Everyone is talking about investing in nuclear energy. The talk is a lot about investing in uranium or uranium-based nuclear energy miners, providers, engineering, construction of reactors etc. But what about thorium? Or should the focus be on investing in thorium instead of uranium, or in addition to uranium? Let’s explore what is happening globally and in particular how China is looking to focus on thorium-based nuclear energy as their long-term strategy.

We also explore how China is exporting its nuclear energy expertise and technology globally with a focus on the Global South/BRICS+ members.

And for paid subscribers, we list the investment ideas we have identified and like.

Nuclear Energy in China

China’s Nuclear Fission Energy: A Strategic Inflection Point

China is executing the most ambitious nuclear energy expansion in human history, with 36-37 reactors under construction — representing over 49% of all global nuclear construction. The nation is simultaneously pursuing a dual-track strategy: rapid deployment of proven uranium-based Gen III+ reactors (Hualong One, CAP1400) for near-term capacity growth, while advancing revolutionary thorium molten salt technology for long-term energy independence.

In November 2025, China achieved a world-first: successful thorium-to-uranium-233 nuclear fuel conversion at the TMSR-LF1 facility, confirming the technical feasibility of thorium utilization. With estimated thorium reserves of 1.3+ million tonnes, China could power its entire electricity grid for thousands of years using this technology.

(Click on any of the images below to enlarge for better readability.)

Uranium vs. Thorium

Small Modular Reactors - Molten Salt Reactors

Investment Ideas we have identified and like

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We have pointed out that China has a big initiative in nuclear energy - but not necessarily using uranium fuel. Instead it is using thorium fuel in small modular reactors which are inherently safe from meltdowns or accidents in pressurized containers - and by some estimates China has about 20,000 years supply of thorium to satisfy its total energy needs! (link here to article and link here to article)

But what we are talking about here is not China’s big initiative in nuclear energy, but rather its big initiative in coal - namely clean coal with a focus on coal-to-gas and coal-to-liquefaction.

Inside China Business does a great coverage on this with the following podcast, of which several snippets are included below as well. Given China as 13% of the worlds’ reserve of coal, China is leveraging this great source of reserves.

China is using Coal to make Agricultural Fertilizers, and even exporting!

China produces sufficient fertilizers for its own farms with even exports of fertilizers to other countries. This is incredible, given the relative size of China’s ag industry:

The Big Question - Is China Developing and Using Clean Coal Technologies?

China is both developing and widely deploying technologies commonly called “clean coal,” but the term mainly means cleaner and more efficient coal, not carbon-free coal.

What China is using

• High-efficiency coal plants: China has built and retrofitted many supercritical and ultra-supercritical generating units. These use less coal per kilowatt-hour than older plants, reducing CO₂ intensity and conventional pollutants.

• Air-pollution controls: Power plants use equipment such as flue-gas desulfurization, selective catalytic reduction for nitrogen oxides, electrostatic precipitators or bag filters for particulates, and mercury controls. These can sharply reduce SO₂, NOₓ, and particulate emissions.

• Coal washing and quality upgrades: Processing coal before combustion removes some ash and sulfur, improving boiler performance and lowering local pollutants.

• Mine methane capture/use: China is promoting coal-bed methane and coal-mine-gas use. Its 2030 plan targets 26 billion cubic metres of coalbed-methane production and use of 6.5 bcm of coal-mine gas, which can improve mine safety and reduce methane leakage if effectively implemented.english.scio

• Automation and “intelligent” mines: Its current coal-industry plan promotes large, automated mines, with a target for intelligent mines to represent 75% of capacity by 2030. This is chiefly about safety and operating efficiency, rather than making coal low-carbon.english.scio

What remains limited

The key distinction is that conventional clean-coal measures can make coal much cleaner for local air quality, but they do not eliminate its climate impact. Even a highly efficient coal plant still emits substantial CO₂ unless it captures and permanently stores or uses that carbon.

China is researching carbon capture, utilization and storage (CCUS), advanced coal conversion, and even experimental direct-coal fuel-cell concepts. But CCUS is not yet deployed at large scale across its coal-power fleet. The IEA emphasizes that coal generation without CO₂ capture is incompatible with net-zero objectives.iea

Scale matters

China still relies heavily on coal despite these upgrades. In 2025, fossil fuels supplied 58% of Chinese electricity; clean sources supplied 42%, including 22% from wind and solar. Coal generation nevertheless fell by 71 TWh—the first absolute decline since 2015—alongside rapid renewable growth.ember-energy

China also has a major methane issue: it accounted for an estimated 76% of global coal-mine-methane emissions in 2023. Policies and carbon-market credits for low-concentration mine methane are steps forward, but actual mitigation remains constrained by economics and implementation.ember-energy

Bottom line

China is a major developer and user of clean-coal technologies in the efficiency and air-pollution-control sense. Those technologies can reduce coal consumption per unit of electricity and improve urban air quality. They do not, by themselves, make coal compatible with deep decarbonization; that would require large-scale carbon capture or, more realistically over time, replacing unabated coal generation with non-fossil power.

The Best Public Exchange Traded Equity We Like In This Off-the-Radar Space

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When anyone living in say Canada or the United States looks at the current rate of inflation as calculated by the government, they see figures currently at 2.8% per year in Canada and 3.5% per year in the United States. But ask anyone and they will say these numbers appear too low, they will emphasize their rate of inflation is much much higher.

Let’s explore the why, how and what of inflation and alternative measures of inflation. We have built a dashboard to monitor various measures of inflation, including the ones below - scroll down below to link to that dashboard, you can bookmark it to keep track going forth.

Why and How?

Governments are accurately calculating inflation but not appropriately calculating inflation, that is why the figures seem off. It all depends what is included in the math and if it reflects the inflation rate of the average person or average household.

Governments are also employing hedonic adjustments.

Hedonic adjustments are statistical techniques used by government agencies to separate pure price changes from changes in product quality or features when calculating inflation. By decomposing goods into their constituent characteristics and estimating how much each feature contributes to the overall price, economists can adjust observed price increases to reflect only the inflationary component rather than the portion attributable to improved quality.bls+1youtube+1

What hedonic adjustment means

The term “hedonic” comes from the Greek word for pleasure, reflecting the idea that consumers derive utility from the characteristics of a product. In price index methodology, hedonic quality adjustment means breaking down an item into observable characteristics (such as processor speed and memory for computers, or horsepower and fuel efficiency for cars), estimating the value consumers place on each characteristic, and using those estimates to adjust prices when product quality changes.bls+3youtube

This approach addresses a core problem in inflation measurement: if a television’s price rises 10% but its resolution, screen size, and smart features also improve substantially, part of that price increase reflects better quality, not just inflation. Hedonic methods aim to isolate the “pure” price change for a constant-quality bundle of features.youtubenber+1

How hedonic adjustments are applied in practice

Statistical agencies typically implement hedonic adjustments using regression models. The basic steps are:

• Define characteristics: Identify measurable features of the product (e.g., CPU speed, RAM, screen size for computers).

• Estimate feature values: Run a regression where the (log of) price is the dependent variable and the characteristics are independent variables. The resulting coefficients indicate the proportional change in price associated with a unit change in each characteristic.

• Impute quality-adjusted prices: When an old product is replaced by a new model, the model estimates what the new product would have cost in the previous period given its characteristics, or equivalently, what the old product would have cost with the new characteristics.

• Calculate price change: The inflation rate is then based on the ratio of the current price to this quality-adjusted previous price, rather than the raw price ratio.

For example, suppose a laptop rises from $1,000 to $1,250, but its CPU speed and memory have also increased. A hedonic model might estimate that, holding quality constant, the comparable price would have been $1,150 last period. The inflation-relevant price change is then $1,250 / $1,150, not $1,250 / $1,000.

Where hedonic adjustments are used

Hedonic methods are not applied to all goods; they are concentrated in categories with rapid technological change and easily observable characteristics. In the U.S. Consumer Price Index (CPI), hedonic quality adjustment is used for:

• Computer equipment, software, and supplies

• Internet access services

• Rent (for certain components)

• Used cars

• Cellular services

• Some apparel items (e.g., men’s shirts, women’s dresses, footwear)

Overall, hedonic adjustments affect a relatively small share of the CPI basket—around 7–8% of items.

Impact on measured inflation

Empirical work suggests that the net effect of hedonic adjustments on headline inflation is modest but non-zero. One study cited by the U.S. Bureau of Labor Statistics estimated the net effect of hedonics from 1999 onward at about +0.005% per year (a very small upward adjustment overall, because some categories like shelter see upward hedonic adjustments while technology sees downward ones). Other research on food prices found that correcting for quality change reduced measured inflation from 5.9% to 2.8% over a specific period, illustrating that in some categories the effect can be more pronounced.

Critics sometimes argue that hedonic adjustments understate “real” inflation by crediting quality improvements that consumers may not fully value. Proponents counter that ignoring quality change would overstate inflation by treating better products as if they were identical to older, inferior ones.

In short, hedonic adjustments are a core part of modern inflation measurement, designed to ensure that price indices reflect changes in the cost of maintaining a constant standard of living, rather than conflating price increases with improvements in product quality.

