“I thought that this Hormuz restriction was going to be an immediate heart attack for the world. … And what should have been or seemed like it should have been a trip to the emergency room turned out to be a trip to the drugstore for some Tylenol.”
The Great Simplification with Nate Hagens · October 2026
Berman was admitting what he and other oil analysts got wrong about the restriction of the Strait of Hormuz. By his account the world lost about 10 million barrels a day and not the 20 million feared, thanks to bypass pipelines, strategic reserves and a drop in Chinese crude imports. The host's next question was whether the trip to the emergency room is still to come.
Transcript
So that is among the core questions and a difficult one. And the simple answer is, as you alluded, first of all, it depends on where you are. But you and I are both in the United States. And so let's just talk about that for a moment. And here in the United States, my life has not changed very noticeably as far as the things that are available to me. Now, the price of some things is higher. But I mean, it's not like the bottom has fallen out. And so why is that? And part of the answer is that the United States has a tremendous endowment of all natural resources, but particularly oil and natural gas and coal. So we are in a much better place than, say, the parts of the world that are hurting, which are predominantly Asia and parts of Africa that essentially have no indigenous energy resources of their own.
And Europe as well. I would include Europe in that list.
Fair enough. Europe used to have a fair amount of energy resources and they've pretty much blown through them. I think the second part, though, is just how remarkably and impressively adaptable the energy system has shown itself to be. It surprised me, Nate. I mean, when we talked about Iran a couple of months ago, you're right, I got the diesel prices and some of the product prices right. But there were some things that I didn't get right. And I thought that this Hormuz restriction was going to be an immediate heart attack for the world. Most of the analysts that I respect were pretty much in the same boat. So we were all wrong to some extent. And what we were wrong about is just how amazingly cleverly the system adapted and adjusted. And so instead of losing 20 million barrels a day, we ended up only losing maybe 10 million barrels a day because there were all sorts of clever things. There were bypass pipelines. There were strategic petroleum reserves that we could draw on. And then there is this mystery of China deciding to stop importing 4.5 million barrels of crude oil a day. So all of those things just kind of stacked up. And what should have been or seemed like it should have been, you know, a trip to the emergency room turned out to be a trip to the drugstore for some Tylenol.
Is the trip to the emergency room on the horizon?
We're getting the car warmed up right now, I think, Nate.
Okay. I want to cover two things. First of all, you mentioned the strategic petroleum reserve. I mean, there's different ones in different countries. Let's talk about the United States. My understanding is we're at 40, 50-year lows, and there's not so much more lower we can go before those caverns start to not be able to function. Can you give us an overview of that situation?
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