[0:00]There is a massive oil crisis going on right now. And if you're asking, so what? Why should I care? Well, let me ask you. Do you drive? Do you shop for groceries? Then picture this. You pull up to gas station to fill up your car. Just a month ago, you remember that gas was under three US dollars a gallon. But today, you see the price approaching $4. According to industry analysts, the all-time record for gas prices in America, about $5 a gallon set back in 2022, could be shattered within weeks. As a matter of fact, in California, it's already blown past 560 a gallon. To make matters worse, every single item at the grocery store is about to get more expensive, as if inflation wasn't crazy enough already. Why? Because the trucks delivering your food run on diesel, and diesel prices are climbing even faster, already surging more than 35% in just the past months. So, what the hell happened? A month ago, gas was relatively cheap, and the economy was more or less chugging along. But then, almost overnight, everything unraveled. On February 28, 2026, the United States and Israel launched the largest coordinated air campaign of the 21st century against Iran, citing Iran's advancing nuclear weapons program as justification. Over 7,000 targets, including military bases, weapons facilities and command centers were struck. Iran's supreme leader, Ayatollah Ali Khamenei, the man who had ruled the country for 36 years, was killed within the first day of bombing. In a matter of hours, the entire top layer of one of the most powerful regimes in the Middle East was effectively decapitated. It looked like the war was over before it even started. But did anybody anticipate what would happen next? Maybe some people did, but I'm not entirely sure if the US did. Sure, in theory, you take out the leadership and destroy the military infrastructure, including their capacity to make nuclear weapons, and let the Iranian people do their thing by taking over the government from the bottom up. That would have been the quick end of the war right there. But within days of the death of their supreme leader, Ayatollah Khamenei's son was rushed into power as the new supreme leader. And his first move was to unleash what might be the most devastating economic counterattack in modern history. Iran started firing back at everybody. Missiles and drones at Israel, and US military bases across the Gulf, and then at countries that weren't even part of the war. They launched over 500 ballistic missiles and nearly 2,000 drones in the first week alone. Dubai International Airport, literally the world's busiest airport for international flights, got struck.
[2:57]Abu Dhabi's airport was also hit. The UAE was suddenly a war zone. Then Iran fired missiles at Qatar's Ras Laffan Industrial City, the single largest liquefied natural gas facility on Earth, responsible for about 20% of the world's entire LNG supply. The damage was significant enough that Qatar suspended LNG production within 24 hours. At first, Iran's move made no sense to the outside world. Why on Earth would they attack Qatar and the UAE all of a sudden when these countries aren't even at war with Iran? Qatar had actually been one of Iran's friendliest neighbors. They share the world's largest gas field, and they signed defense cooperation agreements. So, why turn around and bomb them? Turns out, these were super strategic moves on Iran's part. Head-to-head, there's no way Iran can go up against the US in a direct military engagement. The US military is just too powerful. But by hitting energy infrastructure, not just military bases, but oil terminals, gas facilities, airports that handle fuel logistics, Iran was sending a message directly to the US and the entire world. If you destroy us, we'll take the global economy down with us. And at the center of this showdown is the Strait of Hormuz. If you're not familiar with the region, the strait is this 21 nautical mile or 39 km wide channel between Iran and Oman. And through this narrow passage, about 20% of the world's oil supply and 25% of its liquefied natural gas flows every single day. The strait is now the most strategically important bargaining chip Iran has, to the point that Iran declared that not 1 liter of oil would pass through it. So the question is, how did the entire world end up so dependent on one narrow waterway that a single conflict can send gas prices through the roof, threaten to wreck the global economy, and put the US in a position where all its military power cannot fix the problem, and is there actually a way out of this mess? But before we dive in, I just want to quickly talk about something that is directly related to how we bring you these insights from Asia. It obviously requires a lot of research and going through different sources, but I'm reminded every day just how difficult it is to actually get a clear, unbiased picture of what's going on, especially when it comes to Asia. Between sensational headlines, algorithm-driven feeds, and completely different narratives depending on where you're reading from, it's honestly very easy to get misled or overwhelmed. And that's exactly why we decided to partner with Ground News, which solves a problem I've been wanting to address for a long time. Ground News is not a news outlet trying to sell you its version of the truth. It's a news comparison platform. You take any story, and Ground News shows you how it's being reported across the political spectrum, left, right, and center. So you can actually make up your own mind. And I think that's more important than ever, especially if you're trying to understand complex issues beyond just surface level headlines. For example, if you search Asia on Ground News, you might come across a story about how the International Energy Agency is releasing emergency oil stocks in response to the current tensions in Iran. What's interesting is that instead of just seeing one version of the story, you'll see multiple headlines from different outlets, along with a summary and a bias breakdown. You can see the full picture, like who's covering it, how they're covering it, and what's being left out. In this case, you can see that many of the sources lean slightly right, framing the IEA's move more as a security and market emergency. That level of transparency is incredibly powerful, because it helps you understand not just the news, but how the news is being shaped. Honestly, this is exactly the kind of tool I wish more people used before forming strong opinions. So if you're someone who wants to stay informed without being manipulated by algorithms or one-sided narratives, I highly recommend checking it out. You can subscribe to Ground News and get 40% off the Vantage plan by scanning the QR code on screen or by going to ground.news/boss. Or simply clicking the link in the description below. All right, let's get back to the deep dive.
