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'We're in an Energy Supercycle' - $120+ Oil in Play: Josef Schachter

Commodity Culture Jul 23, 2026

Summary

Schachter argues only higher prices can ration energy supply, because industry spending already falls far short of demand growth.

He sizes the Iran conflict's contribution at roughly $20 per barrel, calling today's crude rally a war premium rather than a demand shift.

Oil's mid-60s breakeven sets the floor; at $100, tier three shale wells turn economic and drilling activity expands again.

He favors Canadian, US, and reopening UK North Sea exposure while steering clear of anything inside Middle East war zones.

China's demand stays resilient, and he argues the US supplies about half of global demand growth this year.

Josef Schachter's takeaways

  • Top takeaway Top takeaway: he calls an energy commodity supercycle that is early in its innings, about 'the fifth hole', with oil averaging around $90 next year and possibly $110-120 into the end of the decade. His working numbers are $80 WTI for 2026 (which he thinks may prove too low given current conditions) and $90 WTI for 2027, assuming the war ends and Europe and the US restock their strategic reserves — roughly 500,000-600,000 barrels a day of demand on its own.
  • He puts about $20 of the roughly $86 oil price in late July 2026 down to war premium, and cites Federal Reserve of Dallas basin charts putting industry break-even in the mid-$60s, a level prices touched only briefly this year during the peace-talk phase.
  • He expects global demand growth near 900,000 barrels a day this year, potentially 1.1-1.2 million if the war ends, against an industry that can supply less than a third of that increment — which leaves higher prices as the only rationing mechanism. He notes US demand rose about 470,000 barrels a day year over year to 20.62 million, roughly half of the world's growth.
  • On where to invest, he says stay out of anything in the Middle East or any war zone, and looks to the UK North Sea if it reopens, to Canada (oil sands, conventional, natural gas, west-coast LNG; names he thinks are cheaper than US peers; and a pro-energy Carney government), and to the less-depleted US basins. He adds that US tier three shale wells need about $100 oil to be economic, with tier two viable near $80-90.
  • He is positioned at about 80% of his target energy weighting and would move to 100% on his next buy signal. He expects another low if peace talks resume, and argues energy's weighting in the S&P and TSX sits far below its 2008 and 2014 levels — which he frames as the upside — after the TSX Energy index rose 110% off the April 2025 low he flagged as cheap.

Jesse Day's takeaways

  • Top takeaway He runs the episode through an investor's lens, opening on the supercycle and $120 oil premise and pressing the guest on where the most opportunity sits in oil and gas and which parts of the market to avoid.
  • He steers the war-versus-fundamentals debate directly, asking how much of the recent price move is conflict premium versus supply-demand imbalance, and pushing on whether US crude output is rolling over as shale depletion claims circulate.