In this Invest Like a Billionaire podcast episode, host SPEAKER A and energy expert Bob Fraser discuss the potential impact of the Israel‑Hamas war on global oil markets and investment decisions. They begin by correcting the common misconception that Saudi Arabia is the world’s largest oil producer, highlighting that the United States now produces roughly 13.2 million barrels per day—about 40 % more than Saudi output. The conversation then shifts to Saudi Arabia’s current geopolitical posture: ongoing normalization talks with Israel have stalled, the kingdom is in a leadership transition, and its response to the conflict remains muted. Fraser evaluates supply‑side risks, noting that the conflict’s proximity to the Suez Canal and the Strait of Hormuz could, if escalated, disrupt roughly 5 % of global oil shipments, but current naval presence limits immediate threats. He also assesses demand‑side effects, concluding that the war’s scale is too limited to materially boost oil demand. The hosts explore price dynamics: a sustained rise above $100 /barrel could prompt Saudi Arabia to increase output to avoid a recessionary shock, yet the broader shale revolution has reduced global reliance on Saudi oil, and overall investment in new oil capacity has stalled, limiting supply growth even if prices spike. A substantial portion of the episode is devoted to contrasting oil with natural gas. Fraser explains that natural gas is a highly volatile, regionally‑bound commodity requiring costly liquefaction (LNG) for transport, making it far less suitable for global trade than oil. He emphasizes that natural gas prices vary dramatically across regions and that the U.S. functions as a “Saudi Arabia” of natural gas. Finally, the duo reiterates their investment thesis: they view oil as a high‑probability upside play and encourage investors to gain exposure to oil production rather than merely trading oil futures or focusing on natural gas. They reference their broader “Megatrends” presentation for deeper analysis and promote their Aspen Funds as a vehicle for passive, macro‑driven alternative investments.
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Welcome back to another episode of the Invest Like a Billionaire podcast. Today we've got a top of mind episode for you and we're going to be reacting to a question that we have been getting from our investor base and listeners probably multiple times a day for the past week or two. It's making headlines, right? The Middle Eastern conflict, the Israel-Hamas war, a lot of things we could, you know, go into that around, but really a focus on energy because we've talked about energy a lot. This is a big area that we see opportunity, but how does this impact the thesis that we've been talking about for a while? So let's, let's dive right in. This is the Invest Like a Billionaire podcast where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you'll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra-wealthy, discuss economics, and interview successful investors. Looking for passive investments done for you? With Aspen Funds, we help accredited investors that are looking for higher yields and diversification from the stock market. As a passive investor, We do all the work for you, making sure your money is working hard for you in alternative investments. In fact, our team invests alongside you in every deal so our interests are aligned. We focus on macro-driven alternative investments so your portfolio is best positioned for this economic environment. Get started and download your free economic report today.
So as everybody's aware, Hamas invaded Israel, and of course it's the Middle East, and so in the major oil-producing areas of the world. So big question is, yeah, what's going to happen to the oil price? And I'll give you the short answer, and that is not yet. Not yet. It's going to affect the oil price, but it could. It absolutely. So, so just, just as a reminder, I don't know anybody was around in 1973. I actually was. And Israel retaliated. They, they did a big counteroffensive very similar to what's happening now in 1973. And it sparked the Arab oil embargo where OPEC basically embargoed oil exports and put the world into a massive recession. Okay. So, so big question out there is what are people thinking? What is Saudi Arabia thinking right now? Now, today, OPEC is not the force that they were in 1973. So OPEC is still a large oil producer, but they're no longer the dominant force. They only produce— I think Saudi Arabia only produces about 15% of the world's oil.
So it is an important point to make because most people don't realize when we're talking, you know, different conferences and events and you ask, you know, who's the world's largest oil producer? No one realizes that it's the US.
