The Duran Podcast - IRAN WAR; Global economic DESTRUCTION event

Episode Date: March 21, 2026

IRAN WAR; Global economic DESTRUCTION event

All right, Alexander, we are here with Ray Zuccaro. Ray, how are you doing? Where can people follow your work? Good morning, gentlemen. Hi. Yeah, I published my thoughts monthly at Ray Zuccaro on TwitterX, and my firm's website is www.RvX-A-M.com. All right, I have those links in the description box down below,

and I will also add them as a pink comment. Alexander, Ray, let's talk about the economic situation. resulting from the war in Iran in the Middle East. Absolutely. And of course, it's all connected to energy flows and not just energy flows, but all kinds of things. And, of course, the thing about markets, the thing about energy markets, about financial markets, is that one thing I did learn long ago is that everything is connected and everything is often very complicated. but not an easy thing for somebody who comes from outside and isn't directly involved in markets to understand.

And Ray does understand these things because he is involved with markets. He analyzes, he looks at them and he discusses these things consistently and clearly. So we are privileged and honored to have him on our program. So, Ray, we have all sorts of commentaries and discussions at the moment about what we're what is going on with energy. The straight of home moves is closed. Some people say this is going to be terrible. Others say it's going to be not so bad.

At the moment, I have to say this here in Britain, we are seeing increases in the price of petrol at the pump. My wife refilled our car yesterday. But it is not so bad, not quite as bad as we've been led to expect by some of the headlines. Can you tell us what you think is going on? And will this have the impact on the global economy that people say? And when we talk about the global economy, it's important to stress just to say in advance that the global economy is a unity, but it is also a unity made up of many parts. So over to you, Ray, take us through.

You know, it's interesting you say about the petrol prices. I know in the US, prices are up about 33 percent. And for the American consumer, that really upsets the American consumer. So 33 percent is a pretty material move. Actually, I think this quote yesterday from a cell-side report from a group called Marix out of the UK, I think summarizes this perfectly. This is not a disruption event, but a destruction event after what happened with Qatar, LNG fields. If you look at what happened in the Russia-Ukraine conflict. You had about a million barrels of disruption as pipelines were turned off. We're staring at 20 million barrels today of disruption, and now we actually have energy being removed from the global marketplace. And what I think you're going to

start to see is a trickle-down effect. Because if you look at shipping, Asia being closest to the Middle East was the first impact, right? First impacted. So you're seeing prices in due. buy oil at 170 barrels. And you're starting to see it hit Sri Lanka, Bangladesh, as it's flowing as the just-in-time mentality is impacting Asia. You're seeing price hikes. You're seeing, you know, it's interesting. You see some of these poorer countries doing different mechanisms to address it. You know, Philippines doing four-day work weeks, Pakistan, closed schools, put all universities online. So all these countries are trying to adjust to the actual disruption of energy. And I think in time, so roughly it takes 10 days for oil supply applies out of the Middle East

to get to Asia. Europe, it's 25 to 35 days, depending on which route. I think the next dominole of fall will be European energy prices. So far, energy prices have been relatively calm if you look at West Texas and Brent, I think over the next 10 days, you could start to see Brent go higher. And that demand, I think, will pull energy or try to pull energy from the North American production basin. And I cannot, I would not be surprised if you start to see export restrictions to protect the American consumers. So sort of a big picture that I think this, as to your point, Alexander, this is a domino. And I think we're just starting to see the trickle down effects. Shall we start with Asia? What parts of Asia are we talking about? Because Asia is huge. But I read an article in the Financial Times about the fact that in India they're now restricting this, you know, they're restricting crematoria. Crematoria are not able to work properly.

The Indian restaurants in India aren't able to do frying because the problems are that. I've heard about problems in Bangladesh, even greater problems in Pakistan. I have relatives in Southeast Asia, by the way, and they're telling me the things are starting to get worse there too and get worse rapidly. What's the situation in different parts of Asia? And what about Japan and South Korea, who are the major industrial export economies, which we rely upon heavily for consumer goods in Europe and I guess in the United States. And then we can talk about China afterwards.

