This Time It's Different! Stock Market Sluggish Response, Central Bank QE Inevitable, Gold Struggles to Hedge

2026-03-21 08:46:30

The Strait of Hormuz blockade is creating a supply crisis that the market has severely underestimated, and this time, traditional safe-haven logic may completely fail.

Top energy consulting firm Energy Aspects founder and head of market intelligence Amrita Sen, along with Carlyle’s chief energy analyst Jeff Currie, pointed out in their latest discussion on March 13 that the current situation is a “mirror” of the COVID-19 pandemic—back then, demand suddenly evaporated; this time, it’s a massive supply disruption. The scale is comparable, but the impact direction is opposite.

Both agree that financial markets are still in collective denial, with stock markets reacting very slowly to supply shocks, and central banks facing dual pressures of shrinking credit pools and economic slowdown—ultimately, quantitative easing (QE) seems almost unavoidable.

More notably, under this framework, gold is not an ideal safe-haven asset—at least before QE truly takes hold, gold faces selling pressure rather than buying.

Currently, Poly Market estimates a 98% probability that the Strait of Hormuz will remain closed until the end of March. Jeff estimates that even with the strategic petroleum reserve (SPR) released at a maximum rate of 2 million barrels per day, the total loss of oil supply by the end of March would still reach about 450 million barrels—these supplies are “gone forever.” Meanwhile, German bond auctions have failed, the US mortgage market is under pressure, and global credit pools are shrinking.

Participants: Jeff Currie, Chief Strategist at Carlyle Energy Path, Non-Executive Director at Energy Aspects

Stock Market Denial: The Market Is Still Waiting for an Unlikely “Reversal”

In Jeff’s view, the sluggish response of financial markets to the supply shock stems from a deep-rooted “denial” mentality—markets have never truly believed the Strait of Hormuz would close. Even if it has, markets still believe Trump can eventually find a way to reverse the situation.

“Markets believe Trump can ‘flip-flop,’ and then everything will be fine,” Jeff said. “Because he’s done that on tariffs before, and on other issues. But whether the Strait is open or closed isn’t a ‘flip-flop’ issue—it’s a binary KPI.”

Amrita cited an industry veteran’s assessment, pinpointing the fundamental fallacy of this logic: “Everyone says the Strait can’t be closed for a month because that would destroy the global economy. But that logic is completely inverted—the deciding factor on whether the Strait opens or closes isn’t the global economy; it’s survival.”

This denial isn’t without historical precedent. Jeff recalls that early in the COVID-19 outbreak, when the world’s second-largest economy was effectively shut down, oil prices remained around $58 per barrel. The market’s denial lasted about six weeks before prices collapsed sharply. “I think we’re in the same situation now—denial, denial, denial, then a sudden cliff.”

From an asset structure perspective, this crisis could have an especially asymmetric impact on the US stock market. Energy companies in the US are worth about $2 trillion, roughly 3% of the market. In contrast, sectors benefiting from low oil prices—airlines, consumer, manufacturing—have a combined market cap exceeding $30 trillion. Jeff characterizes this as “a $2 trillion short against a $30 trillion long,” and has already begun shorting airline stocks.

Central Bank Dilemma: Inflation and Recession—Quantitative Easing as the Only Option

Faced with simultaneous inflationary pressures from supply shocks and risks of economic slowdown, central banks’ policy space is extremely limited.

Amrita notes a clear disagreement with macro research teams: they tend to believe central banks will “turn a blind eye” and cut rates to support growth; but she personally believes that energy price shocks are persistent, and cutting rates in such a scenario would be like drinking poison.

Jeff fully agrees and cites lessons from the 1970s—when central banks followed inflation with rate hikes, making things worse. He believes this time, the central bank may even resort to QE.

The core logic driving this view is the structural contraction of the global credit pool. In his research report “Oil Awakening,” Jeff points out that since July 2022, when the US and Europe seized Russian central bank assets, oil-producing countries have stopped recycling petrodollars into Western capital markets and instead have been buying gold in large quantities. This breakdown of the mechanism means that the “high oil prices = QE” loose policy of the 2000s no longer applies—rising oil prices no longer inject liquidity, only fueling inflation.