[7:20]First, let's take a step back because I think a lot of people hear oil crisis or energy crisis and their eyes just glaze over. But if we're going to talk about arguably the single most important natural resource in the modern world, we better be able to define it, right? You hear oil, gas, petrol, LNG, LPG, and it all sounds like the same thing that people use interchangeably. Well, there are differences and they actually matter for understanding this crisis. Let's start with crude oil, which is the raw stuff that gets pumped out of the ground. It's basically ancient organic material, plants, algae, tiny sea creatures that got buried under layers of rock for millions of years. And slowly cooked by heat and pressure until it turned into this thick, dark liquid. On its own, crude oil isn't that useful. For example, you can't just pour crude oil into your car. It has to be refined, meaning heated and separated into different products. And those products include gasoline for your car, diesel for trucks and ships, jet fuel for planes, and asphalt for roads, all from the same barrel of crude. So when you hear people say oil on the news, they're usually talking about crude oil, the raw commodity that gets traded on global markets and sets the price for everything else. It's measured in barrels, and one barrel is about 42 gallons or about 159 L. From that single barrel, you get about 20 gallons of gasoline, plus diesel, jet fuel, lubricants, asphalt, and a bunch of petrochemicals that end up in everything from plastic to medicine. Yeah, your toothbrush, your phone case, and even the polyester in your clothes are all made from petrochemicals. So you get the picture of how critical crude oil is to our fundamental way of modern life, right? Anyway, gasoline is just one of the many products made from crude oil. And by the way, if you've heard of the word petrol, that's just what people in the UK, Australia, and most of the world outside North America call gasoline. Now, gas is where it gets a little confusing because Americans use gas to mean gasoline at the pump. But it's also short for natural gas, which is a completely different thing. Natural gas is a lighter fossil fuel, mostly methane, that often comes out of the ground alongside crude oil. You probably use it at home for heating or cooking. But here's a thing about natural gas. Gas is, well, a gas. You cannot just load it onto a ship the way you can with liquid oil. So to transport it across oceans, they have to cool it down to -260° Fahrenheit. That's -162 Celsius until it becomes a liquid. That's LNG or liquefied natural gas. It gets loaded onto specifically built ships called LNG tankers. Basically, massive floating freezers designed to keep the gas in liquid form while crossing the ocean. Then there's LPG or liquefied petroleum gas, which is stuff like propane or butane. LPG is actually a byproduct of both crude oil and natural gas. In the US, you probably know it as the gas in your backyard grill tank. But in huge parts of Asia, like India, Bangladesh, and Nepal, LPG is what people cook with every single day. It's how families feed themselves. Most households rely on these heavy metal gas cylinders that get delivered to their door or picked up from a local depot. So when you hear that India is now rationing LPG or that Nepal is running out of cooking gas, that's not just an inconvenience. That means families cannot cook food for their kids. So to sum it up, crude oil gets refined into gasoline, diesel, and jet fuel. Natural gas gets chilled into LNG for shipping, and LPG is cooking and heating fuel that billions of people in Asia depend on daily. Then the next basic question is, where does all this oil and natural gas actually come from? Most people would probably guess the Middle East, and they'll be right. The Persian Gulf region sits on roughly 48% of the world's proven oil reserves. That's nearly half of all the oil we know exists on this planet, concentrated in one region. Now, the US is the world's biggest oil producer in that it pumps more crude oil out of the ground than any other country. But in terms of what's actually left in reserve, the US holds only about 5% of global proven oil reserves. Iran alone is sitting on around 12%, making it the third largest oil reserves in the world, at over 200 billion barrels. Fun fact, Venezuela, where the US captured President Maduro in a military operation just a few months ago, is sitting on the world's largest oil reserve at roughly 17% or over 300 billion barrels. Make of that what you will. Anyway, putting Venezuela aside, pretty much all the countries in the Persian Gulf region, Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, Bahrain, Oman, and Iran, need to ship their oil out through one waterway exit. The Strait of Hormuz. And right now, almost none of it is getting through. Well, except Iran's own oil. So, what's