By the time you receive this issue, we will likely be four months into what I have called a massive heart attack for the global economy. The de facto closure of the Strait of Hormuz.
There have been so many false starts on a peace deal, or at least a deal to open the Strait of Hormuz, that I have lost count. All of this yo-yoing is causing significant volatility in the oil market, in particular.
There are many opinions on the energy markets, and you can find any potential outcome that suits you. My own view is that no one knows exactly how this will resolve. However, there are some things we can know and build on.
I would say unequivocally that the world runs on oil and gas. There is simply no argument that, without a sufficient and growing supply of oil and gas, the modern world will struggle to maintain the economic status quo.
When 10-14% of the world's oil supply is cut off via the closure of the Strait of Hormuz, this is a big deal. I have been comparing this to a massive heart attack for the world economy.
Many analysts, including me, thought that with the closure of the Strait of Hormuz and the removal of 20% of the world's oil supply, we would have experienced a large rise in oil prices. This has not happened as many of us under-estimated the amount of oil in storage and in various countries’ strategic petroleum reserves.
I would also suggest that there has definitely been manipulation of the oil market, given the US administration's BS communications about peace deals and the obvious moves in futures markets that someone always seems to know about before the administration announcement (someone always knows). Below is a list of the previous five “deal” announcements and what crude oil did in the aftermath.
Sell the Tweet, buy the molecules indeed!
The next fact is that the storage is not limitless. SPRs are not limitless.
Oil is one thing, but products (gasoline, diesel, jet fuel, etc) are what matter. Oil must be refined into usable products, and those inventories are already at five-year lows as we enter the summer travel season.
In fact, refinery runs are just now eclipsing the previous highs prior to COVID. Product exports are surging. The US refineries are pumping out as much as they can to take advantage of higher crack spreads.
I am a generalist investor and not an expert in the oil inventory market. I do follow people who are in the market and understand the oil markets. Their view is that, at current draw rates, we are likely to be in trouble by the end of June or early July. Oil executives agree.
In the short term, it doesn't matter if everything restarted 100% today; it would take months to years to get things back to some sense of normality. Many things need to happen:
Currently, a small number of ships are getting out, but few are returning. Ship owners are not going to hazard ships and crews, and insurance companies still need to price the risk to even write policies.
But John, the Strait will open soon (Trump said so!), and in a few months, this will all be a memory. Well, maybe not. This is certainly what the market is hoping for and forecasting based on current oil prices, but there are some issues.
If you were Iran, would you relinquish your hold on the Strait of Hormuz and control of the world’s oil supply? You just absorbed everything the US threw at you militarily and did not fold, thereby strategically defeating “the biggest and best military” in history.
John, are you serious? The US was not defeated. Then why can’t the US open the Strait of Hormuz? If the US could open it militarily, it would. By the way, the Red Sea ship traffic is still well below what it was before the Houthis attacked ships two years ago.
Why should the Islamic Republic of Iran negotiate with the US, an entity that Russian foreign minister Sergei Lavrov described as “agreement incapable”? The US breaks most of the deals it makes. In fact, the US started hostilities twice while negotiations were ongoing with Iran! Who is to say that if the US makes a deal during this administration, the next one won’t just ignore it and resume sanctions and hostilities?
Iran wants reparations and the lifting of sanctions. If they can keep their enriched uranium, that would be great, too. No one ever attacks North Korea because they have demonstrated a nuclear weapons capability. If you were advising the IRGC, what would you suggest? I would suggest they build and demonstrate a nuclear weapon capability.
But John Iran is being strangled economically because it cannot export oil. We just need to continue the blockade for a while, and Iran will fold. Maybe. This is the story we were told about Russia four years ago and Cuba decades ago. More sanctions, and they will fold. Sanctions don’t work. Iran has been subject to sanctions for decades.
I am not naive. Iran is hurting economically. Prices are inflating, and there is economic deprivation in Iran. Iran likely wants a deal, but on terms that will not force it to endure this again.
The question is whether Americans will accept hardship once it comes. The Iranians have been here before, but Americans, I suggest, will not tolerate high fuel and food prices for the ambiguous and seemingly ever-changing reasons we started this war of choice in the first place.
In the short term, this is a game of chicken in my view. Can Iran hold out long enough for the SPRs and storage to hit bottom, and for oil prices to soar along with gasoline and diesel prices, thereby forcing the Trump administration’s hand? I am not sure $8 gasoline and $10 diesel will go over well with Americans as we head into a Congressional election.
But can Trump even end this? What can he get Iran to accept that is not considered worse than what Obama negotiated with the JCPOA? The JCPOA that Trump and Mike Pompeo canceled back in 2018. Notwithstanding the fact that he is under tremendous political pressure from various sides to continue the war.
