Valuetainment - “$10 Diesel by December” - JPMorgan Has No Clear Oil Endgame Due to War in Iran

00:00:00.000 JPMorgan Chase is being asked about what they think is going to happen with oil.

00:00:04.920 Give us an opinion, Will.

00:00:06.860 You're an analyst at JPMorgan Chase.

00:00:08.700 What do you think is going to happen?

00:00:09.980 Here's what the analyst said.

00:00:11.480 This is a Bloomberg article.

00:00:12.860 More than six months after the start of the Iran war, JPMorgan Chase, oil analysts, are stating what many traders have been saying privately.

00:00:20.960 The path to the end of the war is increasingly impossible to predict.

00:00:25.760 So if you can't predict how it's going to end, I cannot tell you what's going to happen to oil prices.

00:00:31.380 Several economic red lines, the bank assumed the administration would be unwilling to cross, including oil above $100 a barrel, gasoline near $5 a gallon.

00:00:40.660 Surging treasury yields have already happened, making the exit strategy less clear.

00:00:45.120 Analysts, including Natasha Keneva, said in a note, the market is on edge.

00:00:49.780 In our view, the analyst wrote oil fair value in September is estimated around $90 a barrel.

00:00:56.160 Prices through close to $106,000, and implying the market is pricing in a risk of additional 4 million barrels a day of supply losses

00:01:03.720 on top of the 10 million barrels a day already disrupted.

00:01:07.140 So it seems like the market can't say what's going to happen to oil prices.

00:01:11.060 What do you say, Jeff?

00:01:12.080 It's not really about oil.

00:01:13.280 Like you said, it's about diesel and gasoline, and that's where the problem is.

00:01:16.220 The bottleneck in energy has moved from oil to the distillates.

00:01:20.200 There's a lack of refinery capacity, as Tom pointed out, in the United States, which is coming back to haunt us at the worst possible time.

00:01:26.140 You've got disruptions with Russian diesel exports, which have been banned because they have their own problems over there.

00:01:31.740 You've got issues with the Middle East.

00:01:34.020 Then all sorts of shortages that are going to start appearing in Asia and other places, which is going to bid up the price of diesel as well as gasoline.

00:01:40.780 um with crack spreads and the crack spread is simply a a a market price that gives you an

00:01:48.480 estimate of how uh the physical physical reality of the energy market and the diesel crack spread

00:01:52.860 right now is a ridiculously high 112 dollars per barrel which is insane but that goes to show you

00:01:59.280 the level of desperation and urgency in the energy market because there's that that that level of a

00:02:06.440 potential shortfall in diesel, and we're rapidly running through all the inventories and supplies

00:02:11.200 as it is. So the market is basically saying, once that physical shortfall really starts to

00:02:16.860 manifest itself, we don't know where prices are going to end up. The $6, $6.50, $7 range that

00:02:23.040 we're getting now in diesel is probably just the beginning. So diesel prices are-

00:02:26.820 How high do you think it's going to hit?

00:02:27.620 Oh, we can see $10.

00:02:29.180 $10 of diesel. By when?

00:02:31.260 I have no idea. That's the thing. I have no idea.

00:02:33.260 Give me the timeline. Shortest, latest.

00:02:35.040 Shortest would be the end of the year.

00:02:35.720 Of course, we're eventually going to hit $10, but I'm saying like.

00:02:37.860 End of the year.

00:02:39.040 It's that soon.

00:02:39.980 It's that close.

00:02:40.880 In December, diesel could hit $10 a gallon.

00:02:42.720 $10 a gallon.

00:02:43.540 And then the consequence.

00:02:44.340 Why do you say that?

00:02:45.220 Based on what?

00:02:46.040 Again, the crack spread.

00:02:47.080 The crack spread is an estimate of how much of there's a price dislocation in the market.

00:02:51.660 Is this it right here that you're talking about, the crack spread?

00:02:53.780 No, that's world inventory.

00:02:55.420 Can you pull up the crack spread real quick?

00:02:57.220 So the crack spread shows what?

00:02:58.540 The crack spread shows you how profitable it is to refine a barrel of oil.