up with the Strait of Hormuz? Even from the map, you can see that it literally creates a bottleneck out of the Persian Gulf, right? The Persian Gulf is basically a giant enclosed body of water, almost like a massive lake, and the Strait of Hormuz is its only connection to the open ocean. Now, some of you might be looking at the map and thinking, wait, Saudi Arabia has a whole coastline on the Red Sea. Why can't they just ship it from there? Fair question. Saudi Arabia does have a pipeline that runs east to west across the country to a Red Sea port called Yanbu. But that pipeline can only handle about 5 million barrels a day. And Saudi Arabia typically exports 6 to 7 million. So even maxed out, it cannot fully replace the straight route. Most of Saudi's oil infrastructure, the fields, the refineries, the giant export terminals are all on the Persian Gulf side. And here's the thing. Even that backup is now under threat right now. Iran actually fired a missile at the port of Yanbu, which Saudi Arabia said they intercepted, so it's clear that Iran is trying to shut down the alternative routes as well. And that's just Saudi. Other Gulf nations, like Qatar and the UAE, don't even have the luxury of being able to build pipelines out to the Red Sea. So the Strait of Hormuz is kind of a big deal. And this has been true for as long as humans have been trading in the Persian Gulf. From our research, ancient Mesopotamian civilizations, like I'm talking 3,000 BC, were already using the Gulf for maritime trade. So the straight has been a strategic choke point for literally 5,000 years. But for most of that history, it didn't matter much to the rest of the world. Regional trade, sure, but not a global pressure point. That changed because of one thing. Oil. In the early 1900s, the world ran mostly on coal, but right before World War I, Winston Churchill, who was running the British Navy at the time, made it the decision to switch the entire fleet from coal to oil. That single call basically turned Persian Gulf oil into a matter of global military survival. And where was one of the first major oil discoveries in the Middle East? Iran. In 1908, a British company struck oil in southwestern Iran, the first major commercial oil find in the entire region. That company would later eventually become BP, British Petroleum. Now, how did a British company just walk into Iran and start drilling? Iran wasn't a British colony. But at the time, Iran, which was still called Persia, was weak, broke, and squeezed between British and Russian influence. A few years earlier, in 1901, a British businessman had cut a deal directly with the Shah, Persia's king, giving British exclusive rights to explore and extract oil across most of the country for 60 years. In exchange, Iran got a small upfront payment and 16% of the profits. That's it. Iran had no technology, no capital, and no leverage to negotiate a better deal. So for decades after the discovery, Britain and later the US essentially controlled Iran's oil. The Iranian people saw almost none of the profits from their own natural resources. That in 1951, Iran's democratically elected Prime Minister, Mohammad Mosaddegh, decided to nationalize the oil industry. He basically said, hey, this is our oil under our land, and the profits should go to our people. The British and the Americans were furious. And in 1953, the CIA and British intelligence orchestrated a coup that overthrew Mosaddegh and reinstalled the Shah, the Iranian monarch who played nice with Western oil companies. This isn't a conspiracy theory by the way. The CIA has literally declassified the documents confirming it. That coup planted a seed of deep, generational mistrust of the West. And when the Islamic Revolution swept Iran in 1979, overthrowing the Shah and installing the current theocratic regime, one of the driving forces was exactly this grievance. In their eyes, Western powers had been exploiting Iran's resources and manipulating its politics for decades. And if you're wondering how Iran went from that 1979 revolution to the economic collapse and massive protests that's at this stage for this current war, I actually did a whole deep dive on that in another video, so I'd recommend checking it out after this one. But here is the thing that's wild to me. Even after all of that, the world just kept getting more and more dependent on oil flowing through the straight, not less. By the 2000s, global oil demand was higher than ever, and the Gulf's share of global supply had only grown. The US set up permanent military bases in Bahrain, Qatar, Kuwait, and the UAE, essentially building an entire military infrastructure whose primary purpose was to make sure oil kept flowing through Hormuz. So hopefully, you get the full picture. You've got 48% of the world's oil reserves sitting in the Persian Gulf. You've got one 21-mile choke point called the