“True” Measures of Inflation

Here are the main alternative or “true inflation” measures that are commonly cited alongside the official U.S. CPI/PCE:

Core alternative inflation gauges

1. MIT Billion Prices Project (BPP) / PriceStats

• What it is: A real‑time inflation index built by MIT economists (Alberto Cavallo, Roberto Rigobón) that scrapes millions of online prices daily across many countries.

• Methodology: Uses actual transaction prices from online retailers; updates daily; aims to track inflation faster and with larger sample sizes than the BLS’s survey‑based CPI. In the U.S. it’s often branded as PriceStats.

• Key point: Despite being “real‑time” and big‑data based, its inflation readings have generally tracked fairly close to official CPI/PCE over time, not dramatically higher.

2. ShadowStats Alternate CPI (SGS)

• What it is: John Williams’ Shadow Government Statistics site publishes alternate CPI series meant to approximate what inflation would look like under older BLS methodologies (roughly 1980 and 1990 styles).

• Methodology (in essence): Starts from official CPI data and adds back estimated effects of methodological changes (e.g., hedonic adjustments, substitution, geometric means, weighting changes). The headline “ShadowStats CPI” is often described as roughly:

  ShadowStats CPI≈Official CPI+fixed/linear adjustment\text{ShadowStats CPI} \approx \text{Official CPI} + \text{fixed/linear adjustment}ShadowStats CPI≈Official CPI+fixed/linear adjustment

  rather than a fully recompiled basket from raw prices.

• Typical result: Reports inflation 5–10 percentage points higher than official CPI in high‑inflation periods; much more conservative critics argue this overstates “true” inflation because it effectively freezes an old basket and methodology.

3. Chapwood Index

• What it is: A private, U.S.-focused cost‑of‑living index created by investor Edward Chapwood.

• Methodology: Tracks price changes for 500 items in 500 cities, with weights based on what people actually spend on, excluding taxes and investment components. It’s meant to reflect “real” out‑of‑pocket living costs for typical households.

• Usage: Often cited by those who feel CPI understates their personal inflation experience, especially for essentials like housing, food, and healthcare. (Not as rigorously documented in academic literature as BPP, but more transparent than ShadowStats in describing its basket concept.)

4. Reality Index

• What it is: A newer alternative index explicitly designed to sit between CPI and ShadowStats in terms of aggressiveness.

• Methodology: Uses a fixed 1980 expenditure basket (Laspeyres index) with fully published components, weights, and sources. It holds the basket constant instead of allowing substitution, which tends to produce somewhat higher inflation than CPI but far lower than ShadowStats.

• Typical result: Headline inflation usually under 1 percentage point above CPI year‑over‑year, positioning itself as a “credible middle ground” rather than an extreme alternative.

Other useful “true inflation” perspectives

These aren’t always branded as “true inflation,” but they’re often used to gauge underlying or felt inflation:

5. Core vs. Headline CPI/PCE

• Headline CPI/PCE: Includes food and energy.

• Core CPI/PCE: Excludes food and energy to reduce volatility.

• Some analysts treat Core PCE as the Fed’s preferred “underlying” inflation gauge, while others argue that excluding food/energy understates the inflation people actually experience.

6. Cleveland Fed “Nowcast” and model‑based measures

• The Cleveland Fed and other institutions publish model‑based “nowcasts” and underlying inflation measures (e.g., median CPI, trimmed‑mean CPI) that try to strip out noisy components and give a cleaner signal of persistent inflation.

• These are still based on official data but are widely used by professionals to judge “true” underlying inflation dynamics.

7. Market‑based inflation expectations

• Breakeven inflation rates from TIPS vs. nominal Treasuries (5y, 10y, 30y) give the market’s implied average inflation over those horizons.

• These are expectations, not realized inflation, but they’re crucial for understanding how investors price “true” future inflation.

8. Sector‑specific “real inflation” gauges

People often construct their own “true inflation” by focusing on key categories:

• Housing: Owner’s equivalent rent, Case–Shiller home price indices, Zillow/Redfin repeat‑sale indices.

• Healthcare: Medical care CPI, private insurance cost indices.

• Education: College tuition and fee indices.
  These can show much higher inflation than headline CPI for households heavily exposed to those costs.

How these measures differ conceptually

Link to Our Inflation Dashboard

Link here to the Dashboard

Snippets from our Inflation Dashboard

Some of the alternative measures may have paused or stopped tracking, and some have not published the data as yet in the public domain. As such we have created a model to provide an estimation of the numbers as noted in the above chart.

Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

This week’s Dashboard is on Monitoring U.S. Debt held by Foreign Central Banks, Foreign Financial Institutions, Foreign Funds/Investors. We are making this week’s dashboard free to all subscribers - LINK HERE.

Definitely these charts and graphs are worthwhile to monitor as the sovereign debt crisis in the indebted G7 world unfolds.

Is the U.S. central bank - the Federal Reserve - monitizing the U.S. debt using accounts in foreign countries?

No—there is evidence that the Federal Reserve Bank of New York acts as a custodian for foreign official and international accounts, but that is not the same as the Fed monetizing U.S. debt through accounts in the UK, Belgium, the Cayman Islands, or elsewhere abroad.

What the data show

The Fed’s H.4.1 release reports “securities held in custody for foreign official and international accounts,” and those custody holdings were about 2.9 trillion dollars in late July 2026. The same release breaks out “foreign official” deposits and custody accounts, showing that these are balance-sheet items associated with foreign holders, not a hidden Fed financing channel. Treasury’s memo also explains that these custody figures are tabulations of actual securities inventories and are based on legal ownership, with foreign governments, central banks, and some international organizations included.

Why UK, Belgium, and Cayman show up

The UK, Belgium, Cayman Islands, and similar jurisdictions appear in Treasury International Capital and related foreign-holder rankings because they are major legal custody or booking locations for Treasury securities, including holdings by hedge funds and other private investors. Treasury and Fed materials note that these datasets can reflect where securities are held or booked, not necessarily the nationality of the ultimate beneficial owner. That is why Cayman can rank high without meaning the Cayman government itself is funding U.S. deficits.

Monetization vs custody

Debt monetization would mean the central bank directly finances government spending by creating money to buy government debt in a way that is effectively monetary financing. The Fed’s published data do show the Fed owns large amounts of U.S. Treasuries outright as part of monetary policy, but the foreign-country custody accounts are separate from that and do not imply the Fed is monetizing debt through overseas accounts. In fact, the H.4.1 release explicitly distinguishes outright Fed holdings from custody holdings for foreign official and international accounts.

Bottom line

The evidence supports a narrower conclusion: the Fed and FRBNY are custodians and counterparties in a global Treasury market, with significant foreign-account custody activity centered in places like the UK, Belgium, and Cayman Islands. It does not support the claim that the Fed is monetizing U.S. debt through offshore accounts in those countries.

Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

Current Status of the U.S. plan to use USD stablecoins to fund the unsustainable growing U.S. government debt

Let’s check on the progress to date, creating an online dashboard to monitor the progress and project out the potential trend:

Here is the LINK to our online dashboard - feel free to share.

The big question is this - is the growth positive and growing? If not, this plan is failing.

The evidence points to some deceleration in the pace of growth, even though the market is still expanding overall. One source said total stablecoin supply rose by about $8 billion in Q1 2026, and explicitly noted that this was the slowest pace of growth since Q4 2023.

At the same time, other 2026 snapshots show the market still making new highs, including roughly $321B in April, $314.7B in early July, and about $302.6B on July 5 in one tracker, which suggests the level stayed high even as short-term momentum softened.

So the best read is:

• Longer-term trend: still upward. (Bitcoin Foundation)

• Recent pace: cooler than earlier in the cycle. (CoinMarketCap)

• Structural note: some growth appears to be shifting from retail-style expansion toward trading, arbitrage, and yield-bearing use cases. (CoinMarketCap)

Our Thoughts

We believe there appears to be deceleration in the adoption and usage of the stablecoins. This means the U.S. plan is likely failing. We will continue to monitor the trend. We believe the decelerations is due to a growing awareness that stablecoins are essentially the feared central bank digital currency (CBDC) which brings the capability of programmable controls on the currency (see our prior postings for insights) which translates to controls on the geographical and politically motivated usage of the currency as well as its potential for value devaluation.

Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

We follow Penguin X on X (twitter). Recently Penguin wrote about China’s control of the copper and sulfuric acid markets - globally:

“Everyone is looking at oil. But China's real move is in a metal that no one is watching. I'm going to show you a metal. You all know it. But most of you haven't heard how scarce it's become in this period. That metal carries all of the technology of the future. Inside an electric car, there's nearly four times as much of this metal as in a gasoline car. In an AI data center, there's enough to supply hundreds of thousands of cars. Even China's largest solar panel company has started removing the silver from its panels and replacing it with this metal. The name of that metal is copper.

But there's a side that's being overlooked. Just when demand has surged this much, producing copper is getting harder. Because copper has a hidden weakness. Not all copper comes out easily. A significant portion is extracted by dissolving it with sulfuric acid. For one ton of copper, more than one ton of acid is needed. So if there's no acid, that copper stays underground. Now comes the critical part. This acid is being cut off from two fronts at once. The first is the Middle East. To make the acid, sulfur is required.