00:03:03.120 That's the 3-2-1 crack spread, which is oil, which is gasoline plus distillate fuel.

00:03:08.760 Explain it to the average person out there so they can understand it.

00:03:11.040 Yeah, I've never heard of the crack spread.

00:03:12.640 No, we're sure today.

00:03:14.320 I thought we were going to go to a porno.

00:03:15.980 I thought we were going to the hood or something right now.

00:03:17.500 We'll have a lot more fun.

00:03:18.400 We've done that before, but go ahead.

00:03:19.900 When we're talking about crack spread, you know things are not good.

00:03:22.120 Yeah.

00:03:22.660 So the crack spread basically tells you the price of oil.

00:03:25.440 Depends on who it is.

00:03:26.120 How profitable is it to convert?

00:03:30.240 Sorry.

00:03:31.700 I'm just saying.

00:03:32.480 How profitable is it to refine a barrel of oil into, in a 3-2-1 crack spread, it's three barrels of oil into two barrels of gasoline and one barrel of distillate stuff.

00:03:44.880 Diesel, it's a little bit different, but it's a similar idea.

00:03:47.780 And so when the crack spread is high, what that basically tells you is that it's very profitable to take a barrel of oil and turn it into something useful.

00:03:55.000 And the reason it's profitable to do so is because the marketplace says, I want that something useful and I'm so desperate for it.

00:04:00.940 I will pay a premium to do so.

00:04:03.020 So the crack spread is basically a premium on supply.

00:04:05.600 Jeff, who else agrees with you that diesel could hit $10?

00:04:08.840 If the JPMorgan Chase analyst is not making any predictions,

00:04:11.940 who else agrees with you that could hit $10?

00:04:13.740 I think the marketplace does.

00:04:15.800 The marketplace does.

00:04:16.700 The marketplace.

00:04:17.160 That's why the crack spread is that high.

00:04:18.560 But also, I mean, the reason they said we can't model this

00:04:20.800 is because they don't want to say it'll be $10 a gallon.

00:04:23.180 So do me a favor.

00:04:23.740 Do you think the president knows this?

00:04:25.040 Yeah, absolutely.

00:04:25.680 Okay, so if the president knows this and you're in his ear,

00:04:30.000 And let's just say that conversation is taking place.

00:04:31.940 Mr. President, diesel could hit $10 by December.

00:04:34.920 Midterms are when?

00:04:35.980 November.

00:04:36.940 What does he keep saying?

00:04:38.280 Gas prices are going to drop right after the election midterms.

00:04:41.040 Why is he saying that?

00:04:41.860 Because he needs to win midterms.

00:04:44.120 You think the average person is buying that?

00:04:45.860 No.

00:04:46.360 Okay.

00:04:46.960 So let's say it does go to $10.

00:04:49.780 What happens to America?

00:04:51.380 What happens to the market?

00:04:52.560 What does the average person do if it hits $10?

00:04:55.220 If it hits $10, what will happen is you'll see layoffs.

00:04:57.720 You'll see jobs disappear.

00:04:58.780 You'll see companies that are struggling.

00:05:00.000 You will see a lot of weak companies that have been kept alive through refinancing debt start to go under.

00:05:04.540 It will be economically, it will be like every other energy shock that we've gone through in history.

00:05:09.240 It leads into a recession.

00:05:10.960 And I think Trump knows, I've said this from the very beginning.

00:05:13.920 Trump said Iran is worth the cost.

00:05:16.660 If we have to go into a global recession, if I lose the midterms really badly, it's worth the cost.

00:05:21.540 And so everybody expected these, you know, the idea that there's these red lines in the energy market.

00:05:26.520 That was never a case. 0.73

00:05:27.920 Do you agree with him that Iran's worth the cost? 0.98

00:05:29.620 If he gets it, if he executes it correctly, yes, it will be worth it, long run. 0.94

00:05:33.580 So you're part of a minority group that believes that. 0.95

00:05:36.020 I understand, yeah.

00:05:36.660 But you're saying if he gets it done, it's worth it, why?