Strait of Hormuz with no alternative sea route. You've got the US military planted across the region to protect it. And now you've got Iran declaring that not 1 liter of oil would pass through the straight until this conflict is resolved. I mean, talk about pulling the pin on a grenade that the entire world had been sitting on for half a century. Every government, every oil company, and every energy analyst has known about this vulnerability for decades. Yet nobody built a real backup plan because the oil kept flowing and the money was too good. To really understand what the world just lost, you need to picture what the Strait of Hormuz looked like before February 28, 2026. On any given day, about 100 ships pass through the straight. Roughly 50 going in, 50 going out. About two-thirds of those are tankers of some kind, massive vessels carrying crude oil, refined fuel, or liquefied natural gas. The rest are cargo ships, hauling everything from coal and iron ore to grain and fertilizer. We are talking about 30,000 vessel crossings a year. Every single day, about 20 million barrels of oil and over 2 billion dollars worth of energy moved through this corridor. That's not an annual figure, that's daily. And what blew my mind when I started looking into this is that the actual shipping lane is way narrower than you think. As I said earlier, the straight itself is about 21 miles or 39 km wide at its narrowest point. But ships don't just go wherever they want. There is a traffic separation scheme, kind of like a highway, with one lane for inbound traffic and one for outbound. Each lane is only 2 miles or 3.2 km wide, separated by a 2-mile buffer zone in the middle. So all those giant tankers, some big enough to carry 2 million barrels of oil, and needing several miles just to come to a full stop, are squeezing through a tiny corridor that runs right between Iranian islands to the north and Omani waters to the south. Now, who's protecting all of this? For decades, that's been the US Navy's job. The Fifth Fleet has been headquartered in Bahrain since 1995, and its core mission has been keeping the straight open and ensuring the free flow of commerce. On top of that, there's a 30-country coalition called the Combined Maritime Forces. Also based in Bahrain. So at any given time, you might have American, British, and French warships, along with various other naval assets patrolling the area. Japan and South Korea have been deploying their own warships to defend their commercial vessels.
[21:15]It was like controlled chaos, if you think about it, because everybody had a reason to keep it going. But when the US and Israel killed Iran's supreme leader Khamenei and bombed the shit out of Iran's military infrastructure, what was left of the regime looked around and realized, our oil exports are already sanctioned. Our economy is already in ruins. Our leader is dead, and they're still bombing us. What exactly do we have left to lose? So Iran went ahead and did something that's never been done before. Not during the Iran-Iraq War, not during the Gulf War, not during any of the countless standoffs over the past four decades. They completely shut down the Strait of Hormuz. How? They did it mainly in three ways. First, the mines. Iran had an estimated 5,000 to 6,000 naval mines, one of the largest stockpiles in the world. And these aren't all the same. Some are contact mines. They float just below the surface, anchored to the seabed by a chain, and when a ship brushes against one, it detonates. These are basically World War I technology and they cost as little as $1,500 each, and they work. But Iran also has much more sophisticated mines. Bottom mines sit on the seafloor and use magnetic or acoustic sensors to detect a ship passing overhead. They sense the magnetic signature of the hull or the sound of the engines and detonate upward. There are also rising mines, including a Chinese-designed rocket-propelled mine called the EM-52, which sits on the bottom and launches itself upward when it detects a target. The ship's crew cannot see any of these. There is no warning. The water just erupts beneath you. And here's the crazy part about how they deployed them. Iran doesn't need specialized warships to lay mines. IRGC or the Islamic Revolutionary Guard Corps, which is basically your second military that reports directly to the supreme leader, operates over 1,000 small boats through its naval wing. We're talking about speedboats, fishing vessels, and even ordinary wooden boats, and crews can literally just roll mines off the back of these things at night. Because the shipping lanes are only 2 miles wide, you just need to drop a few dozen mines in the right places. So deploying mines is super easy, but clearing them takes weeks, potentially months. Second, the swarm boats. IRGC operates a fleet of fast attack speedboats that can hit 50 to 70 knots. That's