In the long term, many other issues are at play and will likely lead to structurally higher oil prices. Morgan Downey wrote the book on oil markets, “Oil 101.” He recently wrote a long article/chapter update that discusses some of the long-term issues that will result for the oil and gas market. I am going to focus on a few snippets.
The Hormuz premium is permanent. Even after the strait reopens, the demonstrated willingness and capability to close it changes the risk calculus for every barrel of Gulf crude. Before February 28, the market priced Hormuz closure as a tail risk with near-zero probability. That probability is no longer near-zero. War-risk insurance premiums on Hormuz transit will remain elevated for years. The forward curve for Gulf crudes will carry a structural premium over Atlantic basin grades. Every long-term supply contract with a Gulf producer will be renegotiated with force majeure language that accounts for what actually happened.
Qatar and global LNG markets. Qatar ships 80 Mtpa of LNG almost entirely through Hormuz. Qatar declared force majeure on March 4. European gas prices doubled in a week. The crisis demonstrated that Hormuz is an LNG chokepoint as much as an oil chokepoint. Global gas markets are the most challenging to model forward because a large portion of supply chains are new, built after Russian pipeline gas to Europe was reduced following the Ukraine invasion and the US became a major LNG exporter. These new trade flows are untested under stress.
New bypass pipelines are now inevitable. Saudi Arabia announced a feasibility study to expand Petroline capacity from 5 to 7 Mbpd. The UAE is studying a second pipeline to Fujairah. Iraq is reviving the Basra to Aqaba pipeline. Kuwait is exploring a route to a Saudi Red Sea terminal. Lead times are 3 to 5 years.
I would definitely take the time to read the whole chapter, as it will get you better informed than most investors on this subject.
The whole situation in the Middle East will remain unstable. This instability and the desire for countries to insulate themselves from future disruptions (e.g., non-Gulf suppliers, larger SPRs) will likely create attractive investment opportunities.
I am adding a new oil and gas producer to the AIA Dividend Portfolio that does not drill wells but has demonstrated success in increasing production and reducing costs. There is also a nice opportunity in another situation with the company that could yield a multi-bagger if it works out.
This company just went public via a SPAC back in August of 2025. Although they came public last summer, they have been in business since 2017.
The company is an oil and gas company. However, the company does not explore for oil and gas. It does not drill wells. The company buys existing producing wells and fields and applies its proven methods for efficiently producing oil and gas. It hedges this production to smooth out commodity prices across the oil and gas cycle.
This creates a predictable cash flow, which is returned to shareholders. Management intends to rinse and repeat. It is simple, demonstrable, and repeatable.
The company is targeting a 13% dividend yield. They also intend to grow this dividend over time. I suspect that if the company can raise the dividend over time, the stock price will also increase to reflect the higher potential dividend.
This meets our “dripping roast” criteria for the AIA Dividend portfolio. We are getting a nice dividend with the potential for capital gains as management grows the dividend.
The company has developed a repeatable plan over the years that enables it to make acquired assets more efficiently (47% average OPEX improvement in one year). Presidio just closed another deal, continuing its plan to grow through acquisition.
Presidio Executes Purchase Agreements for Canyon Creek Acquisition
Presidio Production Company (NYSE: FTW), a yield-focused, differentiated oil and gas operator in the United States focused on the acquisition and optimization of producing oil and natural gas wells, without drilling, today announced the execution of definitive purchase and sale agreements to acquire the Canyon Creek assets for approximately $83 million from companies controlled by Vortus Investments and additional sellers. The Company previously announced a letter of intent for the Transaction on February 24, 2026.
The Transaction is expected to be funded with $60 million of cash and 2,173,913 shares of Presidio equity to be issued to the Sellers, subject to customary closing and post-closing adjustments. The cash will be funded using Presidio’s previously announced, first of its kind, $1.0 billion Goldman Sachs ABS Warehouse Facility, and cash on hand.
Presidio expects the Canyon Creek assets to generate levered equity returns exceeding 20%, while expanding the Company’s operating footprint into an adjacent basin and establishing a platform for future consolidation consistent with its proven land-and-expand strategy.
The Transaction is expected to close early in the third quarter of 2026, and would represent Presidio’s first completed acquisition as a public company. Consistent with prior disclosures, the Company believes the Transaction will support an increase to its anticipated annual dividend from $1.35 to $1.50 per share.
There are some risks to consider. The company has demonstrated its ability to create a process that it applies to acquired fields, which allows for efficiency gains and squeezes out more cash flow than the prior operator. They say they have identified a plethora of possible acquisitions, but that is not a guarantee.