At least thus far, you're seeing the richer countries in Asia being able to outbid LNG. So that will definitely impact the poorer countries and you listed them out perfectly. You know, we've very much focused on crude and liquid natural gas, but the other derivatives particularly that go into the fertilizer system, I think is very impactful. And again, this is going back to my domino analogy, fertilizer production today will impact crop yields, 12 months down the road. So, you know, you have poorer countries, less crop yields, more famine. I mean, this really does have the implications for a real global issue. And I just don't see it being resolved any time in the short term.

And to your point, Alexander, about the more industrialized countries, you know, Again, we focus a lot on LNG and a lot of the power production for Singapore, South Korea, Japan is impacted. But, you know, everything, every bit of the, every bit of the U.S. economy is AI and tech and chips and NVIDIA, right? You look at a country like Taiwan, LNG is an important power production input to the overall economic activity. but again this Qatar gas field that was taken offline, helium. You know, people think of balloons, right? But helium goes into chip production, MRI machines. Right.

So if Taiwan has an ability to produce chips, they have some inventory, but not infinite inventory. So, you know, what have been the driver of global economic returns has been all this AI boom. And if the, you know, at the heart of that is much is in the India. So I do think that that second order impact really, you know, we're on the cusp of seeing a real issue going forward. How do you store something like helium? It's a gas. I mean, obviously you can store it. There are gas storage places. But I'm going to guess that something like helium is going to be stored in relatively small quantities,

especially if up to now we've had secure supplies. Well, even in the U.S. There has been helium shortages for quite a while, even before this whole Middle East disruption. You know, crude has been historically easier to store in strategic reserves. LNG is more difficult because of the amount of cooling that you need to the infrastructure. Again, going back to this Qatar field, one of the two gasification plants, the components, was taken offline. again, that destruction event in Qatar, I'm surprised how commonly the markets have reacted, whether it be U.S. treasuries or even oil prices, there's been some rumors that, you know, there's been

activity in the oil's future markets to calm things down. I have no evidence of that, you know, but the markets are reacting in a different way than I would have anticipated, given the real fundamental destruction events that have taken place. Let's talk about China. Now, there's people like Arnold Bertrand and Cyrus Janssen, who we had on one of our programs, who say China is going to be okay. It's 84% self-sufficient in energy. It does import quite a lot of energy.

It produces all sorts of things, presumably produces many of the things we've just been talking about. But 16% imports of energy is a lot, I would say. What is the real actual long-term situation in China? I mean, what will it look like in six months' time? I mean, there are fragilities in China too. And of course, the other thing with the Chinese is they have relatively deep pockets. if they start as a scramble for energy,

what role are they going to play in it? China has done a very good job of strategic rebuilding strategic reserves, right? If you look at the 2025, China got about 20 million metric tons out of Qatar gas. I know it's not in the short term, but the power of Siberia, too, is headline going to be 50.

So that's five years down the road. From here to there, how do they adjust for that? They are a rich country. They have very good relations with one of the world's largest energy exporters, frankly, very close to their shores, right? So I think that they'll be okay. Will everything be easy for them? No, but I think they have enough resources and friends.

You know, even there are still, even today, you get receiving oil out of Saudi Arabia. I think in the short term, they're okay. Are they doing great? No, I'm more concerned about the Taiwan's, the Singapore's, the Japan's, the South Koreans, the Koreas. They're much more integrated into the Western system and, frankly, much more vulnerable to these energy shocks and input shock generally. I'm asking you, and I'm focusing on China, because Alex and I, we together, we receive

all sorts of messages and all. sorts of people who are telling us, you must understand that this war is really all about China. It's all about cutting off its energy flows and that however bad things are for us, they're going to be far worse for China and this is what this is all about. From what you're saying, Ray, that is perhaps a rather, shall we say, innocent of you of what the realities are at least shorter. I don't know when the last time you gentlemen were able to go to China, but I I had the privilege of go. My last time was about a year and a half ago.