about 80 miles per hour on water. They're tiny, they're fast, and they barely show up on radar. Iran's tactic is something called swarming. They send 10, 15, 20 of these boats at a single ship from every direction at once. Some are armed with heavy machine guns and shoulder-fired missiles. They aim for the bridge to blind the crew and the engine room to kill the power. And mixed in with the armed boats are the unmanned drone boats, remote-controlled speedboats packed with explosives that steer straight into the ship and detonate on impact. Now, imagine you're a tanker captain. Your ship is 1,000 ft long. It weighs hundreds of thousands of tons when loaded, and it needs several miles just to stop or turn. And 15 speedboats are coming at you from all directions at 80 miles per hour. What exactly are you supposed to do? And third, missiles and attack drones fired from shore. This is the part that makes a straight almost impossible to force open. Iran controls three islands on the straight. Qeshm, Hormuz, and Larak. And Qeshm, the largest island, has underground tunnel systems hiding missiles. These missiles sit on trucks. They're rolled out of mountain bunkers, fire, and disappear back inside within minutes. And once launched, some of these missiles travel at Mach 3 to 5. Now, if you've seen the movie Top Gun Maverick, that's three to five times the speed of sound and can reach any ship in the straight in under 2 minutes. And if that wasn't bad enough, on top of the missiles, Iran has also been launching air attack drones from the mainland and its island bases. Unlike missiles, these drones are cheap to make. We're talking as little as $20,000 to $35,000 each. Hard to pick up on radar, and Iran had an estimated stockpile of tens of thousands of them before the war even started. So, using these three physical means available, Iran had waged what might be the most effective asymmetric naval campaign in modern history. And I want to lay out the numbers here because the scale of what's happening is staggering. As of late March 2026, at least 20 commercial vessels have been attacked in or near the Strait of Hormuz. An Indian crude cargo ship was struck by a projectile on day one, two sailors killed. A US-flagged tanker was struck twice at the port of Bahrain. A tugboat sent to rescue a damaged ship was hit by two missiles and sank. Three crew still missing, presumably dead. Two Iraqi fuel tankers was set ablaze by explosive drone boats, with one crew member pulled dead from the water. A Thai cargo ship was hit in the straight itself. The fire was so intense that 20 crew had to be rescued while three were trapped in the engine room. And these are just the attacks we know about from confirmed reports. So, at this point, no ship captain in their right mind is willing to sail through the straight, knowing they could be blown up at any moment. But what Iran did indirectly might be even more devastating, because it didn't just close the straight with missiles. It closed it financially. On March 5th, the major maritime insurance companies, known as P&I Clubs, pulled war risk coverage for any vessels in the Persian Gulf. Now, if you're not familiar with how global shipping works, this is the kill shot. A tanker cannot sail without insurance. No insurance means no bank will finance the cargo. No financing means no port will accept a delivery. The entire financial infrastructure behind moving oil across oceans just switched off. If a captain is brave enough to try, the system won't let him. Economists are calling it actuarial warfare. Using the global insurance market as a weapon. Iran didn't need to sink every ship. It just needed to sink enough of them to make the insurance math impossible. And once the insurers pulled out, the straight closed itself. The result, daily traffic through the straight dropped from about 100 ships to single digits, a 95% collapse. Saudi oil, Qatar gas, Iraqi exports all stopped. And what's coming next could change the global economy and the world order as we know it forever. So to date, Iran appears to have complete control of the Strait of Hormuz, and there's nothing the US can seem to do about it. But surely, you ask, there must be something the US Navy can do, right? Send the Navy in, escort the tankers, force the straight open. But it's not that simple. The US recently decommissioned its dedicated minesweeping ships, specifically the last four battle-tested Avenger-class vessels stationed in the Persian Gulf, which were sent for scrap in the late 2025. Their replacements, a handful of literal combat ships, have never been tested in actual combat, and are currently spread too thin across the Indian Ocean and Malaysia. To reopen the straight, you would need a massive fleet of destroyers for escort, constant air coverage, and minesweeping capabilities that the US simply does not have in the region right now.