A large portion of the world's sulfur comes from the Middle East, produced while refining oil and gas. The Iran war and the Strait of Hormuz crisis have hit these shipments. Sulfur prices have quintupled in two years, and sulfuric acid has risen even faster.

The second is the real issue. China. China is the world's largest exporter of sulfuric acid, holding about one-third of global trade. Starting from May 1, 2026, it has halted exports of industrial-grade sulfuric acid. That's the real move in the headline. While the world looks at oil, straits, and war, China has quietly shut off a far more critical valve. Pay attention: China hasn't seized copper mines. It doesn't need to. Restricting the acid that extracts the copper is enough. In other words, without touching a single mine, it can lock down a significant portion of the world's copper production.

So who does this hit?

Chile. The world's largest copper producer. It imports over a million tons of sulfuric acid from China every year.

Congo. Africa's copper giant. 60% of its copper is extracted with this acid.

Both of their productions face the risk of halting if they run out of acid.

This isn't the first time China has done this. First, it restricted rare earth elements. Then silver. Silver export restrictions haven't even taken effect yet, and the price has risen 142% in three months. The pattern is always the same. China restricts a critical raw material, and the price starts rising even before the ban begins.

Now put the two sides side by side. On one side, demand. Electric cars, artificial intelligence, solar energy. That demand grows a little more every day. On the other side, production. As the acid gets cut, less copper comes out of the ground. Demand up, production down. Where they meet, there's only one thing. Scarcity. This scarcity might seem like distant mining news, but it could catch up to everyone. As copper dwindles, electric cars, data centers, and even electricity could all get more expensive. No one is talking about copper today. But in the next few years, we might all start talking about it. This is my personal analysis. I'm following the developments, and I'll keep you informed.”

Copper and Sulfuric Acid

China exerts very strong control over the processing end of both the copper and sulfur/sulfuric acid value chains, but its control over mined copper and elemental sulfur is more limited. In practice, that means:

• For copper, China dominates global smelting and refining, not mining. It accounts for roughly half of the world’s refined copper output and smelting capacity, while most copper ore still comes from the Americas and Africa.

• For sulfur/sulfuric acid, China is a top producer of sulfuric acid (roughly one‑third of global output) and a major swing supplier to key mining regions, especially Chile. Recent export restrictions (2026) show how quickly it can turn that position into a supply shock for global copper and fertilizer producers.

Below is a more detailed breakdown by commodity.

Copper: mining vs. smelting/refining

1. Where copper is mined

Copper mining is geographically concentrated, but not in China:

• Top copper‑mine producers (by volume) are typically:

  • Chile

  • Peru

  • DRC (Democratic Republic of Congo)

  • China (significant, but not dominant)

  • United States, Indonesia, Australia, etc.

China is a major miner, but it does not come close to controlling global copper mine supply the way it does refining. Most of the ore and concentrate that feeds Chinese smelters is imported, especially from:

• Latin America (Chile, Peru)

• Africa (DRC, Zambia)

• To a lesser extent, North America and Australia

This makes China highly dependent on foreign mines for feedstock, even as it dominates the next stage.

2. Where copper is smelted and refined

This is where China’s leverage is strongest:

• Refining/smelter capacity:

  • China controlled about 48–50% of global refined copper production in 2025, up from ~15% in 2005 and ~45% in 2020.linkedin+1

  • It has accounted for more than 90% of global smelting capacity growth since 2005, effectively crowding out non‑Chinese smelters.

• Trade flows:

  • In 2025, China imported 3.35 Mt of refined copper (down ~10% YoY) and exported 0.79 Mt (up ~74% YoY), pushing net imports to multi‑year lows.

  • In early 2026, monthly refined copper output hit record levels (~1.2 Mt/month), and China shifted from being the biggest consumer to a swing exporter of cathodes.

Implications:

• Global copper prices and margins increasingly clear through Chinese smelter demand for concentrates and Chinese refined output.

• Non‑Chinese smelters struggle to compete because Chinese players can run at thin or negative treatment charges (TC/RC), subsidized by scale, by‑products (gold, silver, sulfuric acid), and policy support.

• Even when China tries to rein in overcapacity (e.g., 2025–2027 plans tying new smelters to mine ownership), implementation is gradual; the structural dominance remains.

So on copper: China does not control the ore, but it effectively controls the bottleneck in turning ore into usable metal.

Sulfur and sulfuric acid: production and export leverage

1. Global sulfur vs. sulfuric acid

Two related but distinct markets:

• Elemental sulfur: mostly a by‑product of oil & gas processing (sour gas, refinery desulfurization). Major producers include:

  • United States

  • Middle East (Saudi Arabia, Qatar, etc.)

  • Russia

  • Canada

  • China (significant, but not the top)

• Sulfuric acid (H₂SO₄): produced by burning sulfur (or using sulfur from smelters) and absorbing SO₃ in water. It’s bulky, corrosive, and expensive to ship long distances, so regional markets matter a lot.

China’s dominance is in sulfuric acid, not elemental sulfur.

2. China’s share of sulfuric acid production

Estimates from 2025–2026 sources:

• China accounts for roughly one‑third of global sulfuric acid production (some sources say “around 33%”; others loosely reference “over 40%” in particular contexts, but the consistent message is “largest single producer by a wide margin”).

• Only a small fraction (~4%) of China’s sulfuric acid output is exported, but because the global market is relatively tight and regional, that small share is strategically important.

Key export destinations historically include:

• Chile (~32% of Chinese sulfuric acid exports)

• Indonesia, Morocco, Saudi Arabia, India, and others

For Chile—the world’s largest copper producer—around 37% of its sulfuric acid imports come from China, making it highly exposed to any Chinese policy shift.

3. 2026 export restrictions: a concrete test of leverage

In 2026, China moved from implicit to explicit control:

• In April 2026, Chinese authorities announced comprehensive restrictions on smelter by‑product sulfuric acid exports starting May 1, 2026, with some reports indicating a full ban on contract and spot sulfuric acid exports through December 2026 (with limited exceptions such as electronic‑grade acid).

• Prior to that, there were already export quotas for Jan–Apr 2026, cutting allowed exports by roughly 45–50% vs. the prior year for that window.

Market impact (as reported):

• Sulfuric acid prices in key import regions surged 50–100% on expectations and then reality of tighter supply.

• Copper producers in Chile, DRC, Zambia and others—whose leaching operations depend on cheap sulfuric acid—faced immediate cost pressure and potential output constraints.

This shows that even though China exports only a modest share of its sulfuric acid output, it occupies a marginal but critical supplier role in several regions. Cutting those marginal flows can quickly reprice the global market and force mines to curtail production or pay much higher costs.

How “control” should be interpreted

Putting this together:

Copper

• Mine supply: China is a major miner but does not control global copper ore; most comes from the Americas and Africa.

• Processing capacity: China controls ~half of global smelting/refining capacity and production, and has been the main source of capacity growth for two decades.

• Strategic leverage:

  • Can influence treatment charges, refined copper availability, and the viability of non‑Chinese smelters.

  • Can shift from net importer to swing exporter of refined copper, altering global balances and price dynamics.

In functional terms: China doesn’t “own” most of the copper in the ground, but it largely controls the industrial gate through which that copper must pass to become usable metal.

Sulfur / sulfuric acid

• Elemental sulfur: China is important but not dominant; Middle East, U.S., Russia, and Canada are major players.

• Sulfuric acid:

  • China is the largest single producer (~1/3 of global output).

  • It is a critical marginal supplier to copper‑producing regions (especially Chile).

  • The 2026 export restrictions demonstrate that China can weaponize this position to tighten global supply and raise costs for mining and fertilizer sectors.

Functionally: China’s control over sulfuric acid is more “chokepoint” than “monopoly,” but that chokepoint is large enough to move global markets.

Implications for investment and risk

• Geopolitical risk: Both copper refining and sulfuric acid fit the “economic statecraft” pattern: seemingly commercial capacity used as strategic leverage. Expect more periodic export controls or informal guidance when Beijing wants to protect domestic industry or signal in broader disputes.

• Supply chain exposure:

  • Copper miners in Chile, Peru, DRC are indirectly exposed to Chinese refining policy (via concentrate demand and TC/RC) and directly exposed to sulfuric acid policy.

  • Fertilizer producers (especially phosphate) are also heavily exposed to sulfuric acid costs.

• Potential hedges / angles:

  • Companies with integrated sulfur/sulfuric acid outside China (e.g., Middle East, U.S., Canada) may benefit from higher regional acid prices.

  • Miners with own acid plants or long‑term contracts diversified away from China are less vulnerable.

  • On the copper side, non‑Chinese smelters could become more valuable if policy or trade barriers reduce China’s ability to flood the market with refined metal—but they currently face severe margin pressure.