And you go to a city like Shanghai and it's quiet. Why? Everything's been the electric cars, even scooters. So they've been very, again, diligent in their build-out-of-the-energy system. So they are obviously still reliant on global energy flows, but their domestic ability to address a lot of that. And you just go back to the nuclear power plants. I think the exact number don't, you know, I may be off,

but I think they're currently under construction 23 nuclear power plants. So China has a much more diversified energy system pulling from different areas, so they're much less dependent on raw energy, like, for example, the North American, where the specific of the U.S. is. So I think they've done a very good job of being more diversified. And so will they ambitiaf acted? Yes. Do I think as bad as many people are saying?

I don't see that here and now. Why is Asia more immediately affected than Europe, and we'll come to Europe shortly, but why has Asia been immediately affected in ways that Europe has not been? I read in one of the British media outlets that it's partly a function of shipping that is much easier to move ships, and ships take much shorter time to go from the Persian Gulf to. Asia than they do to Europe. But can you just explain that? Very much. Think of the just in time mentality, right? So why, you know, Europe actually has quite a bit of storage, whether it be, you know, aviation fuels another area, I think, of potential problems going forward. But given the distance, Europe has much better, much more deeper storage. Asia, given its proximity, was much more of a just in time mentality. You know, aircraft, I think,

is another interesting area. As disruptions and supply have taken place, China has restricted their exports, right? It's something I think we're going to see in the U.S. shortly, you know, next couple weeks. But China's already made moves to restrict exports of aviation fuel. And you've already seen many airlines there in New Zealand cutting routes, Scandinavian Airlines, and Australian price spikes in aviation fuel. So again, that knock on effect, I don't think people realize how disruptive this situation really is. Let's turn to Europe because obviously we're both, the two of us are here.

Now, just to explain one thing about Britain, Britain specifically, we use cars much less than the Americans do. This has been an anecdotal impression of mine, but I think it's a correct one. For example, when people commute to work, you have all the satellite. like towns outside London, but they don't drive into London. They come into London by rail. Most people, many people in London and in the cities in Britain, don't own cars. It's a strange thing for people to understand, but that is the pattern. Nonetheless, 50%, when I said, you know, that my wife was surprised that the price hike had been less than she'd expected, it was actually a 50%. end price height. So, I mean, yeah, it's still a significant one. It might not be quite as damaging to

some to people in the UK or as it might be in the US, but it does have an effect. And it was in rural communities. It does, it is effect. It does have an immediate effect because if you go out into the countryside, people use cars a lot more. And to a certain extent, that reproduces itself right across Europe. Some European countries, Germany, I would say, tends to use people there use cars more than they do in Britain. So it's a more car-heavy society than Britain is. I get the sense of the same as true in France and in other places, but I'm not going to say that I understand the geography quite as well. What is going to happen? You talked about we in Europe hitting a wall in about 10 days, how's that going to play out? And just to say, where people in Britain, at least,

notice price changes most sensitively. It is in heating gas. It's the price of heating and electricity in homes and in businesses. And that is true in Germany too. So what are your thoughts about this? Well, just going back to the difference between the UK and the US, the US is a is a physically much larger country, right? So you have parts of the U.S. that do rely heavily on public transportation in the Northeast in particular around New York. You know, many New Yorkers do not own cars. However, the country is a very big country. And, you know, I'm based out of, you know, the new financial capital of the United States out of Miami. And there really isn't much infrastructure. So to get to a supermarket, you really need a car. To get to the work, you really need a car.

So it depends on where you are in the U.S. But again, it's a very 340, 40, 50 million people, spread out. So it's much more integrated in the day-to-day life. Heating oil, luckily, I think we're near the end of winter, right? So you should see demand ease up. But then if we have a hot summer, right, heating oil is used in power production, cooling. So at least in terms of timing, I think it's not going to be as bad. But I do think you're going to see restrictions on supply as inventories are run down. And again, I go back to aviation fuel. I saw some figures that the Eurozone is okay for about a month,

but then after that, supplies are going to be restricted because the refining in the Middle East had a heavy emphasis on aviation fuel. What about gas? because, of course, in Europe, we are very heavily dependent on gas. Gas reserves are at a critical level, but they're at a low level because we had a relatively cold winter. And supplies have not been perhaps quite as strong as one would like. And we do burn through quite a lot of gas in the summer.