[30:44]The situation is so dire, the US Energy Secretary Chris Wright admitted on live TV that they're simply not ready. Even if the Navy could begin escorting tankers, they will be entering what intelligence officials call Death Valley. Iran has mobile missile launchers hidden among 15,000 km of rocky north coastline, ready to fire and relocate within minutes. Think of the final mission in Top Gun Maverick, flying through the canyon, except instead of a jet, you're now a massive, slow-moving oil tanker. You're confined to a ship lane just 2 miles wide. You can barely maneuver and you're facing a gauntlet of thousands of mines, drone swarms, and super-fast anti-ship missiles. So honestly, I don't know how anyone at this point can force Iran to open up the Strait of Hormuz, meaning Iran could end up winning the war of attrition. Now, to be fair, the US government has claimed that Iran's ballistic missile capability is functionally destroyed, and that Iran's drone attacks are down 95% from the start of the war. That part appears to be true. But if that's the case, why is the Strait of Hormuz still closed? Iran hasn't stopped. It just shifted tactics, firing fewer but heavier missiles, and using what analysts believe are new drone strategies shared by Russia.
[32:29]By the way, Russia is also providing Iran with satellite imagery and intelligence, while shielding it from international pressure at the UN Security Council. Even if the US decides to put boots on the ground, the nightmare scenario everybody wants to avoid, but the one that's looking increasingly likely, analysts are predicting that it still won't be enough to force the straight of Hormuz open. The best the US can hope for with ground troops is to seize Kharg Island, a small island about 15 miles off Iran's coast, that handles 90% of Iran's oil exports, and use it as leverage to drag Iran to the negotiating table. Now, the Trump administration says they can take the island whenever they want. And that's probably true. The US military has the firepower to put troops on Kharg. A former commander of all US forces in the Middle East called it feasible, and said they would need about 800 to 1,000 marines. But taking the island is one thing. Holding it could be a nightmare. Because Kharg is within striking distance of Iran's entire coastline, every rocket, drone, and artillery piece they have. And here is the critical thing. Kharg Island is nearly 5,000 km or 300 miles from the Strait of Hormuz. And taking it still won't reopen the straight because of all the sea mines and coastal missiles, remember? So, you could end up with American troops trapped on an island 15 miles off a hostile coastline, taking fire every day while the straight stays closed. A former defense intelligence agency analyst called the whole idea close to a suicide mission. And then there is China, which really complicates the situation. Over the past two decades, China has quietly become the biggest customer of Gulf oil. About 45% of China's crude imports pass through the Strait of Hormuz. And China is the world's largest oil importer, period. In 2021 alone, China bought 128 billion dollars worth of crude from Persian Gulf countries, three times more than the US and EU combined. So while America was spending trillions building military bases to protect the straight, China was the one benefiting most from it. But China wasn't just sitting back passively. Through its Belt and Road Initiative, Chinese companies have poured over 260 billion dollars into investments and construction projects across the Gulf over the past decade. Ports, energy facilities, transport corridors. And when the 2026 war broke out, China immediately dispatched a naval task force towards the Strait of Hormuz and held joint naval exercises with Iran and Russia right there in the Gulf. Now, remember when I said earlier that almost nothing is getting through the Strait of Hormuz? Well, there's one exception. Obviously, Iran's own oil tankers are still passing through. And guess what? Virtually all of that crude oil is going to China through what is known as a shadow fleet. A network of tankers that operate outside the international shipping system, with a tracking signal switched off and payment settled outside the US dollar. Iran is currently shipping about 1.2 million barrels a day to China through this shadow fleet. Down from over 2 million before the war, but still flowing. And that to me seems like the most significant fallout from this war, one that could accelerate the change in the world order. For the past 50 years, the vast majority of oil on the planet has been bought and sold in US dollars. This is known as the petrodollar system. And it is one of the main reasons why US dollar is the world's reserve currency, because almost every country on Earth needs dollars to buy oil. I say almost, because Russia and China have been quietly settling oil in yuan and rubles for years. And now, Iran is reportedly telling countries, hey, you want to pass through the straight? Pay in Chinese yuan, not US dollars. According to CNN, a senior Iranian official confirmed that Iran is considering allowing tanker traffic through the straight only if the cargo is priced and settled in yuan. And it's not just talk, okay? Since the war started, at least 11.7 million barrels of Iranian crude have moved to Chinese refineries, and every single barrel was settled outside the US dollar system. If this becomes the new normal, even partially, it would be the most direct challenge to the petrodollar in its 52-year history. As a matter of fact, some Asian insurance companies are now already starting to quote shipping premiums in yuan instead of dollars. The infrastructure to replace the dollar in oil trading is being built right now as we speak. So, think about what that means. China has the world's largest strategic oil reserves, about 1.4 billion barrels, enough for roughly four months, plus pipeline oil from Russia that doesn't even touch the Strait of Hormuz at all. When I say strategic, I'm talking about emergency stockpile