We have built an online dashboard detailing not only all of the above, but much more detail in charts, graphs, metrics, and other insightful data points. Become a paid subscriber to get access to the entire dashboard .. let’s view the dashboard

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Yes we are seeing the China market as meeting all these at the same time now and for likely a long-term trend. But is China investable, is it safe to put investment funds into China, safe from confiscations or from freezing of assets? Which market is best to invest in - the Hong Kong exchange or other exchange(s) in China? Let’s explore on these questions and the opportunity … the opportunity is exciting - see below, as even just the Chinese currency strengthening is giving a positive return of about 5% per year based on the current trend over the past 18 months.

Last minute update - see podcast by Clive Thompson on Investing in Equities on the Hong Kong Stock Market - see below for the video link.

Are Chinese Equities Investable?

We would say yes for all investors except with some risks to consider if you are a U.S.-based investor. In particular for investing in equities into the Hong Kong market - Hong Kong has an open capital account, no restrictions on remitting profits and dividends, a freely convertible HKD linked to the USD, and a common-law framework that generally supports contract enforcement and arbitration.

For Americans:

For Americans, U.S. officials and the SEC flag meaningful risks in China-linked exposure, including transparency, governance, volatility, and policy/geopolitical risk. stateyoutube

• U.S. State Department – 2025 Investment Climate Statements: Hong Kong. This is the best official overview if you want a pro-investability baseline, because it covers Hong Kong’s legal regime, banking system, remittance rules, and dispute resolution. state

• SEC Risk Spotlight on U.S. Investors’ Exposure to Domestic Chinese Issuers. This is the best official counterweight, explaining why many China-linked assets can be riskier for U.S. investors than they first appear. youtube

• U.S. Treasury Outbound Investment Security Program. This matters because the U.S. now restricts or requires notification for certain outbound investments into China/Hong Kong in advanced sectors such as semiconductors, quantum, and AI. treasury

Hong Kong exchange positive points:

Hong Kong is still described by the U.S. State Department as a free-market economy with no restrictions on outward investment and no limits on remitting investment profits and dividends. The report also says Hong Kong’s courts provide effective enforcement of contracts and that foreign and domestic companies generally operate under the same rules. For Americans who want China exposure without buying onshore mainland securities directly, Hong Kong listings and Hong Kong-domiciled funds can be a practical entry point.

Risks for Americans:

The biggest issue is not whether you can buy; it is whether the exposure matches your real risk tolerance. The SEC warns that U.S. investors in Chinese securities face risks tied to disclosure quality, governance, liquidity, volatility, fraud, and the structure of Chinese markets. The State Department also notes that Hong Kong’s judicial independence and information environment have faced pressure under the National Security Law, which is relevant for long-term capital safety. For Americans investing directly or through funds, the Treasury’s outbound rules can also affect certain technology-related investments in China and Hong Kong.

For many Americans, the cleanest routes are Hong Kong-exposed ETFs or U.S.-listed funds rather than trying to open complex direct-market structures. BlackRock’s iShares MSCI Hong Kong ETF states that it tracks an index of Hong Kong equities, which makes it a straightforward vehicle for gaining Hong Kong market exposure. Direct Chinese A-share exposure, by contrast, is the part the SEC highlights as especially complicated and risk-heavy for U.S. investors.

It is noteworthy to mention that many U.S. based fund managers, asset managers and ETF providers hold and/or own Hong Kong-listed equities, giving a measure of assurance for holding and owning these assets, whether directly on the Hong Kong exchange or through U.S. listed issuers or U.S. ETFs. Our preference is owning the equities directly off the Hong Kong exchange.

The Four Pillars of Investing in Chinese Equities

We see investing in Chinese equities as bringing together 4 pillars, supporting the potential for great dividends and great capital appreciation - with currency gains as well - as a trend on undervalued and underappreciated equities, especially relative to the overvalued U.S. markets like in the U.S. AI, semiconductor and technology sectors - we have posted many articles showing this overvaluation, and many of the podcasts and industry gurus such as Dr. Marc Faber and Louis-Vincent Gave we follow continue to point this out.

Currency Appreciation

In a recent podcast (see below), Louis Vincent Gave of Gavekal.com points out: “If you look at the past 18 months the REMBI is going up 50 basis point a month like clockwork like it's literally going up 50 basis points a month almost regardless.”

Here is our analysis on the Chinese currency, we see 40+ bps average in the 18 month time period we analyzed:

Is China Encouraging Publicly Listed Companies to Distribute Higher Dividends and Improve Shareholder Returns?

Yes, Chinese authorities have implemented sweeping regulatory directives—including the “nine-point guidelines” and “cash dividend guidance” from the China Securities Regulatory Commission (CSRC)—to compel and encourage publicly listed companies to distribute higher dividends and improve shareholder returns. [1, 2]

The policy shift targets the following to promote a dividend-focused culture: [1, 2]

• Payout Targets: Authorities are enforcing a benchmark 30% dividend payout ratio. Firms that do not meet payout thresholds face tougher scrutiny if they attempt to raise capital through equity refinancing. [1, 2]

• Increased Frequency: Companies are being pushed to make multiple dividend distributions per year, such as interim and quarterly dividends. [1, 2, 3, 4, 5]

• Value Enhancement: Bourses like the Shanghai Stock Exchange actively compel companies to enhance market value through regular cash dividends alongside strategic share buybacks and mergers. [1]

• Tax and Financial Incentives: The government has introduced corporate tax credits for reinvested dividends and rolled out hundreds of billions in buyback financing programs. [1, 2]

This directive has prompted a major cultural shift, shifting investor focus from speculative growth to stable, yield-generating stocks—especially among large State-Owned Enterprises (SOEs) in the energy, telecommunications, and financial sectors. You can read the specific regulatory language on dividend mechanisms in the official CSRC Guidelines. [1, 2, 3]

Here is another link to a great article on this dividend advantage. This article points out the following chart:

Equities aligned with Economic Trends

We like equities that are Hong Kong listed and that are aligned with economic trends, in particular of the big geopolitical trend of the movement by countries including China towards economic statecraft. We have posted on this recently, see link below.

Clive Thompson on Hong Kong Equities

Here are the Chinese Equities we are currently holding or assessing

Let’s delve in to our list …

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Economic statecraft is when a state uses economic tools—such as trade policy, sanctions, investment rules, aid, visas, loans, or industrial incentives—to achieve foreign policy or national security goals. In plain language, it is diplomacy and coercion through the economy rather than through troops or weapons.

Why it is rising

It has become a major geopolitical trend because countries now see economic security as part of national security, not as something separate. States are using both carrots like subsidies and development finance, and sticks like sanctions and trade restrictions, to shape other countries’ behavior and protect their own strategic interests.

What is driving it

A few big forces explain the shift. First, global supply chains and finance are so interconnected that economic pressure can now have strategic effects quickly. Second, countries want to reduce dependence on rivals for critical goods, technology, energy, and capital. Third, governments are increasingly trying to build or protect domestic industries for geopolitical reasons, not just economic efficiency.

Simple example

If one country restricts access to advanced chips, blocks investment, or offers big subsidies to bring semiconductor production home, that is economic statecraft. The goal is not just growth; it is to gain leverage, reduce vulnerability, and influence the balance of power.

Why analysts care

The important shift is that economics and security are now tightly linked. That means trade policy, industrial policy, sanctions, and technology controls are no longer “just economic” decisions—they are now core instruments of state power.

A Couple Great Podcasts on Economic Statecraft

Our Developing Dashboard and Status Tracker on Economic Statecraft

We are developing a dashboard and status tracker to monitor the development by many countries, including the OECD countries and the BRICS+ members and observers. Click on any image below to enlarge to understand the tools being employed by countries to implement economic statecraft:

A bit on our model - click on any image to enlarge. We are working the model to implement a detailed, systematic mathematical approach. In turn we are also developing detailed investment implications. Here are some overview slides below, with much more detail developing. Some areas of the dashboard are interactive with the ability to do “what-if” scenarios on changing parameters and factors. All very nifty and of value to economists, fund managers and investors. We are using all of it in our investment approach with our portfolios.

The Dashboard

Access the entire dashboard is available to all paid subscribers.

Here is the link to the Economic Statecraft Dashboard …

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Here is how our dashboard looks like at the top level below. Scroll down below to view our projections for the price of gold out 1 month, 3 months and 6 months based on this model (click on any image to enlarge):

Link Here to our Model - free for all subscribers for now, will become accessible to paid subscribers only after one month

Subscribe now

Here is a podcast discussing the basis for the first Factor (Factor 1) of the model below. We have performed research to enhance to a high-correlation model.

Background on our Model

Model Specification: Tier 1 (Linear OLS) — plain straight-line fit, R² = 82.8%. Tier 2 (Log-Linear) — log-transforms gold price to capture exponential growth, gaining +8.2 pp to R² = 91.0%. Tier 3 (Log-Linear + Interaction) — adds a Liquidity × YoYInjChange interaction term that captures regime amplification: when PBoC liquidity is already elevated AND net injections are accelerating simultaneously, gold responds more than proportionally. This final model achieves R² = 96.2%, a total gain of +13.3 pp over the linear baseline. All projections and fair-value estimates use Tier 3; predictions are back-transformed via exp().