Again, it varies from place to place, but we do burn through gas. And in Britain, in particular, we are very vulnerable to shifts in the price of gas because we don't have much gas storage here at all. We usually run with gas storage of about two to three days of gas, just as a say. Look, it's hard for me to sugarcoat things. I think the Eurozone is in a very particularly tough spot, right? Because beautiful history, great culture, not a lot of natural resources to satisfy demand. Cutting off the Russian supply, again, has knock on effects. And now Middle East had taken up a lot of that slack.

And you have the force majeure announcements out of Qatar, which is going to impact. They've already said Italy is one of the areas that they're not going to be able to supply. So from an industrial point of view, from a cooling point of view, from an infrastructure point of view, I think the Eurozone is particularly dependent on the U.S. And if I can tell you, Alexander, if prices at the pump are up 50%, you're getting close to the Biden highs. And Trump, I don't think, would be able to politically stomach that. And again, export restrictions, you know, I don't want to say price caps because that certainly didn't work out very well for the U.S. in the 70s. but other mechanisms to try to keep consumer prices down in the U.S. So I think the Eurozone is in a very difficult position.

I'm going to tell you something, Ray, which is back in 2022, when we first had the restrictions on imports of gas into the EU, we actually, Alex and I, we actually did a program in which we floated the possibility, that there might be an energy crisis and that the United States might impose restrictions on exports. Of course, that was a way out thing to say then. It's now being denied. I read an article in the Financial Times, which said that it's not going to happen, that it's not going to happen, but that the industry was saying that it shouldn't happen.

And that the officials within the administration were saying that it won't happen, which makes me think that it is actually being considered. Is that what you're taking? Alexander, I had the same thoughts, right? If you look at historically, the U.S. for more years than not, we've only only changed the laws recently about exporting energy to keep prices lower. Right. And I will say the administration, whether it be here or in Israel,

has been very adamant about trying to calm down the markets. It's almost done. It's an excursion. It's not a war. So they're trying to say things to calm down. If they were to say, yeah, that's something we're looking at. I think you'd see people would rush to fill up tanks as quickly as they can. And then they have a quicker demand spike than they can really handle.

So I do think that it is something that's being considered. Look, if they're considering the draft, absolutely they'd consider energy export restrictions. That's an excellent point, by the way, an excellent point. Let's talk about Russia, because, of course, again, the narrative all over the media here is that Vladimir Putin, this has been an absolute, you know, injection of energy into his economy, that this is, that Russia is the big economic winner out of this, it's going to sort out their fiscal problems, is it going to enable them to fund the war? Is it as simple as that? You know, it's interesting. I don't know if you guys have tracked the rubble recently yet. I would have guessed the rubble would have strengthened over the last week. It's actually been a little weaker, right? Honestly.

I think Russia, look, again, I'm not a priest. I'm not saying it's right or wrong. I'm just saying what is the reality. I do think Russia is in a privileged position here. I do think they will be able to, you know, physically really benefit, you know, going back to helium. Russia's done a lot of infrastructure in building helium, right? So they, going back to Chinese chips, where could they get that helium supply that they're currently getting from the Middle East? Russia's in a privileged position.

So again, the sanctions backfire. I think all that Nord Stream gas that have been allocated to Europe, all right, it's been allocated 50 million cubic meters, the 15 million cubic tons is now going to be allocated to China. So I do think Russia's played the long game and is well positioned. Again, people don't yell at me, not saying it's right or wrong. I'm just telling you the facts and what is reality. Tell us how all this is going to impact ultimately. Let's start with the financial markets.