I mean, people still don't realize that. Yeah. So Just today the stats came out that the US produce is producing 13.2 million barrels per day, a record. So literally US is setting production records right now. Yeah. And the world's largest oil producer producing, I think it's about 40% more than Saudi Arabia. So people don't realize this. So, so, so the bottom line is, you know, there's no question Saudi is a very big actor. On the, on the oil stage, but they're not the oil actor they were in 1973. So big question, what's, what is Saudi Arabia thinking? So prior to this war, uh, Saudi Arabia and Israel were having normalization talks. They were actually talking about, you know, uh, normalizing relations and, you know, reapproachment and super positive. It would de-escalate everything. And then this war happens. In fact, that could be one of the causes of the war is that, you know, to basically, you know, put a kibosh the talks between Saudi Arabia and Israel. So that's happened now. And there's also question on Saudi Arabia's leadership, right? So Saudi Arabia's in the middle of a transition, right? Where the new Saudi prince is kind of really stepping forward and taking leadership. And most people believe that he's kind of, you know, ready to move on and, hey, let's, let's move forward and not worry about, you know, the, the previous conflict of the last decades. I mean, I'm oversimplifying, where the old guard, um, you know, is very, very much opposed to Israel and all that. So, so the big question is, how much authority does, you know, how much, how much, yeah, I guess, uh, you know, say does does the new guy have, right, relative to the old guy. So we'll, we'll see. Um, and so far, you know, it's pretty silent out, out there. So, so we're— so right now it's not a big deal. One, because it's a little teeny war, you know, relative to something like World War II or something. It doesn't use— it doesn't create a lot of extra demand, right, for oil, number one. Now, if the entire world globalized their mobilized their armed forces, including the United States, the Navy, the Air Force, and the Army. Well, yeah, it's going to drive demand, but it really doesn't. It's a very small conflict that doesn't significantly impact demand. Well, what about supply? Will it change supply? And the answer is, I mean, so, you know, Israel is really not an oil producer. They actually produce only about 6,000 barrels per day relative to, you know, 89 million barrels per day global production.
So, oh yeah.
They, they don't count. So if their oil production gets disrupted, it's nothing. But, you know, so they're, they're, you know, around the Horn of Africa is the Strait of Hormuz, um, and then there's the Suez Canal, which cuts through Egypt, right through Egypt. And it's— that's literally right where the conflict is. Gaza is right there on the border of, of, of Egypt and, and Saudi Arabia. So it's right there. So there's the Suez Canal cuts through. So but again, so what you got to realize is the oil market is humongous, right? So, so roughly 5% of the oil transported across oceans goes through the Suez Canal. So again, it's significant, but it's not a complete, you know, right.
Not the majority of the supply.
And it's not that apocalyptic scenario, right? It's just it's like, well, that would be a problem. So that's one, is the Strait of Hormuz and/or the Suez Canal. What happens there? You know, right now it's not closed. Could it be? You know, well, I mean, the Palestinians, you know, Hamas is not very sophisticated militarily. They don't have an air force or a navy to go shut things down. And presumably that would be a very, you know, kind of a lame exercise anyhow when you've got an American aircraft carrier there right? What are they going to do? I mean, this is, you know, the world's most powerful force, you know, mobile force is sitting there. So I, I don't think they could do anything as is. But if the— if the— if it escalated, you know, could there be— could there be, you know, big problems? And, you know, you know, I would— you know, I don't think Saudi Arabia would actually want the, uh, You know, Suez to be closed because they— a lot of their oil flows through there to Europe, um, and to the United States. So who knows? The other big question is Iran. So, and here, here's some of the conflicts. Well, that, you know, anyone who knows the history of Middle East, there's the Sunni and the Shia. And, you know, the, the Shiites— the Iranians are Shiites, and they're considered heretics by the Sunnis. I mean, major heretics, right? It's not It's not just, hey, you're just a little— it's another denomination. They're very anti, um, and well, Iran is backing Hamas, but Hamas is Sunni. So, you know, what's going to happen if Saudi Arabia sees a lot of Sunnis being killed? You know, honestly, I think a lot of it depends on— and I'm not a geopolitical commentator, but I think a lot of it depends on how brutal, um, Israel's response is. Right? If the world turns against them, I think we could see this escalate, and Saudi Arabia could get the world's attention to the atrocities by squeezing the oil price. Could Iran invade or get involved in the conflict? It's a little hard to imagine that happening. They're already such a pariah. They don't really have the ability to project power militarily, right? Um, you know, they're primarily a terrorist nation. They just fund these things. And, and, and again, they are— they're anti-Sunni, which is Hamas. So, you know, they're backing Hamas only just as a chaos creator. I don't think they're really excited about Hamas, right? So again, this is just my, my, my speculations. Um, so, um, and then the other side— okay, that's the puzzle, that's the possible loss of production side. But, um, what about What about the other side? It's possible if oil goes into above the $100 range that the Saudis would actually, actually start, you know, boosting production, right, to bring it down. And so, you know, who, who knows, um, because, uh, they don't want— they like a high oil price because it's more money in their pocket, but too high, you push the world into recession and then their demand goes down and crashes, right? So it's, so it's a little balance. And what's happening, you know, ever since the shale revolution, you know, in the, in the, you know, mid-2000s there in America, America, you know, we're no longer dependent on Saudi oil, and then neither is the world really. So, so who knows? So, so, but bottom line is it's, it's a non-factor today. Could it be a factor? It definitely could, but it would require significant amounts of escalation. And so we'll, we'll see.