of oil reserves. So while the rest of the world are watching oil prices explode, China is better positioned to ride this out than almost anyone. And that changes the entire power dynamic of this conflict. But putting the geopolitics and world order stuff aside, think for a second about how much the COVID pandemic lockdowns wrecked the global economy, okay? And keep in mind, even during COVID, the Strait of Hormuz never shut down. Ships kept moving, oil kept flowing. And still, the pandemic wiped an estimated 22 trillion dollars off global GDP. Supply chains collapsed, inflation got out of control, and it took years for the world to recover. Now, imagine what happens when you take all of that destruction and add the shutdown of 20% of the world's oil supply on top of it. Now, I'm not just talking about fuel. Did you know that one third of the world's fertilizer trade passes through the Strait of Hormuz? Modern farming runs on fertilizer, specifically nitrogen-based fertilizer made from natural gas. The Persian Gulf is one of the biggest producers in the world because it has some of the cheapest natural gas on Earth. Qatar alone supplies 14% of the world's urea, which is the most widely used fertilizer. Well, Qatar's largest fertilizer plant has completely shut down. Nearly a million metric tons of fertilizer cargo are physically stranded in the Gulf. And unlike oil, there are no strategic fertilizer reserves anywhere in the world. None. So, if this disruption lasts through the spring planting season, which is right about now in the Northern Hemisphere, farmers from India to Brazil to the American Midwest may not be able to get the fertilizer they need to grow their crops. That means less food and higher prices for everyone. And here is one more thing that most people don't realize. Qatar also supplies about a third of the world's helium. Yes, the gas that fills party balloons. But helium is also essential for manufacturing semiconductors. Chipmakers use it to cool the silicon wafers that becomes the chips in your phone, your laptop, and every AI server on the planet. Well, Qatar's helium production has shut down along with its LNG plants. And guess who gets roughly 65% of the helium from Qatar? South Korea. Home to Samsung and SK Hynix, the two companies that make up about two-thirds of the world's memory chips. So this war isn't just about threatening your gas prices and your groceries. It could literally slow down the production of the chips that power everything from your iPhone to the AI models that everybody's been talking about. Since the shutdown of the straight, people are getting absolutely destroyed in many parts of Asia. In India, food delivery drivers are watching their daily income get cut in half, because fuel for their motorbikes now eats up most of what they earn. The Philippines has put government workers on a four-day work week to cut energy use. Thailand is telling civil servants to work from home and take the stairs instead of elevators. Bangladesh has shut down all its universities just to save fuel. And South Korea just imposed a cap on fuel prices for the first time in nearly three decades.
[43:05]The United Nations World Food Program is now warning that if this conflict continues through the middle of this year, an additional 45 million people could fall into what they call acute food insecurity, which basically means they cannot afford enough food to meet even the bare minimum calories to survive. And just in case you're thinking, yeah, that's just Asia, too bad, but the US is going to be fine. Well, I'm not so sure about that. Here's why. Remember how I said Iran has tens of thousands of cheap drones that cost as little as $20,000 to $35,000 each, and ballistic missiles starting from around $250,000? Well, those drones and missiles are wrecking havoc across the Gulf right now. Now, here's what it cost the US to shoot those down. America's most advanced ground-based missile defense system is called THAAD, which stands for Terminal High Altitude Area Defense. A single THAAD interceptor costs $12 to $15 million per shot. And get this. These interceptors are not 100% accurate. You apparently need to fire at least two or three at each incoming target just to make sure you actually hit it. So to stop one $35,000 drone or one $250,000 Iranian missiles, the US might spend $30 to $45 million. Think about that math for a second. Iran knows this. Their entire military strategy is built around their cost asymmetry. Iran launched over 2,000 drones in the first week of the war alone. The Center for Strategic and International Studies estimated that the US and its allies spent $1.7 billion on interceptors in just the first 100 hours of fighting. 1.7 billion dollars in 4 days. And it gets worse. Iran has been specifically targeting the radars that make these defense systems work. The THAAD radar costs around $300 to $500 million per unit. Without the radar, the launchers are basically firing blind. Iran has already destroyed at least one of these radars at a US base in Jordan, and claims to have hit three more across the Gulf. The US only has eight of these THAAD systems deployed around the entire world. And they've already had to pull the one stationed in South Korea and fly the whole damn thing to the Middle East just to replace what Iran has destroyed. That system had been in South Korea since 2017 to protect against North Korean missiles, which China wasn't too happy about when it was first deployed. And now, it's gone. So Iran is basically forcing the US to weaken its defenses in Asia just to keep up in the Gulf. So question, who do you think is footing this bill? American taxpayers. And that's before the US even puts boots on the ground. By the way, do you know what the biggest reason might be for the US to put boots on the ground? Pressure from the GCC countries. GCC stands for the Gulf Cooperation Council, that Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain, and Oman. Basically all of America's wealthy Arab allies in the Gulf that rely on the US for protection.