Now, the blockade of the Strait of Hormuz further cuts off the Gulf Cooperation Council countries’ ability to inject capital into global markets. German bond auctions have failed, the US mortgage market is under pressure, and credit pools are shrinking rapidly. “What’s the solution? Expand credit pools and rely on QE to inject money into the system,” Jeff says. “But the result is further soaring prices for food, fuel, and other commodities.”

Gold: Why It’s Not the Time to Hold

In today’s environment, gold is usually seen as the top hedge against geopolitical risks and inflation. However, Jeff clearly states he is cautious about gold right now, and there’s a logical chain behind this judgment.

Funding pressures trigger selling. When supply shocks cause economic contraction and tighten credit conditions, governments and institutions face a primary problem: not hedging, but financing. During liquidity crises, gold is often the most liquid asset, and thus faces selling pressure. Jeff cites Poland’s recent announcement to sell part of its gold reserves to cover expenses—an example of this logic.

Before QE takes effect, gold lacks upward catalysts. Jeff’s core view is that the real buy point for gold is after QE is launched, not before. He references the COVID-19 market trajectory—March 2020 saw a liquidity crisis, with gold sold off; only after the Fed announced unlimited QE on March 23 did gold soar, beginning a strong rally.

“The real logic is: short gold before QE, then go long once QE starts,” Jeff says.

Breakdown of the petrodollar recycling mechanism has already priced in some gains. Jeff notes that since July 2022, the trend of oil-producing countries shifting petrodollars into gold has been a major driver of gold’s sharp rise. Since then, gold has gained about 112%. He believes much of this increase already reflects geopolitical premiums and de-dollarization, and current prices offer less risk-reward compared to other commodities.

Other commodities offer more direct exposure. Compared to gold, Jeff prefers holdings in Brent crude oil, copper, aluminum, etc. He sees copper as irreplaceable in renewable energy and “safe energy” infrastructure—its logic is clear and ongoing; Brent oil benefits directly from supply disruptions and avoids the policy intervention risks associated with WTI. “Apart from gold, I’m bullish on other commodities,” Jeff states. “And I think this will persist—similar to the 1970s, until 1985 or 86, when the market turned bearish.”

Overall, Jeff’s advice is: wait for clear QE signals before holding gold long; once central banks actually launch QE, then include gold in long positions. This timing is the most critical and often overlooked aspect of current gold trading logic.

This Is Not Short-Term Trading, But a Rebuilding of the Era

Both Jeff and Amrita emphasize that the current situation should not be viewed as a short-term shock to be “solved,” but as a deep systemic shift.

Jeff compares it to the post-9/11 period: 9/11 ended the dot-com bubble and indirectly facilitated China’s accession to the WTO, triggering the commodity supercycle of the 2000s. He sees strong similarities between that period’s asset rotation and today—physical assets, heavy assets, low-depreciation assets (“HALO” assets) will systematically outperform financial assets.

On the US-China front, both agree China is in a more advantageous position during this crisis. China has large strategic reserves, has banned refined oil exports, and continues to absorb 1.5–2 million barrels daily from the Hormuz side. “Once he and Trump meet at the end of the month, we’ll see who has the better chips,” Jeff says.

Amrita points out that even if the Strait reopens, shipping will never return to normal—longer rerouting, higher insurance costs, crew safety concerns will permanently alter the global energy supply chain. “The new normal will be completely different from the old,” she states.

In terms of investment strategy, Jeff’s overall framework is: go long high-volatility assets, hold instruments directly exposed to price swings, and diversify across markets with broad commodity exposure. Specifically, Brent crude and copper are his most confident long positions; airline stocks are clear shorts; WTI should be avoided due to policy risks; gold should wait for QE signals before entering long.

Host: Amrita Sen, Founder and Head of Market Intelligence at Energy Aspects

Below is the transcript of their discussion:

Market Size and Supply Losses

Amrita: In my career, I’ve never seen such a situation. Jeff: Indeed, it’s very similar to COVID-19, just in a completely opposite direction—a mirror image. The supply losses we’re talking about are comparable to demand losses back then.

By the way, during this period, we’ve been calling each other constantly because I couldn’t even keep up with the news and calls—it’s been crazy.

