Reserves Reach 'Critical Levels', 'Severe Recession' Once Oil Spikes | Josef Schachter

Summary

Josef Schachter discusses the Strait of Hormuz conflict and its impact on global oil supply and prices. He remains bullish on crude oil into year-end and 2027, and sees Canadian energy stocks as deeply undervalued, recommending investors buy on pullbacks. A severe global recession risk exists only if oil spikes above $140, which is not his base case.

• Strait of Hormuz disruptions continue to restrict oil shipments, with mines in the main channel still uncleared.
• Strategic petroleum reserves worldwide are depleting, with the US approaching critical levels, supporting future crude demand for refilling.
• Josef Schachter expects WTI to average $80 in Q4 2026 and $90 in 2027, driven by winter demand and inventory tightness.
• Canadian energy stocks are trading under 3x cash flow, cheaper than US and international peers, with new pipeline projects improving export capacity.
• A pullback in oil to the mid-$60s in the coming weeks would present another strong buying opportunity for Canadian energy equities.
• The Carney government has shifted to a more pro-pipeline stance, recognizing energy as Canada's biggest revenue generator.
• If oil were to spike above $140, significant demand destruction and a severe global recession would follow, but a resolution to the Hormuz crisis is seen as more likely.