The financial markets have up to now taken this very, calmly. My own experience of financial markets is that they do take things very calmly until the moment suddenly comes when they don't. That's my own experience as a non-market person. What do you think is going to happen if things start to play out in the way that you say? Okay. I have to make a differentiation in the short term and then in the long term. In the short term, this is very inflationary, right? And you've seen yields, U.S. Treasury, yields rise. People would have thought historically when there's a conflict, flight to safety. You've seen it in the dollar, but not in treasuries, right? So yields have actually risen over this time

period. Why? I mean, look, from the tariff loss where the U.S. has to repay the tariffs with interest that had been collected up until the Supreme Court date, now we have at least $1.7, $1.8 billion daily in terms of funding this Iran-com. conflict. Plus, you have with the tariff loss, what I think also a lot of American investors haven't really picked up one, is you had all these commitments of foreign countries investing in the U.S. Malaysia, I believe it was Monday or Tuesday. They already said, well, since you lost the tariff case, we're not going to do that investment, right? All the Middle Eastern money that had been allocated to the U.S. So I think treasury rates, and also just going back to the Middle East,

as these countries have lost revenue, they're going to sell down assets. You've seen a lot of our utility in gold. And I think treasuries could also be impactful. So I think in the short term, you're going to see a rise in rates. And what does that do for the U.S. economy? It's already impacted mortgage rates, right? And housing is a very important component here in the United States. So that's going to slow down housing. This is in the short term. So very problematic, very inflationary. In a year or a year and a half, these type of energy shocks are very, cause great demand destruction. So it's going to be very recessionary. So in a year, a year and a half, I could see global central banks lowering rates. But we're in this,

to use a baseball analogy, we're in the first or second inning of a long game. So I think from here to there, it's very problematic. And I think you're going to see a lot of inflationary pressures. And you know, you have a new Fed chairman in theory coming in in May, if he can get through the process, which also looks a little challenging. So you have the prospect of a continuation of Jerome Powell who has not been very accommodative in interest rate cuts. So I see a lot of reasons for slowdown. Again, a year and a year, a year and a half out, it could be good for lowering rates, but we have a lot to get through. Yeah. I mean, we'll talk in a moment about, about the recession, can you actually talk a little bit more about the situation with the Gulf

States? Not so much about what their long-term future is, but they used to be, or so it seemed to me, very important in providing much of the lubrication in the global financial system. I mean, there would be the oil, they'd sell the oil, the money would come in, they'd invest it in the West, in treasuries, in the housing markets in New York, Paris and London. They would buy all sorts of assets. They tried to buy newspapers here. They did all kinds of things of that kind. That money flow is now going to be disrupted, at least for a time,

and it might be a long time, and it might be forever, but we're not going to speculate about that. What does that actually do to the way in which the world economy functions? Again, whether it be true or not, the petrodolar, this idea of protection in terms of denominating your main commodity in dollars, frankly, I don't see how it could not come into question now. So if they choose to, you know, where is the world's largest producer of goods? It's China.

So frankly, it makes more sense for these producers if they're buying products, whether it be cars or whatever out of China, to have to. to bypass the use of the dollar. I do think that second order, the third order impacts of this type of disruption for that Middle East, you know, that's a look for a geographically small area, a lot of capital, trillions and trillions of dollars. I think they'll be less inclined to invest in the U.S., all these, you know, contingent funding, you know.

I saw a funny little tweet this morning about Qatar and the airplane that they gifted the Trump, you know, $400 million. maybe that wasn't such a great investment. Maybe they'll buy, you know, alliances elsewhere. Yeah. Can we talk about the prospect of industrial recession? Because I think you made the point, and I think it's an excellent one, that, you know, we focus on oil.

And when people talk about the strait of hormones, they talk about oil. And that is, of course, enormously important. But there are all the other byproducts that come out of that region that work through the various supply chains, much more so apparently than was true, say, in the 1970s. And that looks to me like it's going to have an long-term impact on industrial supply chains and a very disruptive one. Is that correct? And will that intensify industrial recessions, which would affect the more industrial countries long-term as well? Just asking. You're absolutely correct.