[47:24]And right now, they're in serious trouble. Not just because their oil fields are on fire and their crude exports have been stopped, but also because of water. You probably heard of desalination plants. These are facilities that take seawater and convert it into drinking water. What you might not know is that for the GCC countries, desalination is a matter of national survival. There are over 400 desalination plants lining the shores of the Persian Gulf, and these countries depend on them for almost everything. Kuwait gets 90% of its drinking water from desalination. Qatar, 99%. Bahrain, over 90%. And desalination plants have already come under fire. On March 7th, a desalination plant on Qeshm Island, again, one of Iran's own islands, was struck. Iran blames the US. The very next day, Iran hits a desalination plant in Bahrain with a drone, disrupting water supply to 30 villages. And Iranian strikes on Dubai's Jebel Ali Port, landed just 12 miles from a massive desalination complex with 43 units that produces over, get this, 160 billion gallons of water a year. So imagine you're a Gulf leader right now. Iran is hitting your oil infrastructure, your airports are damaged, your desalination plants are within striking distance, and your people might run out of drinking water. So you pick up the phone and call Washington, demanding that the US does more to protect you. And the US will likely have no choice but to comply. Why? Because of AI. Wait, what? What does AI have to do with any of this? Well, if you look at the AI industry right now, one could argue it's one giant bubble that's been keeping the US economy afloat. Companies like OpenAI, xAI, and others have received billions of dollars in investment despite not being profitable. And not many people outside the industry know where a huge chunk of that money is actually coming from. It's Gulf oil money. Over the past few years, Saudi Arabia's sovereign wealth fund, Abu Dhabi's wealth funds, and Qatar's Investment Authority have collectively pledged or committed roughly $2.5 trillion in investments tied to US technology. Gulf sovereign wealth funds are among the biggest limited partners or LPs, basically the people who write the checks behind the largest venture capital firms in Silicon Valley. They're funding the AI race. So when the people bankrolling your entire tech economy calls you up and say, hey, we're dying over here. Get over here and protect us at all costs. How much of a choice do you really have? Because if they pull back or cannot afford to keep investing, that's not just a Gulf problem. That's a Silicon Valley problem. That's a Wall Street problem. That's everybody else's problem. And that's why the US putting boots on the ground is probably only a matter of time. You know, when we started researching this topic, I thought we're just making a video about oil prices and shipping lanes. But the deeper we dug, the more we realized that this story is about something much bigger. It's about how the entire modern world, the food we eat, the water we drink, the energy that powers our cities, the money that funds our technology, all of it flows through a handful of choke points that most people couldn't even find on a map. And it took exactly one war to expose just how fragile that system really is. You know, I'm not really interested in the debate about who's going to win this war, because in the end, everyone loses. I'm talking about hard-working, ordinary people all around the world, who have nothing to do with this conflict. They just want to put food on the table for their families. And here's a fact I'll leave you with that I came across while researching this, okay? Every single recession since World War II, except the pandemic one, has been preceded by a spike in oil prices. Like every single one. It's basically a law of economic history. And right now, oil is up 40% from where it was before the war started. So, whether or not we end up entering an official recession, this is going to devastate working-class people everywhere. It's in everyone's best interest that the Strait of Hormuz be reopened as soon as humanly possible. I just hope our leaders remember who's really paying the price until then. If you found this video insightful and feel like you learned something, be sure to subscribe to Asian Boss and turn on the notification bell. Our data shows that only about 23% of you watching right now are actually subscribed to our channel. Because we put so much time and effort into our research, we cannot really upload on a fixed schedule. So subscribing and turning on notifications is the best way to help us beat the YouTube algorithms and grow our channel, so that we can reach a wider audience and cover more authentic insights from Asia. I really hope you'll be a part of it.
[54:33]Of course, I'm Stephen Park. Thank you for watching all the way till the end. And as always, stay curious.