Two-Factor Methodology: Factor 1 (Level, 65%) — OLS regression of PBoC cumulative liquidity (CNY Trillions) vs. gold spot price (CNY/oz); anchors long-run fair value. Factor 2 (Momentum, 35%) — OLS regression of YoY % change in net OMO+MLF injections vs. YoY % gold returns; captures short-to-medium term price momentum. Framework inspired by Michael Howell (GL Indexes, “Capital Wars”) and global fund managers and economists. Not financial advice.

Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

A comprehensive mathematical and economic analysis of the relationship between oil prices, debt levels, EROI, and systemic financial risk. Based on Martenson’s Peak Prosperity framework, public research, Federal Reserve data, BIS derivatives data, and EIA energy statistics.

We are near the Singularity Danger Point where Oil Prices meet the Unsustainable Government Debt Levels

(click on any image to enlarge)

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Click Here to the Interactive Oil-Debt Model Dashboard

Theory Deep Dive

Complete analysis of Chris Martenson’s Oil-Debt Boundary Theory — synthesized from Peak Prosperity publications, The Crash Course (2008, 2011, 2023), podcasts, and public research.

Who is Chris Martenson?

Chris Martenson holds a PhD in pathology from Duke University and an MBA in finance from Cornell University. He co-founded Peak Prosperity, a platform dedicated to analyzing the interconnected forces of Economy, Energy, and Environment — what he calls the “Three E’s.”

He is best known for creating The Crash Course, a multi-part video/book series (2008, 2011, revised 2023) that ties these three domains into a coherent framework for understanding systemic risk. His work draws on energy economics, monetary theory, ecological economics, and systems thinking.

Martenson draws intellectual lineage from Matthew Simmons (Twilight in the Desert — argued Saudi reserves were overstated), Michael Ruppert (Collapse — linked Peak Oil to financial instability), and the broader Peak Oil research community including M. King Hubbert’s original production curve work.

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Disclaimer: This analysis is for educational and research purposes only. It synthesizes publicly available research from Chris Martenson / Peak Prosperity, Federal Reserve data, BIS derivatives statistics, EIA energy data, and academic literature on EROI and energy economics. This is not financial advice. All projections involve significant uncertainty. Mathematical models are simplified representations of complex systems.

Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

Oil & Gold Price History

The Arab Oil Embargo Era · 1971–1982

Oil ($/bbl)Gold ($/oz)Ratio (bbl/oz)

The decade from 1971 to 1982 witnessed two of the most dramatic commodity price shocks in modern history. The collapse of the Bretton Woods gold-peg system in 1971, the Arab Oil Embargo of 1973–74, the Iranian Revolution of 1979, and the Iran-Iraq War of 1980 combined to send both oil and gold prices surging. The charts below use annual average prices: US crude oil ($/barrel) and London PM Fix gold ($/troy oz).

Crude Oil Price

click on each image/chart to enlarge:

Gold Price

click on each image/chart to enlarge:

Oil / Gold Ratio

Barrels of oil purchasable with 1 troy oz of gold · 1971–1982

Key insight: Despite massive nominal swings, the ratio stayed in a ~15–21 bbl/oz band

Interpretation: Gold and oil moved together as inflation hedges

Key Historical Events

1971

Nixon ends USD-gold convertibility; gold begins free float

1972

USD devalued; gold rises as dollar weakens

Oct 1973

Arab Oil Embargo — OAPEC cuts exports to US & allies

1974

Oil price quadruples; embargo lifted March 1974

1976

Gold corrects ~22% from 1974 highs

1979

Iranian Revolution — Shah deposed; oil supply collapses

Jan 1980

Gold peaks at $850/oz intraday; oil at $35+/bbl

1980

Iran-Iraq War begins; prolonged supply uncertainty

1981–82

Demand destruction, energy efficiency; prices soften

Data Notes

• Oil prices: US crude oil annual average ($/barrel) based on EIA/posted price records. Pre-1974 prices reflect US domestic posted prices; post-1973 reflect OPEC official selling prices.

• Gold prices: London Bullion Market PM Fix annual averages ($/troy oz). The $850 intraday peak occurred on January 21, 1980; the 1980 annual average was ~$615.

• Oil/Gold ratio: calculated as (gold price ÷ oil price), representing barrels of oil purchasable with one troy ounce of gold.

• All prices are nominal USD — not inflation-adjusted.

Historical data · EIA · London Bullion Market · IMF · All prices nominal USD

Oil and Gold Price Projections based on 1970s Model

Let’s delve in …

(based on mid June 2026 prices)

click on each image to enlarge:

Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

In the past Dr. Marc Faber has also pointed out this asset deflation could be either in the form of a deflation in nominal terms or in real commodities-based (or real inflation-adjusted) terms. We have written postings on this - see below":

History Rhyming Now Again

We believe that we are in a similar 1966 to 1982 long-term performance time period. Recognizing the extreme overvaluation relative to income, earnings, sales and revenues of current equities in the AI, Semiconductor and Quantum Computing spaces, if we look at the S&P 500 index and adjust it by taking out major equities in these spaces, and compare to the performance of gold and silver over the past 2 years, we definitely see an asset deflation generally in most equities in this measure of real terms. Here is an indication chart showing the extreme concentration of the AI, Semiconductor, and Quantum Computing spaces relative to the rest of the market and how in the past historically it has exemplified bubble sector behavior - another reason why we take that out in our chart below as we think it is highly likely this bubble sector will deflate not only in real-terms but even in nominal terms over the coming months:

Here is the chart of the Adjusted S&P500 relative to an index of gold/silver (representing real terms) over the past 2 years - click to enlarge:

Will the SpaceX IPO cause market selling generally for investors to raise cash to enter the IPO?

Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

Note: it is very important to add PRODUCTS to the math in the dashboard - meaning SPR + Commercial + Petroleum Products as the importance of Petroleum Products as a factor needs to be factored in - see link to x tweet by Jack Prandelli - link here and substack article:

Here is our projected oil price trajectory for the remainder of the year. These are WTI and Brent prices. We have also incorporated the views of expert analysts (see references) in this calculation model as well:

We also have a section in the dashboard on what we see as an 8-step economic sequence happening to the global economy and financial markets. Already we are seeing price controls, export restrictions and shortages emerging in several countries:

Based on our analysis we have calculated the investment implications to our portfolio as being the below. We do include the “Defense and Aerospace” sector though we do not include equities of businesses focused in this sector in our portfolio.

The Link

Here is the link - link here. (may need to wait for data to load; for references, click on References and Data Sources towards the bottom of the dashboard. Overall the dashboard is still developing and we are performing validation testing and further enhancements - please send us an email for any suggestions for enhancements as well! Thanks for your support.

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Subscribe today to become a paid subscriber to maintain access to this dashboard - it will be free for a few weeks and then only be available to paid subscribers.

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Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

Become a paid subscriber today for access to the below, and also for access to our entire postings, and also for access to our portfolios - all of this for our best offer of less than $5 dollars a month.

Let’s delve into the implications to our investment approach and holdings in our portfolio …

Let’s delve into the entire detailed and comprehensive report, including an insightful table on Systemic Risk and Contagion Matrix, and what the investment implications are to our portfolio …

Investment Implications - 2026

Commodity Prices Impact Dashboard

Let’s delve in …

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A comprehensive analysis of commodity shocks, inflation dynamics, policy responses, social consequences, and investor implications - grounded in historical precedent and current geopolitical intelligence.

Executive Summary

This report analyzes the cascading economic and financial consequences of an active U.S.-Israel-Iran military conflict, with particular focus on the Strait of Hormuz chokepoint, global energy markets, inflation dynamics, and investor positioning. Drawing on historical precedents from 1973, 1979, 1990, 2003, and 2022, we construct an 8-step economic sequence model and assess probability-weighted outcomes across multiple escalation scenarios.

Key Findings

● Oil prices could surge 60-120% within weeks of Hormuz closure, mirroring or exceeding 1973 and 1979 shock magnitudes.

● Global GDP contraction of 3-6% is plausible in a sustained conflict scenario, comparable to the 2008-09 financial crisis.

● Inflation could re-accelerate to 8-15% in advanced economies, creating a new stagflation episode.

● The Strait of Hormuz carries ~21 million barrels/day - approximately 20% of global petroleum liquids.

● Historical precedent shows governments respond with price controls, rationing, and emergency legislation within 30-60 days.

● Social unrest, supply chain disruption, and food security crises follow energy shocks with a 3-6 month lag.

Every major Middle East conflict since 1973 has triggered a predictable sequence: commodity shock → policy overreaction → supply destruction → stagflation → social strain. The 2026 U.S.–Israel–Iran war follows this template — but with the added dimension of historically unprecedented G7 debt levels and digital surveillance infrastructure.

Analysis by Geopolitical and Energy Expert Art Berman

Art Berman's analysis centers on the structural fragility of global energy markets and why this conflict is categorically different from prior Gulf crises.

Berman emphasizes that global oil markets were already structurally tight before the conflict, with spare OPEC+ capacity at multi-decade lows. Any supply disruption from the Gulf would find no buffer. He notes WTI was trading near $78/bbl with demand outpacing new field development.

Strait of Hormuz: The Chokepoint

Approximately 17–21 million barrels per day transits the Strait — roughly 20% of global consumption. Berman argues Iran’s asymmetric naval capability (mines, drones, missile boats) makes a sustained closure far more plausible than Western analysts acknowledge. Even a 30-day partial closure would drain strategic reserves globally.

