"we're now in 2020 after COVID uh where we the the the AI world started people start talking about you know data centers the electric grid is insufficient we need to spend money there and so all of a sudden uh we're starting the next super cycle of commodities" - Josef Schachter [00:21:07]
"it's the emerging world that's really growing because if we need more lithium more copper and more nickel more aluminum all the things we need for the AI world... we're going to have to have new facilities new mines brought on in the third world" - Josef Schachter [00:02:44]
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"if this thing lasts into the summer of 2026 we could see all-time nominal highs" - Josef Schachter [00:07:33]
"when Russia invaded Ukraine we went to 120 [dollars]... normal inventories are between 88 and 92 days we're about 90 days right now" - Josef Schachter [00:17:13]
"we had two prior commodity super cycles energy super cycles the first one was 1974 to 81... the price of oil went up 12 times the TSX energy oil and gas producers and it went up 15 times" - Josef Schachter [00:19:37]
"I still look at the sector and say if you're a golfer we're on the third hole and 15 holes still to go so lots of opportunity still in the sector" - Josef Schachter [00:23:38]
"the 20 million barrels that everybody talks about should really be a number that's more like uh you know 13 14" - Josef Schachter [00:05:43]
Speakers & Credentials
Anthony Fatseas: Host of the "What The Finance" (WTFi) podcast, specializing in macroeconomic, geopolitical, and investment analysis.
Josef Schachter: A 40+ year veteran of the Canadian investment management industry and the founder of the Schachter Energy Report. He specializes in macroeconomic energy cycles, natural resource valuation, and the Canadian oil and gas sector.
1. Executive Summary
The global economy has entered a massive, multi-decade commodity and energy supercycle, driven by explosive AI-related power demands and the resource-intensive modernization of third-world infrastructure.
Recent Middle Eastern conflicts and severe disruptions in the Strait of Hormuz have curtailed global supply, effectively burning through strategic reserves while heavily sanctioning Iranian output.
Global oil inventories are hovering dangerously close to critical lows (currently around 90 days), with new structural production lagging mathematically behind an annual demand growth of 1.2 million barrels per day.
Canadian energy producers offer a unique arbitrage opportunity due to their immense reserves, severely discounted equity valuations, and a geographic shipping advantage to Asian markets compared to the US Gulf Coast.
Investors are strongly urged to overweight resource equities—specifically oil, natural gas, and industrial metals—to capture the immense upside of a supercycle projected to last well into the 2030s.
2. Chronological Table of Contents
[00:01:04] - Introduction & The Middle East Oil Shock
[00:02:31] - Global Demand Shifts: OECD vs. Emerging Markets
[00:04:13] - Supply Disruptions: The Strait of Hormuz & Strategic Reserves
[00:08:40] - Geopolitics, The IRGC, and The Forward Curve Problem
[00:19:18] - The History and Mechanics of Energy Supercycles
[00:23:50] - Portfolio Allocation & Canadian Energy Opportunities
[00:30:45] - Infrastructure Bottlenecks & North American LNG
[00:36:26] - Canada's Geopolitical Advantage in Resource Exports
3. Detailed Thematic Summary
The Catalyst: AI and Emerging Market Demand
Total global oil demand currently stands at an immense 106 million barrels a day, and is structurally expanding at a rate of 1.2 million barrels annually [00:02:37].
While OECD demand is flatlining due to improved fuel efficiency and electric vehicle (EV) adoption, the emerging world is driving a massive consumption spike [00:02:44].
The raw material extraction required for the AI boom—specifically lithium, copper, nickel, and aluminum—necessitates building entirely new infrastructure grids and mines in developing nations across Africa, Asia, and South America [00:02:53].
These new development zones require extreme baseload energy for heavy machinery, roads, and modern living standards for localized workforces, locking in aggressive long-term structural demand for hydrocarbons [00:03:36].
Supply Choke Points and Geopolitical Shocks
The Strait of Hormuz is historically responsible for transiting 20 million barrels per day, but factoring in alternative pipelines (like the East-West Saudi pipeline handling 2-7 million barrels) and Red Sea routes, the actual bottlenecked volume is closer to 13 to 14 million barrels [00:05:43].
Currently, only a fraction of typical traffic—roughly 2 to 3 million barrels via 1-2 carriers daily—is successfully transiting the Strait, primarily shipments bound for China and India that are sanctioned by Iran [00:05:14].
Global markets have avoided immediate collapse exclusively due to the aggressive deployment of safety nets: coordinated Strategic Petroleum Reserve (SPR) releases and the localized dumping of floating Russian shadow-fleet inventory off the coasts of Singapore and China [00:05:58].
If the geopolitical blockade persists into the summer of 2026, Brent crude is modeled to shatter its all-time nominal high of $147 per barrel (set in 2008) [00:07:33].
Inventory Depletion and the "Phantom Barrel" Theory
Consensus models falsely assumed an OPEC spare capacity overhang of 4 million barrels. Schachter argues these are "phantom barrels," highlighting that Saudi Arabia’s true field production is capped around 10.5 million barrels, with the rest being unsustainable inventory liquidation [00:26:51].
Global inventories sit dangerously close to the baseline average of 90 days. Should inventories compress to 87 or 86 days, the structural deficit will become mathematically undeniable, triggering violent price discovery [00:17:30].