As they grow, they will need to acquire more and larger fields to both increase the dividend and replace depleted assets (decline is 8% per year). There is no guarantee that they can continue to find fields to which they can apply their process. I do think they know what they are doing, and I think they have a workable process that will help them to identify appropriate acquisitions.
I am adding Presidio Production Company (FTW) to the AIA Dividend Portfolio.
*Note: There is an interesting warrant play on this company. The warrant play has significant upside potential. The idea comes from “Triples Special Situations Investing” on Substack. I also own the warrants but consider them higher-risk.
I recently released a video on YouTube with Scott Osheroff, the CIO of the AFC Uzbekistan Fund, in which we discuss why Uzbekistan is undervalued and why UZNF may be an appropriate way for investors to gain exposure to the country. The AFC Uzbekistan Fund (Scott’s fund) is a private investment fund focused on Uzbekistan and is distinct from UZNF.
Uzbekistan has consistently grown 6-7% a year for years and is becoming the central hub for the emerging “Silk Road” of Central Asia. I think this marks the start of an increase in liquidity, which could lead Uzbekistan's capital markets to catch up with the economy. I am adding to the AIA Portfolio. It trades in London.
The company reported Q1 2026 earnings. This quarter, although positive, was a letdown compared to recent euphoric results. The market reaction was less about “bad results” and more about expectations set by management. Abacus is being valued as a high-growth alternative asset manager with operating leverage. Q1 delivered growth, but not the kind of clean beat that confirms a straight-line acceleration story.
The bearish interpretation is that revenue missed, sequential results slowed, expenses increased, AUM was not clearly accelerating QoQ, and guidance still relies heavily on H2 execution. However, EBITDA margins remain very high, ROE/ROIC are in the high teens, operating cash flow has increased materially, longevity fund AUM is scaling, and management raised guidance while continuing buybacks. At around $8.97 on May 21, ABX was trading at roughly 9x management’s FY 2026 adjusted EPS guide of $1.00–$1.05, so the market is not giving full credit to the growth story yet. I am still bullish on this stock in the long term.
The company reported Q1 2026.
The bad news on Chilean copper keeps coming. Hopefully, the new government will be able to put policies in place to arrest this fall.
No major news this week.
The company announced an ATM facility for its common stock. More possible dilution. In the Q1 2026 earnings announcement, the company only said they are still waiting for debt financing or a JV partner. Hence, the need for the ATM mentioned above. This is highly speculative and only for the most risk-averse investors.
The company reported Q1 2026 results. The war in Iran disrupted four vessels in the Gulf. This is why the financial metrics were affected negatively. The good news is that the vessels were re-crewed and their work resumed. The management has maintained its 2026 guidance. I think this company will benefit from the bull market in offshore services. I remain patient.
No major news this month.
Farmers are really struggling in the US. Expect higher food prices later this year.
The company reported Q1 2026. Q1 Highlights:
“Our Kamoa-Kakula Copper Complex and smelter are ramping up in a very strong price environment for the two most critical elements on our planet: copper, which is the King of Metals, and sulphuric acid (H2SO4), which is the King of Chemicals. Kamoa-Kakula benefits from a powerful natural hedge: our sulphuric acid production. H2SO4, which is a by-product of our copper smelter, is growing into a one-million-dollar-a-day operating credit, massively offsetting rising diesel prices. This advantage is supported by our high-grade ore, which has the lowest hydrocarbon intensity per tonne of produced copper of any major mine in the world.”
Ivanhoe Mines recorded a loss of $2 million for Q1 2026, compared with a profit of $122 million for Q1 2025. The main contributor to the loss for the period was the Company’s share of loss from Kamoa-Kakula of $42 million, compared to a profit of $108 million for the same period in 2025. Kamoa-Kakula incurred a loss for the quarter as a result of a $183 million tax adjustment following the settlement of tax claims.
“At the same time, our team are executing a disciplined turnaround at Kamoa-Kakula. The plan is clear, the execution is underway… and the strong tailwinds in copper prices adds to the momentum. We will fully capitalize on our strategic advantages. Ivanhoe leads the copper world in our exploration programs. We have extremely strong momentum in the discovery process for major copper systems. The Makoko District copper discovery in the Western Forelands is an emerging giant in the making, and its significance is growing around the clock. Soon, we will reveal our development plans for the Western Forelands.”
Copper is going higher, and the prospects of owning multi-decade producing resources are quite attractive. I am long and will likely buy more on any resolution to the Iran war.
The company reported Q1 2026 earnings.
