Crude Catastrophe

In terms of gold the picture changes. It took about ten barrels of oil to buy an ounce of gold in 1971. Now, it takes 78 of them. Is oil too cheap? Is gold too expensive?

Source: Getty Images

Friday, February 27th, 2026

Bill Bonner, from Youghal, Ireland

Our job here is simply to connect the dots...and see what picture they give us.

Sometimes, they line up neatly...making our job easy. The Daily Beast:

Tiny Trump-Linked Firm in Line for $25B Nuclear Deal

Wall Street analyst Joe Osha of Guggenheim Securities was blunt about the company’s stature in comments to Politico. Pushing back on NuScale’s characterization of Entra1 as a “global energy company,” Osha said, “In reality, it really just looks like it’s a couple of guys.”

But one of those guys donated heavily to Trump...and another is said to be a close friend of Donald Trump, Jr. That dot goes into the ‘corruption cluster,’ and we don’t need any more there.

But what about this big dot? Fox:

Trump weighing strike options against Iran

Where does that go? From recent experience, we know that the US is fully capable of starting wars. As to whether any of them have been worth fighting, opinions are divided. But based on the record, US missiles are probably likely to arrive in Tehran before US doctors arrive in Nuuk.

As we explained earlier this week, we cast no judgment on the dots themselves. We just try to see what they mean and where they are going.

In that respect, it is helpful to understand the motivation behind them. On Fox News, foreign policy analysts insist that the attack on Iran would be driven by a desire to protect US security. But Iran has no worthy navy or air force. It has no way to strike America. And its missiles only have a range of about 2,000 kilometers...far short of the 10,000 needed to approach the US.

Iran’s entire military budget is $23 billion...about two weeks’ worth of the Pentagon spend...and only a quarter of New York City’s annual budget. There are no Iranian missile bases in Mexico or Canada, ready to rain terror on the Homeland. There are no Iranian troops stationed anywhere in the New World preparing to invade. With such limited means, all of Iran’s resources must be used to protect itself at home.

So, if not ‘national security’, what? Does Israel have some ‘dirt’ on Trump...forcing him to take action against its arch-enemy? Does the Pentagon have new weapons it wants to test? Does Trump hope for glory by (starting and) ending another war?

There could be a mix of those things. Or just the momentum of a late, degenerate empire...needing villains to challenge and conquer. We don’t know.

And what would be the consequence?

The simplest and most likely result would be an increase in the price of oil. But we see no sign of it, so far.

In May of ‘22, you could buy a barrel of oil for $114. Now, it’s about $66. And all this talk of going to war with Iran doesn’t seem to have made much of a difference. For the last 20 years, the price of oil has gone nowhere.

We have to look back to the 1970s to see what might happen in a war with Iran. In 1971, before the Oil Crisis created by the Yom Kippur war of 1973, oil sold for about $3.50 a barrel. That conflict...with an embargo on oil shipments to the US from Saudi Arabia...and the inflation of the ‘70s… took the price to almost $40 in 1980.

Source: thechartstore.com

Do you remember the oil crisis of ’74? We do. We’d get up at 4AM to get in line for gasoline. Normally, prices would rise to ‘clear the market.’ But the feds prohibited ‘price gouging.’ So, they gouged our time instead.

Could that happen again? Could that be the surprise, a rerun of the ‘70s? The industry publication, Oil Price.com, doesn’t think so. It suggests that even a ‘severe escalation’ of the attacks would drive the oil price up ‘only $10 to $15’ a barrel.

In terms of gold the picture changes. It took about ten barrels of oil to buy an ounce of gold in 1971. Now, it takes 78 of them. Is oil too cheap? Is gold too expensive? We don’t know that either.

But here at Bonner Private Research we are all unrepentant catastrophists. We look out for the Big Loss. It will come from somewhere. Most likely the Iran War won’t be it; the dot will prove only a minor irritant. But often, the things most likely to happen are not those that actually do happen. And it wouldn’t necessarily take an ‘extreme’ event to bring the whole creaky shebang crashing down.

Maybe we should buy a little oil, just in case.

Regards,

Bill Bonner