Art Berman: The Global Energy Order Is Breaking

**Art Berman** (0:00)
10 million barrels of oil per day is shut in. So that was oil that used to be produced, now it's not. There's no switch here. I don't think we're ever going back to January, 2026 for energy. The grand bargain is dead.

**Maggie Lake** (0:20)
Hello, and welcome to Wealthion, I'm Maggie Lake. Joining me today to discuss the outlook for energy is Art Berman, geologist and energy industry consultant. Hi Art, welcome back to the channel.

**Art Berman** (0:30)
Thanks for having me again, Maggie. Good to see you.

**Maggie Lake** (0:33)
Good to see you too. I think anyone who's hoping for a quiet summer has been disappointed because it has been full of headlines and a lot of them are back and forth on the status of the war in Iran. When we spoke back in June, you were very concerned about the situation in the Strait of Hormuz.
What's your view now? How are you feeling now about the situation?

**Art Berman** (0:53)
Nothing has really changed, which is, I guess, in some ways not surprising, but certainly not a satisfying answer. When we talked in June, I think we were on the verge of making some kind of an agreement, a temporary one for sure, between Iran, the United States, and Israel, and that lasted about as long as I thought it would, and then fell apart. So we're sort of back to where we were before that. Despite all the talk about a solution is right around the corner, et cetera, the reality on the ground is that I think six commercial vessels moved through Hormuz yesterday. So compared to 130 to 140 before the war, that's pretty much zero. So situation is worse, I would say. I mean, worse than worse than worse than worse. It was bad before.
It's at least as bad, if not worse now. So that's that's that's kind of a roundabout but simple answer. Nothing simple.

**Maggie Lake** (2:09)
Yeah, nothing is simple when it comes to this situation. Do you see a scenario where oil flows through the strait at pre-war levels? Is that is that feasible scenario in your mind?

**Art Berman** (2:21)
Well, you know, no one knows. But since you're asking, my most likely case, I've been around long enough to know that, you know, certitude and ignorance are pretty close together. So whenever somebody says they know what's going to happen, I say, OK, yeah, I don't know about that. My most likely case is that basically nothing changes between now and the end of the year. I mean, you know, we might have weeks where it looks a little better and weeks where it looks a little worse. And the longer term into next year, I would be pleasantly surprised if Hormuz flows return to 50% of pre-war by the middle of 2027
I just don't, I don't see it happening. And I don't think it has everything to do with the hostilities between the United States, Israel and Iran. I think there are so many other factors which we can get into. But, you know, it's a logistical problem that transcends just the, you know, whether or not everybody can make nice.

**Maggie Lake** (3:38)
Well, that's really interesting because the markets really seems to be pinning its hope on the fact that if there is a ceasefire that holds, that we'll be able to move forward. Not problem solved, but, you know, it'll go a long way to normalizing the situation. What are these other factors you're watching? Because it doesn't sound like you think that's the case at all.

**Art Berman** (3:57)
Right. So, I mean, markets are, you know, I mean, I'm not one of these people that think markets always get everything right.
But that's because it depends on what right means. If right is good for the world and humanity, markets probably don't. But when markets do get incredibly right, is optimization for profits in the relatively near term. And so when you say markets are, you know, expecting some kind of a peace agreement, you know, maybe what I see is that markets are encouraged by the adaptability of the energy system that they've seen, it's seen. We're talking about markets as if they're people.

**Maggie Lake** (4:54)
Yeah, investors.

**Art Berman** (4:56)
They're us. But, you know, I mean, the system has adapted remarkably well, considering what is happening and has happened. And so markets, you know, they discount the future and they're saying, well, you know, six months into this thing and the world hasn't had a heart attack. And that's true. I mean, some parts of the world are having palpitations for sure. But, you know, for those of us sitting in the United States or, you know, Europe, for the most part, other places, you know, it's not like, you know, the sky is falling. Now, if you're in certain parts of Asia, things are worse. But that's my sense, Maggie. I think markets are pretty darn smart.