Again, fertilizers, aluminum or aluminum, as the American would say. My brother works in pharmaceuticals. And again, another industry that doesn't get a lot of financial press, but he also envisions a lot of impact there because of the inputs that come from the tip of petroleum and petroleum derivatives. So I absolutely think this is a going back to that Merrick's quote. I think this is a much more of a destruction event than a disruption event. And I don't see it.

I don't see how. industries globally are not going to be impacted by this. I mean, look, there are always winners and losers, right? I think some of your higher-cost energy producers, like Angola, Nigeria will do better here. But that historically high-quality, I guess, perceived low-beta producer of the Middle East will come into question going forward.

Are we looking at a major recession? I mean, is this likely? I don't see, given this type of shock, I don't see how that is not in the cards. Again, it takes time to roll through the system. Again, that year, 18 months out, but this kind of shock, I just don't see it any other way it will have. I mean, the global central banks in terms of stimulus, in terms of their own respective balance sheets, right? I mean, look, I know we've talked about Japan before. So not only do you have, you know, Japan with 239% debt to GDP, higher interest costs, higher defense costs, and now higher inputs from energy prices, these countries are, frankly, financially strapped so they can't help stimulate the consumer to the extent that they had been. So you're going to have to have demand destruction. And with demand destruction, that very recessionary pressures in the medium to long term. Again, it won't happen tomorrow because you've had a continuation of the economy.

but over time these type of shocks, I just have to, I'll strongly lead to a recessionary environment. Basically, last question. You spoke about destruction, production, destruction. I mean, Qatar are saying that 17% of their production has been destroyed and that it will take months to get years to get it up. up and running. How long must this go on for?

I mean, if things stopped today, would we be able to avoid some of the worst consequences or is this going to be a cumulative thing that gets

worse and worse the longer it goes on for? So some people were talking about a couple of days ago about the war continuing until September. What will the effect be if it continues like this right up until September? I think the impacts are growing exponentially as inventories are drawn down. Again, that 10, 15 days that the Eurozone has, I think it's going to get worse before it gets better, because I don't envision a scenario again, whether this administration or the Israeli administration yesterday talked about, you know, quick, almost over, you know,

I just don't think, I frankly, again, going back to the LNG disruption, you've had, now you have a permanent law, well, permanent, a long-term loss of capacity. So even if everything were to go back today, back to production, A, you have to replenish depleted inventories, and you have a system that is not going to be able to work at the same efficiency or output level that you had before. Actually, I will ask one question. Is this one of those great events like the Bretton Woods collapse, the energy crisis of 73? Is it on that kind of scale?

Look, people are going to say I'm alarmist, but you look at the historical disruptions of this magnitude, you have to go back to the Iran-Iraq war, at which time you lost not even 10 million barrels of global supply. We're looking at two times that. So I don't see how this will not be one of those Bretton Woods global events that really changes the economy. If I'm, again, I put myself in a Chinese mentality, I've seen that the Middle East can no longer be that reliable support. So I'm going to deepen my ties. I'm going to put on my industrial capacity in terms of building out the power of Siberia, too, not five years, I wouldn't have done in the next two and a half years, right? So I think this will have long-term repercussions. And obviously,

Chinese-Russian trade is not going to take place in dollars. What will that impact for the dollar demand going forward? So I do really think that this is going to be one of those events that will go down in history and be discussed after our lifetimes as a seminal event that's change the course of the global economy, which is where I focus on. Ray, that has been a marvelous program and a brilliant analysis. Thank you very much. I have to say, one of the thing that you've described is worrying, but we always need, it's always better to be well informed than not optimism, which isn't based on fact,

is fool's optimism. So thank you for explaining it to us. I hope some of the policymakers in London, Washington, wherever, Jerusalem are listening. I doubt that they are, I'm afraid, but hope that they are and we'll see where we go. Thank you very much. And let's return and have a further discussion with you about as things evolve over the next few weeks. Thank you, gentlemen, again, for having me on. Thank you, Ray.

Before you go, a quick plug, where can people follow you? Again, I post my monthly thoughts on TwitterX at at Ray Zuccaro. and my firm is www. rvx-a-m.com. Thank you, Ray. Thank you, gentlemen.