Even to your earlier point, if there is a significant amount of escalation, the impact really from a supply standpoint would be a lot less than it was in the '70s when the US wasn't a dominant player in this space. And you know, if we have higher oil prices above $100, that, you know, not really sure where that kind of price point to rebuild inventories and to stoke more, you know, development, but it might actually create more supply, not even just in Saudi but other places.
Right. But, but as we've pointed out in our Megatrends talk, and if you haven't heard that, you're listening to this, you haven't heard that, you definitely need to go do that. Listen to the Megatrends talk. So that, that they, that even if prices spike up, we're not going to see an increase in supply globally because there just is not a lot of capacity to do that. And why is that? Well, because the world has stopped spending money to, to develop oil fields. And, and if you stop spending money, you see declines because everything is being depleted. So yeah, yeah.
Well, it's fascinating. Obviously, we're early kind of at the point of this conflict. And so a lot of things kind of to bear out here, but wanted to provide some early insights. We're getting a lot of questions. And so we do appreciate, you know, those that have reached out that are asking the questions. We love to be responsive when it's, when it's helpful. And hopefully this was, you know, interesting. And if you haven't watched the full Megatrends presentation, we go very, very in-depth on the energy case. And again, you know, we ultimately want to be sellers of oil. We think the probabilities of price going to the upside is very high and a good place to be placing capital.
When you say sellers of oil, you don't mean selling oil investments.
Yeah, I think you clarified. We want to be producing oil and selling it to the market.
Yeah. Yeah. It's, if you're not, if you're not playing in oil right now, you're going to regret it. You want to be in the oil space as an investor. Yeah.
If you want to just real quickly comment on natural gas, because a lot of times a lot of people conflate the two, or I would say oil and gas investing, and it's the two kind of totally different commodities. And I do know natural gas has spiked a lot recently. Oil has remained high, a little bit higher than it was before the conflict. Dramatically. You want to just touch on natural gas?
Like, yeah, so natural gas is very different than oil. Very, very, very different. So natural gas is extremely volatile. It will, it will spike up 100% and then drop 100%. I mean, it's just, it's over the map. And then the reason is that, that natural gas is primarily a local commodity. It can't be shipped unless you do— you, you basically put it in a giant freezer compressor, um, industrial, you know, I mean, you know, refinery-sized freezer compressor that to turn it into liquid. And this is like taking oxygen and turning into liquid, okay? It takes an enormous amount of energy and there's very little capacity to do this. And then it's loaded into special tankers called LNG tankers that ship it and keep it cold. This basically refrigerator tankers. And it's extremely expensive and there's very few of these things. And So, so natural gas really must be piped in a pipe. It does. You can't put it into a truck. You can't really put it into a ship unless it's one of these specialized ships. You can't, you can't put it into an airplane. So all transportation, 100% of transportation is powered by oil, liquid oil, because it has extremely high energy density. So, you know, a little gallon of oil or whatever has an enormous energy potential, whereas a cubic foot of natural gas, you think about it's a big gaseous cube, a balloon full of natural gas has, has far less energy and it's got a lot of volume and not that much energy. So, so it's great if you can pipe it from where it's produced to where it's consumed. So most natural gas in America goes into industrial production. It's, you know, it's used to produce plastics. It goes, it goes into our, our power plants. You know, we're laughing the other day at a guy, you know, talking about— we ask him, where do power plants— you know, he was talking about electric vehicles and where does he get his electricity? He says, from the wall. And he said, where does the wall get its electricity? From the power plant. And where does the power plant get its electricity? He was befuddled. And well, it turns out it's primarily coal and secondarily natural gas. And so these natural gas, you know, just big turbines that burn natural gas or boil, you know, or create, you know, steam from water and turn giant turbines that turn generators that produce electricity. So it is, it is the, you know, and the thing about natural gas production is it can be spun up and spun down. So these turbines, you literally just turn it on and it starts producing. Producing electricity, you turn, you know, people start turning off their air conditioners, you turn it off. And so coal takes much longer to turn on and off. So it— natural gas is the kind of marginal, marginal producer, but just your marginal supply in electricity, electric production, right? And the other thing people need to realize, this is why— so natural gas, the price, you know, I haven't seen what the price is recently, but a month ago it was, you know, $2.50 in the United States. but it's roughly 4 or 5 times that much in Europe and in Asia typically. And the reason is they don't have any of their own and it has to come in through, through, you know, these expensive means. So again, it just, you know, America is kind of the Saudi Arabia of natural gas and, and coal, by the way. So, yeah, so very different commodities. If, if you, if you believe in energy and you want to invest in oil, then I would suggest you invest in oil.
Alright, that, that'd be the other ones. Well, if you're enjoying this podcast, you know, please leave a review, share with a friend. We always appreciate that. And please subscribe if you're not, and tune in for next episode later this week. Thanks so much for joining.
