you or I might invest in a stock or a commodity or whatever.

Their budgets are in value at risk.

So by increasing the volatility dramatically through these sort of fake news statements and these sort of, uh, one step forward, two step back sort of, um, headlines, what we've seen is a suppression of speculation and investment in oil futures.

And so that suppression has kept prices down for now.

Can you just look at this chart and, uh, explain to us what's happening here?

So is that, does that play into this idea of, of that nonlinear relationship between inventory and price?

Yeah.

Again, I think that that was driven more by some of the early dislocations and sort of panic buying around the initial, you know, few weeks of confusion around the Strait of Hormuz being closed and some of the, the specific short-term flows.

I think as these logistical networks have been sort of rejiggered, I think there's, there's more...

There's less of a physical shortage still, 'cause again, there's billions of barrels in the system outside of the Persian Gulf.And more of a question of economics.

And the economics have actually prevailed to the point where there have been points recently after everyone started talking about the disconnect between paper and physical and so on, where you actually saw the paper price higher at brief periods of time than the physical.

And so everyone got so used to making this one argument, and then, and again, it's similar, it's the same thing where the, these analysts that were, they were super wrong before, and now they're super wrong about the phy- ah, it's all the physical.

Is that part of what plays into the, the muted response from the S&P and the, the general markets here?

Yeah

... we got to about $147 a barrel.

And if you inflation adjust that, you're talking potentially 200, um, plus.

And so, you know, historically, cyclicals at the tops of cycles go to their all-time highs.

Again, here's Josh Young explaining why.

And so what we're seeing from a price perspective is that every day, um, that this continues, the oil price is ratcheting up 5 to [laughs] some days right now it's 8%, uh, but ratcheting up about 5% a day.

And I think people keep betting on there being some sort of quick fix, and various US government and other officials and, uh, economists and so on are calling for various quick solutions, but there isn't a quick solution here other than a sort of political victory or, um, concession that, that reopens the strait.

The, the, the fact that Bessent is, uh, hinting at a lot of, uh, oil outside of Iran, can we just com- oh, sorry, outside of, um, yeah, Iranian waters, can we just comment on that? Uh, what does he mean by that?

Yeah.

So there is oil on the water.

Um, a lot of it, unfortunately now is trapped in the Persian Gulf, uh, prior to hitting the Strait of Hormuz.

So a lot of it's trapped, but the oil that's not trapped is in floating storage and probably getting drawn down right now.

We're seeing refiners actually having insufficient oil in Asia already, um, and seeing wildly high, uh, refining margins for jet fuel and, um, fuel oil right now, uh, which is indicative of a situation different from what he's describing.

And so that's indicative to me that those, that floating storage that was there is in some, in some places fully depleted, and in other places getting depleted rapidly.

Could we expect the Federal Reserve to ease on monetary easing, meaning slow the pace of rate cuts, which would impact negatively, neg- uh, negatively impact financial markets in the sense that investors were expecting a certain number of cuts and now they're not getting that?