Josef Schachter: Imminent Gasoline Shortages, Tank Bottoms & 'Much Higher' Oil Prices for Longer
Palisades Gold Radio Jul 31, 2026
Summary
Global refined-product tightness in Asia, not crude supply, is the real energy shortage — Asian product prices imply more than $150 per barrel of oil.
US oil production has surged roughly a million barrels per day, enabling 3-4 million barrels of exports that cushion global markets.
China's willingness to withhold 10 million barrels per day of demand makes it the de facto swing buyer for global oil markets.
Oil producers are using windfall cash to pay down debt and buy back stock rather than boost drilling, limiting the near-term supply response.
Escalation scenarios could push oil above $150 and trigger a global recession; a peace deal could send prices back into the $60s-$70s.
Stijn Schmitz's takeaways
- Top takeaway Host Stijn Schmitz frames the discussion around Asian refining tightness and presses Schachter to quantify floating storage as a cushion against the supply/demand deficit.
- Host Schmitz surfaces the EV adoption angle, prompting Schachter's view that GM and Ford EV losses reflect weak US consumer uptake while Tesla's growth came from Europe.
Josef Schachter's takeaways
- Top takeaway Schachter argues oil prices are heading 'much higher for longer,' with a 2027 forecast near $90/bbl driven by demand recovery plus SPR refills of up to 600,000 b/d.
- Schachter sees no crude oil shortage — US production is up nearly 1M b/d YoY and floating storage (potentially ~1B bbl) plus China's buying flexibility cushion the market — but warns refined products are tight in Asia because Ukrainian strikes have removed Russian refining capacity and India/China are not exporting.
- Schachter lays out three scenarios: a base case $70-$94 trading range, an escalation that breaks above the $119 March high toward $140-$150, or successful China-brokered talks pushing prices back toward $70.
- Schachter flags severe recession risk at $150/bbl (3-5M b/d demand destruction, negative GDP) compounded by AI-driven layoffs and rising government debt-service costs.
- Schachter prefers integrated 'Seven Sisters' with refining + chemicals + E&P, and highlights Canadian producers trading at a US discount with 25-30 year reserve life and 5-7% dividends.