Energy Price Trajectory

Berman’s base case: oil at $120–160/bbl within 60–90 days of sustained conflict. His bull case: $200+ if Iranian oil infrastructure is struck and retaliatory attacks hit Saudi Aramco facilities. He draws direct parallels to 1973 and 1979, noting that both crises were initially dismissed as ‘temporary.’

Natural Gas & LNG Cascade

Qatar’s LNG exports — critical for European energy security — transit the same Gulf waters. Berman warns of a European energy crisis worse than 2022, with gas prices potentially exceeding €300/MWh. This would force industrial shutdowns across Germany, the Netherlands, and Belgium.

Petrochemical & Fertilizer Cascade

Berman highlights the underappreciated role of Gulf-sourced petrochemicals in global supply chains. He notes that urea (fertilizer), plastics, and industrial chemicals embedded in ~95% of finished goods would face simultaneous supply shocks, creating ‘inflation in everything.’

Policy Response & Investor Positioning

Berman is skeptical of SPR releases as a meaningful buffer (the US SPR is at 40-year lows). He recommends energy equities, commodity producers, and inflation-linked assets. He warns that central banks face an impossible choice: fight inflation with rate hikes that crush growth, or tolerate inflation to protect employment.

Berman’s synopsis: The world has never faced a simultaneous disruption of oil, gas, petrochemicals, and fertilizers at this scale. The 1973 embargo was oil only. This is everything, all at once. Markets are not priced for this.

Analysis by Geopolitical Expert Robert Pape

Pape’s research-backed framework reveals why this conflict is likely to be prolonged, costly, and strategically inconclusive for Western powers.

Coercive Strategy & Its Limits

Pape opens with his foundational framework: coercive air power and sanctions rarely achieve strategic objectives against determined adversaries. He cites his landmark research showing that economic coercion succeeds in fewer than 30% of cases historically — and almost never against states with strong nationalist identity and resource independence.

Iran’s Strategic Resilience

Pape argues Iran has spent 40+ years preparing for exactly this scenario. Its dispersed nuclear infrastructure, proxy network (Hezbollah, Houthis, Iraqi militias), and asymmetric naval capabilities make a quick military victory impossible. He warns that bombing campaigns historically harden civilian resolve rather than breaking it — citing WWII London, Dresden, and Vietnam.

Escalation Dynamics & Regional Contagion

Pape maps the escalation ladder: from Iranian proxy attacks on US bases → Hormuz mining → direct missile strikes on Israeli cities → potential nuclear threshold moments. He notes that each rung of escalation is harder to de-escalate than the last. Regional contagion risk — drawing in Saudi Arabia, Turkey, and Russia — is underpriced by Western analysts.

Historical Precedents: Occupation & Blowback

Drawing on his ‘Dying to Win’ research on suicide terrorism, Pape argues that military occupation and perceived humiliation are the primary drivers of asymmetric retaliation. He warns that a prolonged conflict will generate a generation of radicalized actors — a pattern seen after the 1982 Lebanon invasion, the 2003 Iraq War, and the 2006 Gaza blockade.

Economic Warfare & Sanctions Blowback

Pape analyzes the paradox of economic warfare: sanctions on Iran have accelerated its de-dollarization efforts, strengthened China–Iran–Russia economic ties, and reduced Western leverage. He argues the US has ‘spent’ its economic coercion capital — further sanctions will have diminishing returns while accelerating the dollar’s reserve currency erosion.

Diplomatic Off-Ramps & Historical Resolution Patterns

Pape identifies three historical resolution patterns for conflicts of this type: exhaustion (both sides bleed until negotiation), regime change (historically rare and unstable), or great-power mediation (China/Russia as brokers). He gives the highest probability to a prolonged, low-intensity conflict with periodic escalation — lasting 3–7 years.

Pape’s synopsis: History is unambiguous: you cannot bomb a nation into submission when its people believe they are defending their homeland. The economic costs of this war will fall disproportionately on ordinary citizens in the West — not on the decision-makers who started it.

Art Berman: Oil Markets, the Strait of Hormuz & the Coming Energy Crisis

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Podcast / YouTube•2025–2026

Art Berman’s detailed analysis of global oil market fragility, Hormuz chokepoint risk, petrochemical cascade effects, and investor positioning in a war-driven energy shock scenario. Berman is a petroleum geologist and energy analyst with 40+ years of industry experience.

Robert Pape: Coercive Strategy, Escalation Dynamics & the Limits of Military Power

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Podcast / YouTube•2025–2026

Professor Robert Pape (University of Chicago) discusses his research on coercive air power, suicide terrorism, and strategic escalation. Pape is the author of ‘Bombing to Win’ and ‘Dying to Win’, landmark works on the effectiveness of military coercion.

Bombing to Win: Air Power and Coercion in War

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Robert A. Pape — Cornell University Press•1996

Pape’s foundational work demonstrating that strategic bombing rarely achieves political objectives. Essential framework for understanding why air campaigns against Iran are unlikely to produce quick capitulation.

https://www.cornellpress.cornell.edu/book/9780801483356/bombing-to-win/

Dying to Win: The Strategic Logic of Suicide Terrorism

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Robert A. Pape — Random House•2005

Pape’s research on 315 suicide terrorist campaigns showing that military occupation is the primary driver of asymmetric retaliation — directly relevant to predicting Iranian proxy responses.

https://www.penguinrandomhouse.com/books/291762/dying-to-win-by-robert-a-pape/

The Oil Price–Macroeconomy Relationship Since the Mid-1980s

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Lutz Kilian — Journal of Economic Perspectives•2008

Seminal academic analysis of how oil price shocks transmit into broader macroeconomic disruption, inflation, and recession — the theoretical backbone for the 8-step economic sequence analysis.

https://pubs.aeaweb.org/doi/10.1257/jep.22.4.147

Energy and the Macroeconomy: A Review

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Olivier Blanchard & Jordi Galí — NBER Working Paper•2007

Analysis of why oil shocks in the 2000s produced less stagflation than the 1970s — and the conditions under which the 1970s pattern could recur (high debt, tight labor markets, supply-side disruption).

https://www.nber.org/papers/w13368

The Strait of Hormuz: The World’s Most Important Oil Transit Chokepoint

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U.S. Energy Information Administration (EIA)•2023

Official EIA analysis of Hormuz transit volumes (17–21 million bbl/day), alternative routes, and the economic consequences of closure. Primary data source for the 20% global supply disruption figure.

https://www.eia.gov/todayinenergy/detail.php?id=56919

Historical Precedents

The 1973 Oil Crisis and Its Economic Legacy

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Federal Reserve History / FRASER•1973–1974

Comprehensive account of the Arab Oil Embargo’s economic impact: oil +400%, US CPI peaked at 12.3%, recession of 1974–75. Primary historical parallel for the commodity shock analysis.

https://www.federalreservehistory.org/essays/oil-shock-of-1973-74

The Iranian Revolution and the 1979 Oil Shock

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Federal Reserve History / FRASER•1979–1980

Analysis of the 1979 Iranian Revolution’s oil market impact: supply drop of 5.6 mb/d, oil +150%, US stagflation, and the Volcker shock. Key precedent for the Iran conflict scenario.

https://www.federalreservehistory.org/essays/oil-shock-of-1978-79

Nixon’s Wage and Price Controls (1971–1974)

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Federal Reserve History•1971–1974

Historical account of Nixon’s price control program, its initial political success, and its role in creating gasoline shortages, black markets, and ultimately worsening inflation — the template for Steps 2–3 of the economic sequence.

https://www.federalreservehistory.org/essays/wage-price-controls

The 1990 Gulf War Oil Price Shock

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EIA / IMF Historical Analysis•1990–1991

Analysis of the Iraqi invasion of Kuwait’s oil market impact: oil +130% spike from $17 to $40/bbl, brief US recession, and rapid normalization after coalition victory — the ‘best case’ historical parallel.

https://www.eia.gov/finance/markets/crudeoil/spot_prices.php

Russia–Ukraine War: Energy Market Impacts (2022)

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International Energy Agency (IEA)•2022–2023

IEA analysis of the 2022 energy crisis triggered by Russia’s invasion: European gas prices +1,000%, energy inflation +200%, industrial shutdowns, and emergency rationing — the most recent historical parallel.

https://www.iea.org/reports/world-energy-outlook-2022

Economic & Policy Analysis

World Economic Outlook: War Sets Back the Global Recovery

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International Monetary Fund (IMF)•April 2022

IMF framework for analyzing war-driven economic disruption, used as the basis for GDP impact projections and the stagflation risk assessment in the 8-step sequence.

https://www.imf.org/en/Publications/WEO/Issues/2022/04/19/world-economic-outlook-april-2022

Central Bank Digital Currencies: Foundational Principles and Core Features

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Bank for International Settlements (BIS)•2020

BIS framework document on CBDC design and implementation — foundational source for the Step 8 analysis of digital control mechanisms and programmable money in wartime economies.

https://www.bis.org/publ/othp33.pdf

Global Fertilizer Markets: Supply Chain Vulnerabilities

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Food and Agriculture Organization (FAO) / World Bank•2022–2023

Analysis of global fertilizer supply chains, Gulf-sourced urea and ammonia dependency, and food security implications of supply disruption — basis for the petrochemical cascade analysis.

https://www.worldbank.org/en/topic/agriculture/brief/fertilizers

De-dollarization: Myth or Impending Reality?

