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Josh Young: Oil Is Heading for a Massive Shortage — And MUCH Higher Prices

VRIC Media Sep 9, 2026 43:52

Summary

Producers replacing only ~10% of pumped reserves are eroding long-term supply — even spot oil near $91 can't reverse years of underinvestment fast enough.

Forward prices in the $60s-70s sit below what producers say they need, so a higher spot won't unlock enough new drilling to prevent a shortage.

Knocked-out Russian refining and throttled Chinese product exports are squeezing diesel and gasoline crack spreads sharply above their historical norm.

Even pipeline rerouting cannot neutralize Strait-of-Hormuz risk because Persian Gulf production stays inside IRGC missile and drone range.

Venezuela's nationalized oil sector is too degraded and politically risky to deliver meaningful new global supply anytime soon.

Darrell Thomas's takeaways

  • Top takeaway The host opens by framing the interview around the structural-supply thesis — that producers are replacing only about 10% of produced reserves and that today's oil prices still aren't high enough to reverse years of underinvestment.
  • The host presses on the effectiveness of U.S. price-suppression efforts (SPR releases, jawboning) and later raises whether Venezuelan oil could bail out U.S. supply, prompting the discussion of historical production levels and confiscation risk.

Josh Young's takeaways

  • Top takeaway The guest argues oil is structurally bullish long-term: producers are replacing only about 10% of produced reserves, forward-curve prices in the $60s–$70s are too low to incentivize enough investment, and any shortage would be reconciled through demand destruction at much higher prices.
  • The guest attributes the diesel and refined-product squeeze to geopolitics rather than capacity — Russian refineries are offline from Ukrainian strikes and Russia has flipped to a net importer of diesel, while China halted refined-product exports shortly after the U.S.-Iran conflict began.
  • The guest argues U.S. jawboning to suppress the oil price is counterproductive, noting that Trump-administration declarations of victory over Iran have repeatedly been followed by IRGC missile and drone attacks on tankers, raising the risk of a super-spike.
  • The guest is skeptical that Venezuelan oil will meaningfully offset the supply gap, citing nationalization risk, depleted fields, and the unlikelihood of reparations to previously expropriated U.S. majors like Exxon or Conoco.
  • The guest highlights that his own oil-and-gas fund is up roughly 270% since its May 2015 launch, versus the small-cap producer ETF (PSCE) down about 60%, framing his views as backed by real capital at risk.