With only 600,000 barrels of net new global supply scheduled to come online in 2026 (led by Guyana, Brazil, and Canada), the industry is entirely incapable of satisfying the 1.2 million barrel annual demand growth vector [00:27:58].
The Historical Context of Energy Supercycles
The market is presently navigating its third historical supercycle. The first cycle (1974 to 1981) saw oil scale from $3 to $36—a 12x price explosion that catapulted producer equities by 15x [00:19:37].
The second supercycle (1999 to 2008) was ignited by China's hyper-industrialization, pushing their domestic consumption from 3.5 million barrels to roughly 14 million barrels daily, peaking prices at $147 [00:20:25].
This third cycle, catalyzed post-COVID by the collision of AI energy demands and electrical grid deficiencies, marks a foundational shift that will carry the commodity bull market through the 2030s [00:21:07].
The Canadian Energy Arbitrage Advantage
Canada operates as the world's fourth-largest producing basin (6.1 million barrels per day), possessing the raw geology to scale up to 7 or 8 million barrels if federal regulatory environments improve [00:08:26].
Transportation economics heavily favor Canada; shipping routes from the coast of British Columbia to Asian manufacturing hubs (Japan, South Korea, Vietnam) are less than half the duration of routes originating from the US Gulf Coast or the Middle East [00:37:48].
Canadian natural gas capacity sits at 18 BCF, but the aggressive buildout of localized LNG export infrastructure (like LNG Canada) threatens to consume an additional 6 BCF of supply, creating a massive upside catalyst for domestic gas pricing [00:32:13].
The Supercycle Triad [00:19:18]: A historical macro-model used to identify decade-long commodity bull markets. The model isolates massive, generational demand shocks—such as the 1970s OPEC embargo, the 2000s Chinese industrialization, and the 2020s AI/Electrification infrastructure buildout—that permanently elevate the price floor of base resources.
The "Phantom Barrel" Illusion [00:26:05]: An analytical framework for stress-testing reported "spare capacity." The model demands differentiation between sustainable field production and temporary storage liquidation. It proves that perceived global safety buffers (like Saudi Arabia's theoretical 12.5 million barrel capacity) are an illusion when measured against their actual 10.5 million barrel sustainable field output.
The Three-Tier Allocation Strategy [00:23:50]: A risk-adjusted resource portfolio model dividing capital into three specific silos: Conservative (high dividend EMPs targeting 15-20% capital gains via shareholder returns), Growth (companies with strong production growth wedges targeting 20-50% gains), and Entrepreneurial (international/domestic exploration companies offering "5 to 10 bagger" potential contingent on the "lie detector of the drill bit").
The Forward Curve Trap [00:16:05]: A mental model explaining the delayed equity reaction to spot commodity spikes. Because futures markets project prices returning to the $60s down the curve, producers cannot secure long-term hedges to justify expanding CapEx. Consequently, institutional money will not assign higher equity multiples until the forward curve itself permanently elevates.
6. Anecdotes
The Trans Mountain Pipeline (TMX) Cost Explosion [00:31:15]: Schachter perfectly illustrates the systemic dysfunction of North American infrastructure development by pointing to the TMX pipeline. Originally budgeted at under $10 billion, the final cost ballooned to $34 billion—a bill ultimately footed by Canadian taxpayers. This anecdote highlights the massive regulatory and capital moats preventing rapid supply expansion, making existing, operating assets exponentially more valuable in a supercycle.
The Iranian Artesh Wildcard [00:14:33]: When analyzing Middle Eastern geopolitics, Schachter contrasts the heavily armed IRGC with the Artesh (Iran's original, conventional military). The Artesh is larger but was systematically defunded by the Ayatollahs. Schachter outlines a scenario where, if the IRGC is sufficiently degraded by conflict, the Artesh could pivot to support a localized populist uprising, serving as the ultimate "wildcard" for Middle Eastern regime stabilization.
7. References & Recommendations
Macro Entities & Organizations: IEA (International Energy Agency), OPEC, IRGC (Islamic Revolutionary Guard Corps), Artesh (Iranian conventional military).
Research & Reports: Schachter Energy Report, OPEC Monthly Report (specifically referenced for tracking global inventory days).
Monitor the OPEC Monthly Inventory Threshold [00:18:34]: Establish a strict tracking system for the OPEC Monthly Report. If global inventory days compress from the current 90 days down to the 87 or 86-day threshold, use it as the mathematical trigger to allocate heavily into resource futures and E&P equities ahead of a massive price spike.
Overweight Canadian Natural Gas & E&P Equities [00:32:13]: Exploit the geopolitical shipping arbitrage and deep Net Asset Value (NAV) discounts by aggressively weighting Canadian producers. Target entities positioned to supply the 6 BCF capacity vacuum created by impending North American LNG export projects.
Hedge Against Forward Curve Gravity [00:16:05]: Do not buy spot-market emotional spikes. Structure long-term investment models around companies that are utilizing current cash flow windfalls specifically to pay down debt and execute Normal Course Issuer Bids (share buybacks), rather than those engaging in reckless, unhedged CapEx expansion.
Jul 16, 2026
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$147/barrel
The historical nominal all-time high for global crude