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Council on Foreign Relations•2023

CFR analysis of dollar reserve currency status, BRICS payment system development, and the conditions under which war-driven sanctions could accelerate de-dollarization — relevant to the Year 2–3 timeline phase.

https://www.cfr.org/backgrounder/dollar-dominance-monitor

Data Sources

Crude Oil Prices: West Texas Intermediate (WTI)

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Federal Reserve Bank of St. Louis (FRED)•Ongoing

Primary data source for historical WTI crude oil price series used in the oil price trajectory chart and historical precedent analysis.

https://fred.stlouisfed.org/series/DCOILWTICO

Consumer Price Index for All Urban Consumers (CPI-U)

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U.S. Bureau of Labor Statistics / FRED•Ongoing

Primary data source for US CPI historical series used in the inflation trajectory chart and stagflation analysis.

https://fred.stlouisfed.org/series/CPIAUCSL

Global GDP Growth Data

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World Bank Open Data•Ongoing

World Bank GDP growth data used as baseline for the GDP impact projections and historical comparison across the 1973, 1979, 1990, and 2022 crisis periods.

https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

Strait of Hormuz Oil Flow Data

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U.S. Energy Information Administration (EIA)•2024

EIA chokepoint analysis providing the 17–21 mb/day transit volume figure and alternative route capacity data used throughout the report.

https://www.eia.gov/international/analysis/special-topics/World_Oil_Transit_Chokepoints

This report synthesizes primary source analysis (podcast interviews), academic research, historical data, and institutional reports. Quantitative projections (oil prices, inflation rates, GDP impacts) are scenario-based estimates derived from historical precedent analysis and are not forecasts. They represent plausible ranges under the stated conflict assumptions.

The 8-step economic sequence framework is an original analytical construct by CedarOwl Research, drawing on the theoretical frameworks of Kilian (2008), Blanchard & Galí (2007), and historical case studies from 1973, 1979, 1990, and 2022. All historical return data is sourced from FRED (Federal Reserve Bank of St. Louis) and World Bank Open Data.

Implications to our Investment Approach and Holdings in our Portfolio

Let’s delve into the implications to our investment approach and holdings in our portfolio …

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We see the beginnings of a long-term bull market in China assets, in particular here we focus on Chinese equities. We look at this from a fundamental perspective with a great podcast by The Master Investor Podcast program show interviewing the legendary investor Louis-Vincent Gave, whose firm is based in Hong Kong China. We also look at the technical analysis perspective with an incredible chart from the legendary Chief Investment Strategist Judd Hirschberg, indicating a potential long-term breakout .. let’s hear and see what Louis-Vincent, Judd and David Rosenberg have to say about China - scroll below …

Louis-Vincent Gave on China:

Here’s the main takeaway: Louis Gave argues that the world is entering a major reset driven by Middle East disruption, inflation, and broken assumptions about U.S. financial and military dominance, while China looks unusually well positioned and potentially undervalued.

Core Argument

The episode’s central idea is that geopolitical shocks are forcing investors to rethink old beliefs about safe assets, supply chains, and defense spending. Gave says the world is moving into a period where inventories, energy security, and industrial capacity matter much more than before.

Middle East Shock

He expects the conflict to create a 6-week to 2-month supply chain “air pocket,” even if a diplomatic solution comes quickly, because ships and cargo flows take time to normalize. He says the inflationary hit from energy, fertilizer, gas, and related goods is already unavoidable, but not fully priced into equities and bonds yet.

U.S. and China Reset

Gave’s more optimistic view is that inflation pressure may force the U.S. and China into a more cooperative relationship, because both sides cannot afford simultaneous inflation shocks from trade conflict and Middle East disruption. He thinks upcoming meetings between Trump and Xi could mark a reset in relations rather than a new escalation.

Why China Stands Out

He argues China is “screamingly cheap” because it has the lowest cost of capital, labor, and electricity, plus the world’s cheapest currency. In his view, China also prepared unusually well by stockpiling oil, gas, and fertilizer after semiconductor restrictions convinced policymakers they needed self-sufficiency.

Defense and Warfare

Gave is bearish on traditional defense stocks because war has become far more asymmetrical and drone-driven. He argues that a $50,000 drone can threaten assets worth hundreds of millions or even billions, which weakens the economics of legacy weapons systems and big-ticket defense contractors.

Bond Market Risks

He highlights the UK, France, and the U.S. as especially vulnerable because they rely heavily on foreign buyers of government bonds rather than domestic savings. That dependence, he says, leaves them exposed if foreign investors lose confidence or demand higher yields.

Investment Lens

His broader message is that markets are being reshaped by policy, energy, and geopolitics, so investors should focus less on old valuation narratives and more on resilience, momentum, and structural cost advantages. For him, the big trade implication is that China may remain one of the most attractive markets if the current regime of cheap inputs and supportive policy continues.

David Rosenberg on China:

“Regarding equities, we truly like Asia. China is the biggest component of the MSCI AC Asia ex Japan Index, and valuations are much more compelling than in the US. In addition, China’s position is likely to be strengthened internationally by the war, without Beijing having to lift a finger. They built up enough oil reserves to withstand the impact of this war. Also, in clean energy, they’re so far ahead of everybody else, and that is where the world is heading. In bonds, Latin America is also well represented in our portfolio, as there are attractive real yields there.” David Rosenberg - source link

Judd Hirschberg Chart on China:

Check out this incredible technical analysis chart from Judd Hirschberg of White Wave Trading Strategies - link here.

Note in particular the multi-year breakout! Our technical analysis indicates the potential long-term move in the Shanghai Composite Index to 9000.

A Double Whammy Higher with Asian Currencies Strengthening

See our prior posting relating to this:

Let’s delve into the specific investments in China we are making and that we are considering …

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Key Findings

● ⚡ Energy Crisis: AI data centers consume 10× more energy by 2026; energy costs alone can exceed human payroll at scale.

● 💰 Hidden Costs: 85% of organizations underestimate total AI deployment costs; true TCO is 3–5× the licensing fee.

● 🤖 Robot Economics: Humanoid robots at $5,900–$250,000 achieve payback in 14–24 months in high-wage markets.

● 📊 Token Inflation: API costs inflate 40–70× from base rate when full workflow overhead is included.

● ⚖️ The Crossover: Cost parity between AI agents and human workers is projected around 2030 for most enterprise use cases.

● 🏭 Physical Tasks: For warehouse/logistics in high-wage markets, robots already beat human TCO in many scenarios.

"AI didn't remove cost—it changed where the cost lives."

Conclusions and Strategic Recommendations … and a useful “AI versus Human Decision Framework” …

Let’s delve into the final details and to view our very useful “AI versus Human Decision Framework” …

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Key Finding: By 2025, China will award roughly double the STEM PhDs of the United States. If international students are excluded from U.S. counts, Chinese graduates outnumber U.S. domestic graduates by more than 3 to 1. The U.S. is not losing a race — it has already lost it.

Key Finding: The U.S. skilled trades shortage is structural, not cyclical. Training a CNC machinist to full proficiency takes 2–4 years. Rebuilding the vocational pipeline from near-zero would take a generation. No reshoring initiative can outrun this timeline.

Key Finding: U.S. regulatory compliance costs alone — $29,000 per worker per year — are roughly equivalent to the total annual wages of a Chinese manufacturing worker. This structural cost disadvantage cannot be overcome by tariffs or subsidies without fundamental regulatory reform.

Two Great Videos by Inside China Business:

Combined Takeaway from Both Videos: The reshoring narrative is politically powerful but structurally hollow. Both videos converge on the same conclusion: without a fundamental reorientation of American education, culture, regulatory architecture, and legal incentives, reshoring announcements will remain largely aspirational — generating headlines but not factories, jobs, or industrial capacity.

The reshoring of American manufacturing is not impossible in the long arc of history. But it requires a level of structural reform — in education, regulation, legal culture, and industrial policy — that dwarfs any tariff regime or subsidy package currently on the table. Until the United States is willing to become, once again, a nation that values making things as much as it values litigating about things, the reshoring promise will remain what it currently is: a compelling political narrative disconnected from industrial reality.

Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

This piece brings together two complementary perspectives—

Eric Greene, focused on capital flows and real-world infrastructure, and CedarOwl, whose work centers on synthesizing geopolitical and macro frameworks across global markets.

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In a recent piece, I highlighted rare earth processing as a critical bottleneck. What’s becoming clearer is that this isn’t isolated—it’s part of a broader pattern now emerging across industrial systems.

There’s a tendency to frame the current environment as a series of supply problems.

Rare earths. Helium. Fertilizers. Petrochemicals.

Each gets analyzed on its own terms.

But that framing misses what’s actually happening.

This isn’t about isolated shortages. It’s about a system under strain—one where the pressure is building not at the source, but across how inputs are processed, connected, and ultimately turned into something usable.