Amrita: What’s your view on the current Middle East situation? We estimate about 15 million barrels per day of oil loss, including crude, refined products, and LPG, and this number could grow depending on classification.

Jeff: I believe the damage is already done. Let me give the “oil surplus” folks some numbers: suppose the surplus inventory is about 590 million barrels—this is my estimate. Even with SPR releases at a maximum of 2 million barrels per day, by the end of March, roughly two weeks from now, about 450 million barrels will be lost—these are gone forever.

Poly Market currently estimates a 98% chance that the Strait remains closed until the end of March. Admiral Stavridis from Carlyle also estimates at least two to four weeks, which is the most optimistic scenario. Military experts and prediction markets are highly aligned: the Strait is unlikely to reopen soon.

However, markets and oil prices are slow to react. Even with oil at $100 per barrel, risk is still severely underestimated.

This morning, I was thinking about shorting airlines. It’s a replay of COVID-19, just in the opposite direction.

Market Denial and Reopening Expectations

Amrita: Our baseline is that the issue won’t be resolved before the end of the month, and we keep emphasizing that the situation is so volatile that even if the Strait reopens, it won’t return to normal. That’s the hardest thing for me to accept—the new normal will be completely different from the old.

All major shipping companies I’ve spoken with say they’re reluctant to risk sending crews back immediately. No one can guarantee there won’t be attacks tomorrow. So, a high degree of certainty is needed.

My first question: you’ve been in this industry long enough—closure of the Strait has always been the market’s worst nightmare—and now it’s really closed. Why is no one prepared?

Jeff: Actually, a friend who worked in government about 20 years ago told me that during the Obama administration, the government organized a scenario planning exercise for an oil crisis, including a simulation of a Strait closure. They involved major companies like Shell. The result was that everyone thought it was too remote to prepare for seriously.

Now it’s happening, and everyone is caught off guard.

Amrita: In other words, even though it’s been the biggest risk concern for decades, because it’s “too extreme,” no one took it seriously?

Jeff: Exactly. I think markets aren’t reacting because they never truly believed it would happen, and they’re still in denial—still believing Trump can eventually make the Strait reopen, even though no one can say exactly how.

Amrita: This “disbelief” mentality dominates the market. I spoke with a very senior industry insider who said something that struck me: “Everyone says the Strait can’t be closed for a month because that would destroy the world economy. But that logic is upside down—the Strait can’t be closed for a month because the world economy can’t handle it; but that doesn’t mean it won’t be closed for a month, because the decision to open or close isn’t about the economy—it’s about survival.”

Jeff: Yes. Markets believe Trump can “flip-flop” (taco), and then everything will be fine. Because he’s done that with tariffs and other issues. But whether the Strait is open or closed isn’t a “flip-flop” issue—it’s a binary KPI.

He could do a stunt like Bush Jr. on the aircraft carrier claiming “mission accomplished,” but that option doesn’t really exist. Ultimately, the decision to open the Strait depends on Iran.

Amrita: I even think the final control lies with China.

Jeff: You’re right. China will enter the end of March or early April meeting with Trump with the reality of the Strait blockade—daily absorbing 1.5–2 million barrels from the Hormuz side.

They’re also playing the “BRICS” card now. Russia’s sanctions have been lifted, and they’re in a very good position; Iran, with Russian support, reportedly has shut down satellite signals—but that’s useless because Iran uses Russian satellites, not US ones.

The entire situation involves absolute denial and serious misjudgment.

COVID-19 Mirror: Supply Shock and Demand Destruction

Jeff: I want to make an analogy—not a conspiracy theory, just a perspective: COVID-19 destroyed manufacturing in the US and Europe, but China’s manufacturing capacity increased significantly during the same period. Comparing the two, the gap is startling—US and Europe declined, China rose, widening the gap by nearly 50 percentage points. Who benefits most from this crisis? It’s the BRICS countries.

China is now advertising electric vehicles everywhere, claiming they can be fully charged in seven minutes—almost as if everything is perfectly tailored for them.

Amrita: You’re right. If we break down the BRICS, India is least affected. Just yesterday, March 12, the US announced it would allow re-purchasing Russian oil (at least in transit), causing Russian crude prices to jump from around $40 to over $100.