00:05:39.400 Because the short run, the pain in the economy will be in the short run. 1.00

00:05:44.080 If Iran actually turns into a, you know, what we hope it could be, that's a long run future that's hugely positive. 1.00

00:05:52.040 So it would be worth the short run economic pain and political pain because it's going to be political pain. 1.00

00:05:56.240 I think Republicans need to steel themselves for how this election is going to go.

00:05:59.620 Well, I just want to say this. When the Iran War started, I was one of the few voices who was saying, I don't think this is a good idea, everything like that. 0.99

00:06:06.220 And I got called a liberal. I got called a traitor. You know, I'm now a horrible person and all this and no longer a conservative.

00:06:12.300 You're a Russian shill. 0.99

00:06:12.940 A Russian shill, you know, and everyone was telling me at the time, go back and read the comments on my videos about the Iran War. 0.96

00:06:18.840 They said two weeks is going to be done. It's all going to be taken care of. You know, oil prices are going to go way down. 0.87

00:06:23.800 Everything's going to be great. We're going to figure it out. And now look at where we are.

00:06:26.720 But what was your reasoning for not being forward at that time?

00:06:30.440 Well, I think we've seen this song and dance before with the endless wars.

00:06:33.960 And for me, I don't see it working out any other way.

00:06:37.500 Libya, Iraq, Afghanistan.

00:06:39.120 I mean, it all seems to me the same to me.

00:06:41.140 And I didn't want America dragged in.

00:06:42.960 And that's not just from Americans going overseas and being separated from their families,

00:06:47.920 potentially dying, but also from this economic standpoint that we're looking at.

00:06:51.260 It seems to me like you're making companies like Lockheed Martin and Boeing incredibly rich

00:06:55.580 with these defense contracts, and I know, again, people will be like,

00:06:58.240 you sound like a liberal right now, you know, anti-war liberal.

00:07:00.500 But to be honest, this is what it really goes down to.

00:07:03.920 I think a lot of conservatives would agree with that whole,

00:07:07.140 we all know what, who was it, Eisenhower, before he stepped down,

00:07:09.820 where he says be careful with the military-industrial complex,

00:07:11.940 how much money they can make and keep the wars going.

00:07:14.940 I get that part. Tom, where are you at with this?

00:07:17.500 I'll tell you where I'm at with this right now is that if you take a look

00:07:20.560 at where that crack spread was before it started,

00:07:22.540 and I think we were at $24, $26.

00:07:24.500 So it's $24 to $26 to take a barrel of oil and turn three barrels of oil into two barrels of gasoline, one barrel of diesel.

00:07:32.180 That is up now three and a half X.

00:07:35.280 And so I think right now, I think we are literally a couple of weeks from seeing $8 a gallon in some of the high tax states on diesel like California.

00:07:45.700 And it's devastating.

00:07:47.500 That soon as you touch that, you are playing with fire right now.

00:07:51.820 And as soon as you touch $8 diesel, you're going to see layoffs in hospitality.

00:07:57.420 The hospitality industry, which is discretionary consumer spending, is going to do a face plant.

00:08:03.360 It is absolutely going to stop.

00:08:06.040 It's going to be like COVID.

00:08:07.420 What I'm saying is similar to COVID that the revenue will stop so quickly.

00:08:13.160 You have restaurants and independent restaurants that are not supported by national franchise fees and things like that.

00:08:18.480 Already they're under deep stress or laying people off right now in hospitality.

00:08:21.820 you're seeing it and you see the jobs report which included seasonal things that happened

00:08:27.280 specifically in education as everybody went back to school and the jobs report was misread and so

00:08:32.900 what i see right now i see misreadings and i to answer your question directly i'm worried about

00:08:39.280 eight dollar diesel because i think that just that's where the tree starts that the tree right

00:08:44.180 now is leaning i think the tree falls at eight dollar diesel and i think we have a very tough

00:08:48.440 winter and we have a recession like you said with covid oh sorry i didn't go for it no no like you

00:08:53.080 said with covid i mean the most important thing with that it was like what 60 of all small

