Is Higher Oil Inflation Actually Good for Your Wallet?

Summary

Despite short-term pain, higher oil prices could lead to fantastic medium-term economic benefits, especially for real wages, according to Josh Young of Bison Interests. While a recent US-China agreement on the Strait of Hormuz reopening seems unlikely to yield immediate results, China remains a net beneficiary of the current situation and doesn't appear motivated to change it. Young suggests that the US is now a net oil exporter, meaning higher oil prices can boost the economy, unlike in past cycles. He predicts oil could reach $150 per barrel by year-end, potentially even $200-$250, due to depleting inventories and supply constraints from the Strait of Hormuz closure. This scenario, he argues, will drive up wages, particularly for lower-income workers, helping to close the K-shaped economic disparity. Young favors investing in smaller oil producers and service companies, which he believes are undervalued and less affected by potential Strait of Hormuz disruptions. He also notes that the current tech boom, driven by AI, is surprisingly oil-intensive and will likely create future demand.