India had already received exemptions a week earlier. China, although some refineries cut processing due to inability to load from the Hormuz side, has large strategic reserves and has explicitly banned exports of refined products, requiring domestic retention—this will be a heavy blow to other countries. Overall, India and China are the least impacted in Asia.

Jeff: I completely agree. For me, the real issue is that markets are in total denial. Many hedge funds previously shorted heavily based on the “oversupply” narrative, and now they’re caught off guard.

We’ve been publishing research saying oil prices are still undervalued—by supply and demand fundamentals, they should be much higher. But it’s not just about “Can the US suppress prices”—they can’t solve real supply disruptions with words alone.

It’s also a trading issue—risk management is extremely challenging, and there aren’t enough market participants willing to go long. Plus, everyone believes “it will be resolved tomorrow.” How do you see this evolving?

Jeff: Amrita and I are often labeled as “permanent bulls,” but I want to clarify: looking back to July 2024, we were advocating buying gold, copper, and oil at $85, when everyone else was losing money and mocking us.

But if you had just held those three assets—simply rolling over near-month contracts—you’d now see oil up 40%, gold up 112%, and copper up about 60%.

This shows that: you want to hold high-volatility assets (long vol). Since 2009, in the low-interest-rate environment, all asset managers flooded into risk assets, private equity, private credit, and multi-strategy funds—these are essentially short vol strategies. And we’ve been saying: you should be long vol.

Collapse of the US Dollar Recycling Mechanism and Credit Pool Contraction

Jeff: I want to discuss a deeper issue that explains why markets have been sluggish and why the recent price surge is particularly dangerous.

We published a report called “Oil Awakening,” which states that after July 2022, when the US and Europe seized Russian central bank assets, gold prices soared—this is no coincidence.

From that moment, the dollar’s petrodollar recycling mechanism was completely broken. Oil-producing countries stopped recycling petrodollars into Western financial markets and instead bought large amounts of gold. This breakdown is a key reason for gold’s surge.

The “high oil prices = QE” logic of the 2000s has vanished—back then, petrodollar flows into the global financial system created a loose policy environment beneficial to the global economy. Now, with oil prices rising, that loose effect has disappeared, leaving only inflationary pressures.

Worse still, we’ve cut off the Gulf Cooperation Council countries’ ability to inject capital into global markets. German bond auctions have failed, US mortgage products are under pressure—credit pools are shrinking.

What’s the solution? Expand credit pools and rely on QE to inject liquidity, Jeff says. “But that will further push up food, fuel, and other commodity prices.”

Why Gold Is Not the Right Asset Now

In today’s market, gold is often seen as the top hedge against geopolitical risks and inflation. But Jeff states clearly that he is cautious about gold now, and there’s a clear logical chain behind this view.

Funding pressures trigger selling. When supply shocks cause economic contraction and tighten credit, governments and institutions face a primary problem: not hedging, but financing. During liquidity crises, gold is the most liquid asset and thus faces selling pressure. Jeff cites Poland’s recent announcement to sell part of its gold reserves to cover expenses—an example of this logic.

Before QE takes effect, gold lacks upward catalysts. Jeff’s core view is that the real buy point for gold is after QE is launched, not before. He references the 2020 market—March 2020 saw a liquidity crisis, with gold sold off; only after the Fed announced unlimited QE on March 23 did gold rally strongly.

“The key is: short gold before QE, then go long once QE starts,” Jeff says.

Breakdown of petrodollar recycling has priced in some gains. Jeff notes that since July 2022, the shift of petrodollars into gold has been a major driver of gold’s rise, with about 112% increase since then. Much of this reflects geopolitical premiums and de-dollarization, and current prices offer less attractive risk-reward compared to other commodities.

Other commodities offer more direct exposure. Compared to gold, Jeff prefers holdings in Brent crude, copper, aluminum, etc. Copper’s role in renewable energy and “safe energy” infrastructure is irreplaceable—its logic is clear and ongoing; Brent benefits directly from supply disruptions and avoids WTI policy risks. “Apart from gold, I’m bullish on other commodities,” Jeff states. “And I believe this will continue—like in the 1970s, until 1985 or 86, when the market turned bearish.”

His overall advice: wait for QE signals before holding gold long; once QE is confirmed, add gold to long positions. This timing is crucial and often overlooked.