00:08:56.720 businesses in america shut down and that's what it seems like it's going to be again you think

00:09:00.200 this is going to be at that level type crisis well it's funny i was just on the phone i always

00:09:03.900 talk to my family and and uh my sister is married and looking to maybe buy a house i'm like i'm not

00:09:08.720 buying a house right now everything's going to crash soon enough how old are you i'm 20 or just

00:09:13.000 turned 30 actually last week so 30 happy birthday congratulations i know i know i decided to just

00:09:17.920 say 29 forever yeah exactly you know but it seems like the small businesses are all going to get

00:09:22.900 shut down the big businesses are going to take another a huge win off of this i mean you know

00:09:27.620 it seems to me like it's going the exact same way look i think these are all worthy discussions and

00:09:32.160 discussions that need to be having gas prices oil prices i keep going back to the same thing this is

00:09:37.600 where i respectfully disagree with my super liberal friend will right now if we didn't deal

00:09:42.720 with iran now when would we have dealt with them because if not trump then who president aoc i will

00:09:50.200 tell you this though you better finish the deal okay you better finish and this is a guy that

00:09:55.720 you know where i stand i fully agree but if we didn't do it now what would happen in 5 10 20 years

00:10:01.600 when they actually have a nuclear weapon when they actually have more capabilities and it's

00:10:07.420 not even a nuclear, they were building up their missile shield

00:10:11.060 that if you even tried to attack them,

00:10:13.260 they would have unleashed hell and fire and fury

00:10:16.000 around any of their neighbors. 1.00

00:10:17.660 So yes, it sucks. 0.99

00:10:18.900 Yes, gas prices are high. 0.98

00:10:20.500 Yes, inflation is higher.

00:10:21.800 Yes, core inflation and CPI is higher.

00:10:24.260 But I will ask you this.

00:10:25.380 If we didn't do it now, how much worse would it have been

00:10:27.660 5, 10, 20 years from now?

00:10:29.180 That's what I keep going back to.

00:10:30.780 Yes, we need to finish the job.

00:10:32.240 Yes, we need to clean this up.

00:10:33.980 But I'm coming back to you.

00:10:34.840 You can say that, Adam.

00:10:35.540 But I'm coming.

00:10:37.400 Those are two different discussions.

00:10:38.840 Coming back to how this all started.

00:10:40.760 We're figuring how this is ending.

00:10:42.220 Jeff said the best thing.

00:10:43.220 Jeff said the best thing.

00:10:43.900 Jeff said, he said, if I lose the midterms, if I lose this, if I lose that, if I lose that, guess what?

00:10:50.440 It's all worth it.

00:10:51.680 Guess what, folks?

00:10:53.060 You didn't become the president.

00:10:54.780 President Trump did.

00:10:56.420 And by the way, guess what?

00:10:58.680 President Trump can't say, why is the media talking smack about me and the podcasters?

00:11:02.800 That's what happens when you're the president. 0.99

00:11:04.600 Everybody gets to talk trash. 0.69

00:11:06.460 And you get to say agree, disagree, fake news, whatever. 0.82

00:11:09.660 But if you're making this massive type of a bold position that you're going to put the Iranian regime out, guess what this works like? 0.55

00:11:20.020 If you do it, your face is up there with Mount Rushmore type of conversations, and you did something that all these other politicians talked about, you closed the deal. 0.76

00:11:28.740 If you don't do it, AOC is the president in 2028.

00:11:32.740 It's that simple for me.

00:11:34.320 And let me simplify it for you.

00:11:35.360 I'm going to say this to you one more time.

00:11:37.260 If he pulls it off, J.D. or Rubio are president in 2028.

00:11:41.440 If he pulls it off, one of those two guys will be president.

00:11:43.920 And probably more Rubio if he pulls it off.

00:11:46.440 You understand why it's going to be probably more Rubio if he pulls it off.

00:11:50.360 If he pulls it off.

00:11:51.140 If he doesn't pull it off, here you go.

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Valuetainment - September 22, 2026

“$10 Diesel by December” - JPMorgan Has No Clear Oil Endgame Due to War in Iran

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