Because having something in the ground has never been the same as being able to use it at scale.

Where the System Actually Breaks

Most analysis still begins upstream—where the resources are and who controls them.

Important questions—but incomplete.

The constraint isn’t geological. It’s industrial.

It shows up later—where materials have to be refined, separated, and converted into functional inputs. That’s where timelines stretch, costs rise, and dependencies become far more concentrated than most assume.

In some cases, that concentration isn’t just high—it’s effectively absolute.

China’s position across key industrial inputs reflects this clearly:

This isn’t just market share. It’s control of the conversion layer—the point where raw materials become usable.

The Invisible Chokepoint

One of the clearest examples of this dynamic is something most people never think about: sulfuric acid.

It sits at the center of industrial production—critical for copper extraction, nickel processing, and phosphate fertilizers that support global food systems.

And right now, it’s tightening.

China is restricting exports, while disruptions through the Strait of Hormuz are pressuring sulfur flows from the Middle East—historically a major source of supply.

Individually, those developments matter.

Together, they compound.

Sulfur prices have already moved from roughly $100 per ton in 2024 to over $700 in some markets—feeding directly into mining costs and production decisions.

This is how pressure builds:

• Input costs move

• Production economics shift

• Supply chains adjust

And once that process begins, it rarely stays contained.

From Efficiency to Fragility

For decades, the global system optimized for efficiency.

Production moved to where it was cheapest. Processing followed. Supply chains stretched across borders under the assumption they would remain intact.

For a long time, that worked.

But it also created fragility—less visible, but far more consequential.

Not at the source, but in the middle of the chain, where materials are transformed and made usable.

That’s where disruptions don’t just slow things down—they force the system to adapt.

How Systems Actually Adapt

Finance blogger and author Charles Hugh Smith has developed the S-curve of Systemic Adaption:

That adaptation doesn’t happen through simple substitution.

It happens through layering.

You can already see this clearly in agriculture, where fertilizer supply—particularly nitrogen-based inputs—has long been concentrated in specific regions.

When that flow is disrupted, the response isn’t to replace one input with another.

It’s to build a more resilient system:

The system becomes more complex—but also more durable.

This is the pattern that repeats across sectors.

A critical input tightens.

Costs move.

Dependencies are exposed.

And the system reorganizes—toward redundancy, regionalization, and resilience.

A Broader Reordering

This dynamic isn’t happening in isolation.

It’s unfolding within a larger geopolitical shift.

As Zoltan Pozsar has framed it, the United States is increasingly focused on controlling energy and financial chokepoints, while China continues to consolidate control over industrial processing and manufacturing capacity.

The result isn’t a traditional trade conflict.

It’s a structural standoff—one where both sides are targeting the layers of the system the other depends on most.

And neither can unwind those dependencies quickly.

Where This Leads

What we’re witnessing isn’t a temporary disruption.

It’s the early stage of a broader reorganization of the global industrial system.

One that moves away from:

• centralized efficiency

And toward:

• distributed resilience

• regional infrastructure

• layered supply chains

The adjustment won’t be linear.

It will be uneven, and at times abrupt—showing up first in costs, then in production, and eventually in how entire systems are designed.

Closing Perspective

The system doesn’t break all at once.

It adjusts—under pressure, in layers, and often in ways that only become clear in hindsight.

Understanding that process—where it starts, how it spreads, and how it resolves—is where both analysis and opportunity begin.

— Eric Greene

Founder, Greene Financial Advisory

Founder & Chief Architect, TCE12 Corridor Initiative

— CedarOwl

Geopolitical Strategist & Macro Analyst

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Disclaimer: This information and material contained in this post is of a general nature and is intended for educational purposes only. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. This post does not constitute a recommendation or a solicitation or offer of the purchase or sale of securities. Furthermore, this post does not endorse or recommend any tax, legal, or investment related strategy, trading related strategy or model portfolio. The future performance of an investment, trade, strategy or model portfolio cannot be deduced from past performance. As with any investment, trade, strategy or model portfolio, the outcome depends upon many factors including: investment or trading objectives, income, net worth, tax bracket, suitability, risk tolerance, as well as economic and market factors. Economic forecasts set forth may not develop as predicted and there can be no guarantee that investments, trades, strategies or model portfolios will be successful. All information contained in this post has been derived from sources that are deemed to be reliable but not guaranteed.

Based on reports from the March/April 2026 timeframe, the ongoing conflict in the Middle East - specifically revolving around the the Strait of Hormuz and Middle East infrastructure - has caused significant disruptions to global commodity supplies. The International Energy Agency (IEA) has described the oil disruption as the largest in history.

Based on sources including the IEA, The Guardian, BBC and Wood Macenzie,here is the estimated impact on key commodities taken off the global market:

1. Oil & Gas

• Crude Oil: Approximately 20% of the world’s daily crude oil, which normally passes through the Strait of Hormuz, has been affected. The IEA noted that more than 3 million barrels per day of refining capacity in the region was shut down as of early March 2026.

• Natural Gas (LNG): Similarly, around 20% of global Liquefied Natural Gas (LNG) exports that traverse the Strait of Hormuz have been disrupted. Qatar, a top global LNG exporter, declared force majeure on shipments.

2. Urea (Fertilizer)

• Supply Impact: The Middle East accounts for a significant portion of global nitrogen fertilizer exports, with roughly 43% of global urea trade (along with 27% of ammonia and 24% of phosphate fertilizer) passing through the constrained region.

• Shortage: As of mid-March 2026, the U.S. was estimated to be 25% short of fertilizer supplies for the spring season. Global urea exports were expected to fall to roughly 1.5 million metric tons in March, down from a typical 3.5–5 million tons.

3. Methanol

• Capacity Affected: An estimated 17% to 18% of global methanol production capacity was affected by the conflict.

• Export Disruption: The Middle East, particularly Iran and Qatar, is the world’s largest exporter of methanol. The conflict impacted about 90% of regional methanol capacity that relies on transit through the Strait of Hormuz. India faced a near-total (97%) supply deficit of imported methanol as a result.

Key Market Impact Summary (As of March/April 2026)

• Oil Prices: Surged above $100 a barrel, a 50% increase in some assessments.

• Urea Prices: Increased by over 50%, with prices in the Middle East jumping by over $200/tonne.

• Methanol Prices: Reached over-four-year highs in India and all-time highs in Southeast Asia, with European spot prices rising about 47%.

This is all very likely to begin causing transportation, energy and food crises around the world. In our posting this week, we relate how we are preparing for such crises personally.

We do include in this posting our selected equities which we are investing in the sectors of oil & gas, energy, petrochemicals, fertilizers and agriculture - paid subscribers get access to this list of our selected equities, many of which we like as these equities pay what we consider as good dividends as well.

Transportation

Given the rising prices of oil, gas and diesel, particularly needed for transportation in our cars, we considered several options and scenarios. We want to minimize the use of our cars requiring gasoline or diesel fuels, but realize that their use is required for longer distance destinations. Of course there is also the use of public transportation in the form of the subway or commuter trains for going to work.

We assessed EV-based cars but found them either relatively expensive or logistically difficult on availability of charging stations and limitations in distance for especially long-distance destinations.

There is the option of getting a Chinese-made plug-in hybrid BYD at lower price than a Tesla for example with a much longer distance capability - some plug-in hybrid BYDs can go 2100 kms with one tank of gasoline versus a relatively more expensive Tesla which would need to be charged perhaps 2x or 3x to cover this plug-in hybrid BYD distance.

We settled for now for an option which is relatively low cost - an electricity-based vehicle which is high-quality, robust, can carry cargo, has a decent maximum distance to cover most if not all of our daily requirements, but with a very low affordable price and with an ability to be charged using essentially free solar-based electricity:

• A high-quality, robust e-bike that has the capacity to travel with up to 2 passengers in addition to the driver, with the potential as well of only the driver plus enough space to serve as a “cargo” e-bike for getting supplies at say a local Costco store, together with a battery good enough for a 75 km round trip before recharging. Some options for e-bikes meeting these requirements are provided below for paid subscribers - we have vetted them for reliability, pricing and quality.

Energy

Our most important consideration for the cargo e-bike was the energy required - no gas, no diesel and only electricity. But the big question is how to generate and store low-cost energy? We considered several options on this and ultimately decided on the following setup:

• A high-quality, efficient, high-capacity and fully portable battery, serving as a non-gas based generator to power all forms of e-bikes, freezers, cellphones, flat screen televisions, refrigerators, computers, lights etc in a traditional, western-style 3 bedroom, 2-washroom house.

• With the battery powered by solar energy through an efficient high-powered solar panel or powered by regular electrical outlets in the house, and offering other powered options as well.

• All for a relatively low price - generally in the USD 500 to USD 7,000 range for various models, depending on sizes, features and capabilities.

  

See the link below to the model we choose - we have performed considerable research and analysis in this space, and like this specific model as not only does it meet our requirements, but it has also several certifications and safety measures and features.

Food

Skirret and Scorzonera - Healthy vegetables that are perennial and can survive harsh winters

Link to Medieval Edible Crops

Skirret

Scorzonera

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