This Is Not Short-Term Trading, But a Systemic Rebuilding

Jeff and Amrita both emphasize that the current situation isn’t just a short-term shock to be “solved,” but a systemic regime shift.

Jeff compares it to the post-9/11 period: 9/11 ended the dot-com bubble and indirectly led to China’s WTO accession, sparking the commodity supercycle of the 2000s. He sees strong similarities—physical assets, heavy assets, low-depreciation assets (“HALO” assets) will systematically outperform financial assets.

On US-China relations, both agree China is in a more advantageous position. China has large strategic reserves, has banned refined oil exports, and continues to absorb 1.5–2 million barrels daily from Hormuz. “Once he and Trump meet at the end of the month, we’ll see who has the better chips,” Jeff says.

Amrita notes that even if the Strait reopens, shipping will never return to pre-crisis levels—longer rerouting, higher insurance, crew safety concerns will permanently alter the energy supply chain. “The new normal will be completely different,” she states.

In investment terms, Jeff’s overall approach: go long high-volatility assets, hold instruments exposed to price swings, diversify across markets and commodities. Specifically, Brent crude and copper are his top longs; airline stocks are shorts; avoid WTI due to policy risks; wait for QE signals before adding gold.

Host: Amrita Sen, Founder and Head of Market Intelligence at Energy Aspects

Below is the transcript of their dialogue:

Market Size and Supply Losses

Amrita: I’ve never seen such a situation in my career. Jeff: Indeed, it’s very similar to COVID-19, just in a mirror image—almost the same magnitude of supply loss as demand loss back then.

By the way, during this period, we’ve been calling each other constantly because I couldn’t even keep up with the news and calls—it’s been crazy.

Amrita: What’s your view on the current Middle East situation? We estimate about 15 million barrels per day of oil loss, including crude, refined products, and LPG, and this number could grow depending on classification.

Jeff: I believe the damage is already done. Let me give the “oil surplus” folks some numbers: suppose the surplus inventory is about 590 million barrels—this is my estimate. Even with SPR releases at a maximum of 2 million barrels per day, by the end of March, roughly two weeks from now, about 450 million barrels will be lost—these are gone forever.

Poly Market currently estimates a 98% chance that the Strait remains closed until the end of March. Admiral Stavridis from Carlyle also estimates at least two to four weeks, which is the most optimistic scenario. Military experts and prediction markets are highly aligned: the Strait is unlikely to reopen soon.

However, markets and oil prices are slow to react. Even with oil at $100 per barrel, risk is still severely underestimated.

This morning, I was thinking about shorting airlines. It’s a replay of COVID-19, just in the opposite direction.

Market Denial and Reopening Expectations

Amrita: Our baseline is that the issue won’t be resolved before the end of the month, and we keep emphasizing that the situation is so volatile that even if the Strait reopens, it won’t return to normal. That’s the hardest thing for me to accept—the new normal will be completely different from the old.

All major shipping companies I’ve spoken with say they’re reluctant to risk sending crews back immediately. No one can guarantee there won’t be attacks tomorrow. So, a high degree of certainty is needed.

My first question: you’ve been in this industry long enough—closure of the Strait has always been the market’s worst nightmare—and now it’s really closed. Why is no one prepared?

Jeff: Actually, a friend who worked in government about 20 years ago told me that during the Obama administration, the government organized a scenario planning exercise for an oil crisis, including a simulation of a Strait closure. They involved major companies like Shell. The result was that everyone thought it was too remote to prepare for seriously.

Now it’s happening, and everyone is caught off guard.

Amrita: In other words, even though it’s been the biggest risk concern for decades, because it’s “too extreme,” no one took it seriously?

Jeff: Exactly. I think markets aren’t reacting because they never truly believed it would happen, and they’re still in denial—still believing Trump can eventually make the Strait reopen, even though no one can say exactly how.

Amrita: This “disbelief” mentality dominates the market. I spoke with a very senior industry insider who said something that struck me: “Everyone says the Strait can’t be closed for a month because that would destroy the world economy. But that logic is upside down—the Strait can’t be closed for a month because the world economy can’t handle it; but that doesn’t mean it won’t be closed for a month, because the decision to open or close isn’t about the economy—it’s about survival.”

Jeff: Yes. Markets believe Trump can “flip-flop” (taco), and then everything will be fine. Because he’s done that with tariffs and other issues. But whether the Strait is open or closed isn’t a “flip-flop” issue—it’s a binary KPI.

He could do a stunt like Bush Jr. on the aircraft carrier claiming “mission accomplished,” but that option doesn’t really exist. Ultimately, the decision to open the Strait depends on Iran.

Amrita: I even think the final control lies with China.

Jeff: You’re right. China will enter the end of March or early April meeting with Trump with the reality of the Strait blockade—daily absorbing 1.5–2 million barrels from the Hormuz side.

They’re also playing the “BRICS” card now. Russia’s sanctions have been lifted, and they’re in a very good position; Iran, with Russian support, reportedly has shut down satellite signals—but that’s useless because Iran uses Russian satellites, not US ones.

The entire situation involves absolute denial and serious misjudgment.

COVID-19 Mirror: Supply Shock and Demand Destruction

Jeff: I want to make an analogy—not a conspiracy theory, just a perspective: COVID-19 destroyed manufacturing in the US and Europe, but China’s manufacturing capacity increased significantly during the same period. Comparing the two, the gap is startling—US and Europe declined, China rose, widening the gap by nearly 50 percentage points. Who benefits most from this crisis? It’s the BRICS countries.

China is now advertising electric vehicles everywhere, claiming they can be fully charged in seven minutes—almost as if everything is perfectly tailored for them.

Amrita: You’re right. If we break down the BRICS, India is least affected. Just yesterday, March 12, the US announced it would allow re-purchasing Russian oil (at least in transit), causing Russian crude prices to jump from around $40 to over $100.

India had already received exemptions a week earlier. China, although some refineries cut processing due to inability to load from the Hormuz side, has large strategic reserves and has explicitly banned exports of refined products, requiring domestic retention—this will be a heavy blow to other countries. Overall, India and China are the least impacted in Asia.

Jeff: I completely agree. For me, the real issue is that markets are in total denial. Many hedge funds previously shorted heavily based on the “oversupply” narrative, and now they’re caught off guard.

We’ve been publishing research saying oil prices are still undervalued—by supply and demand fundamentals, they should be much higher. But it’s not just about “Can the US suppress prices”—they can’t solve real supply disruptions with words alone.

It’s also a trading issue—risk management is extremely challenging, and there aren’t enough market participants willing to go long. Plus, everyone believes “it will be resolved tomorrow.” How do you see this evolving?

Jeff: Amrita and I are often labeled as “permanent bulls,” but I want to clarify: looking back to July 2024, we were advocating buying gold, copper, and oil at $85, when everyone else was losing money and mocking us.

But if you had just held those three assets—simply rolling over near-month contracts—you’d now see oil up 40%, gold up 112%, and copper up about 60%.

This shows that: you want to hold high-volatility assets (long vol). Since 2009, in the low-interest-rate environment, all asset managers flooded into risk assets, private equity, private credit, and multi-strategy funds—these are essentially short vol strategies. And we’ve been saying: you should be long vol.

Collapse of the US Dollar Recycling Mechanism and Credit Pool Contraction

Jeff: I want to discuss a deeper issue that explains why markets have been sluggish and why the recent price surge is particularly dangerous.

We published a report called “Oil Awakening,” which states that after July 2022, when the US and Europe seized Russian central bank assets, gold prices soared—this is no coincidence.

From that moment, the dollar’s petrodollar recycling mechanism was completely broken. Oil-producing countries stopped recycling petrodollars into Western financial markets and instead bought large amounts of gold. This breakdown is a key reason for gold’s surge.

The “high oil prices = QE” logic of the 2000s has vanished—back then, petrodollar flows into the global financial system created a loose policy environment beneficial to the global economy. Now, with oil prices rising, that loose effect has disappeared, leaving only inflationary pressures.

Worse still, we’ve cut off the Gulf Cooperation Council countries’ ability to inject capital into global markets. German bond auctions have failed, US mortgage products are under pressure—credit pools are shrinking.

What’s the solution? Expand credit pools and rely on QE to inject liquidity, Jeff says. “But that will further push up food, fuel, and other commodity prices.”

Why Gold Is Not the Right Asset Now

In today’s market, gold is often seen as the top hedge against geopolitical risks and inflation. But Jeff states clearly that he is cautious about gold now, and there’s a clear logical chain behind this view.

“The key is: short gold before QE, then go long once QE starts,” Jeff says.

Other commodities offer more direct exposure. Compared to gold, Jeff prefers holdings in Brent crude oil, copper, aluminum, etc. Copper’s role in renewable energy and “safe energy” infrastructure is irreplaceable—its logic is clear and ongoing; Brent benefits directly from supply disruptions and avoids WTI policy risks. “Apart from gold, I’m bullish on other commodities,” Jeff states. “And I believe this will continue—like in the 1970s, until 1985 or 86, when the market turned bearish.”

His overall advice: wait for QE signals before holding gold long; once QE is confirmed, add gold to long positions. This timing is crucial and often overlooked.

This Is Not Short-Term Trading, But a Systemic Rebuilding

Both Jeff and Amrita emphasize that the current situation isn’t just a short-term shock to be “solved,” but a systemic regime shift.

Amrita points out that even if the Strait reopens, shipping will never return to pre-crisis levels—longer rerouting, higher insurance, crew safety concerns will permanently alter the energy supply chain. “The new normal will be completely different,” she states.

In terms of investment, Jeff’s overall approach: go long high-volatility assets, hold instruments exposed to price swings, diversify across markets and commodities. Specifically, Brent crude and copper are his top longs; airline stocks are shorts; avoid WTI due to policy risks; wait for QE signals before adding gold.

Host: Amrita Sen, Founder and Head of Market Intelligence at Energy Aspects

Below is the transcript of their discussion:

Market Size and Supply Losses

Amrita: I’ve never seen such a situation in my career. Jeff: Indeed, it’s very similar to COVID-19, just in a mirror image—almost the same magnitude of supply loss as demand loss back then.

By the way, during this period, we’ve been calling each other constantly because I couldn’t even keep up with the news and calls—it’s been crazy.

Amrita: What’s your view on the current Middle East situation? We estimate about 15 million barrels per day of oil loss, including crude, refined products, and LPG, and this number could grow depending on classification.

Jeff: I believe the damage is already done. Let me give the “oil surplus” folks some numbers: suppose the surplus inventory is about 590 million barrels—this is my estimate. Even with SPR releases at a maximum of 2 million barrels per day, by the end of March, roughly two weeks from now, about 450 million barrels will be lost—these are gone forever.

Poly Market currently estimates a 98% chance that the Strait remains closed until the end of March. Admiral Stavridis from Carlyle also estimates at least two to four weeks, which is the most optimistic scenario. Military experts and prediction markets are highly aligned: the Strait is unlikely to reopen soon.

However, markets and oil prices are slow to react. Even with oil at $100 per barrel, risk is still severely underestimated.

This morning, I was thinking about shorting airlines. It’s a replay of COVID-19, just in the opposite direction.

Historical Analogy: Systemic Shift and Asset Rotation

Jeff: Let me talk about the concept of “systemic shift.” Think of it as a regime change. For example, after 9/11, the end of the dot-com bubble was followed by a series of geopolitical events that indirectly led to China joining the WTO, sparking the supercycle of commodities in the 2000s. The asset rotation then was from financial assets to physical, heavy, low-depreciation assets—what I call “HALO” assets.

Currently, I see a similar pattern. The rotation favors real assets—commodities, heavy assets—over financial assets.

On the US-China front, both of us believe China is in a better position. China has large strategic reserves, has banned refined oil exports, and continues to absorb 1.5–2 million barrels daily from Hormuz. “Once he and Trump meet at the end of the month, we’ll see who has the better chips,” Jeff says.

Amrita notes that even if the Strait reopens, shipping will never be the same—longer reroutes, higher insurance, crew safety concerns will permanently change the energy supply chain. “The new normal will be very different,” she states.

In terms of investment, Jeff’s overall approach: long high-volatility assets, hold instruments exposed to price swings, diversify across markets and commodities. Specifically, Brent crude and copper are his top picks; airline stocks are shorts; avoid WTI due to policy risks; wait for QE signals before adding gold.

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