“Three full quarters into the commercial launch of Yutrepia… in the third full quarter on the market, Yutrepia is now leading the growth of the inhaled prostacyclin category. Yutrepia is well on its way to becoming the anchored inhaled therapy for patients with PAH and PH-ILD. As of April 30, we have received approximately 4,500 unique patient prescriptions and started approximately 3,750 patients on therapy since launch. And approximately 980 physicians have prescribed Yutrepia since launch… when we go back to them and they begin prescribing Yutrepia, they come back with their own anecdote around that they’re seeing a night and day difference, particularly around the cough and the ability to titrate and drive outcomes.”
Everything is going well. Once the 327 decision comes from Judge Andrews, and assuming it is not negative for (LQDA), we will finally have clarity, and the stock can potentially re-rate. I think a positive decision from Judge Andrews for (LQDA) will also allow for a takeover of the company at much higher prices.
No major news this month.
No major news this month.
The company reported Q1 2026 results. The PR was light, largely because insiders control most of the company. However, if you check out the filing on SEDAR the MD&A looks quite positive. The Calcatreu project is now operating. Heap leach operations commenced on 4/15/26. It typically takes a couple of months for the solution to percolate through the heap, for gold to begin leaching into it, and for it to be collected. We should have a clear reading on production by the end of Q2. Lots of upside and exploration bluesky. I am bullish on this company.
The company reported Q1 2026 earnings.
Production continues to shrink due to the inability to increase drilling (rig is expected to start new wells in October 2026) and water disposal issues. The company has been working on higher-capacity water disposal infrastructure to enable higher production. The higher Brent price has, of course, benefited PetroTal. I will continue to hold for the duration of the Gulf crisis and while oil prices stay elevated.
No major news this month.
I continue to like the lithium chart.
I am still bullish on uranium.
India willing to buy heaps of Canadian uranium, invest in mines, high commissioner says. India is prepared to buy as much uranium as Canada’s largest producer can sell, in a bid to meet the South Asian country’s nuclear power ambitions, High Commissioner Dinesh Patnaik says. “We would buy as much (uranium) as Cameco can produce,” Patnaik, India’s high commissioner to Canada, told reporters at a summit in Regina, Sask. “We would like to invest in your Uranium mines, if possible.”
Uranium is going much higher in my view.
Courageous Lake project spinout approved by shareholders.
Seabridge will transfer its 100% interest in the Courageous Lake gold project located in the Northwest Territories, Canada into Valor, which is expected to become a separately listed issuer on the Toronto Stock Exchange (the “TSX”), then distribute 100% of the common shares of Valor to its shareholders by way of a plan of arrangement under the CBCA. Pursuant to the Arrangement, Seabridge will distribute the 55,000,000 shares to be held by Seabridge in Valor to Shareholders on the basis of one Valor Share for every approximately 1.957 Seabridge shares held.
Rudi Fronk, the CEO, was on Steve Barton’s YouTube channel “In It To Win It”. Rick Rule was also on it to discuss the potential for Seabridge Gold’s KSM project. It seems Seabridge management is close to announcing a JV partner, at least it seems that way. The spinout of the Courageous Lake project to shareholders is also a nice bonus.
No major news this month.
The company reported Q1 2026 results.
“During the first quarter, Operation Epic Fury commenced in the Middle East, one of our principal operating regions. To date, we have not experienced any disruptions in activity due to the conflict; in fact we experienced higher than anticipated utilization during the first quarter. However, late in the quarter after the conflict commenced, we did experience higher than anticipated costs associated with the conflict, particularly as it relates to insurance and the costs of our crews in the region. We anticipate that this elevated level of operating expense to persist until such time the conflict is resolved.
During the first quarter, we announced the acquisition of Wilson Sons Ultratug, a 22-vessel fleet of PSVs exclusively focused on serving the Brazilian market… We still expect to close the transaction by the end of the second quarter.
As pleased as we are with the strong start to the year, uncertainty remains at a macro level as to how the conflict in the Middle East is ultimately resolved. However, we believe that the outlook for offshore vessel activity has fundamentally improved over the past quarter… the global energy equation is being reshaped through the conflict in the Middle East and is likely to have long-term implications. We anticipate that energy security, particularly access to localized sources of energy, along with the need to replace existing production and depleted inventories, should drive incremental activity beyond what was anticipated prior to the conflict in the Middle East.”
This is a long-term hold. The long-awaited offshore oil exploration bull market was already underway before the closure of the Strait of Hormuz and the war with Iran. As a result of the war and supply disruptions, I expect more investment to diversify oil and gas supply outside the Persian Gulf. That means more offshore exploration and development. I remain bullish on this stock.
No major news this month.
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No major news this month.
The company reported Q1 2026 earnings. Subsequently, one of the rigs dropped its BOP (blowout preventer) and had to stop operations. I don’t think it’s a big deal as the company has insurance, including business interruption insurance. They also have a backup BOP.
People have emailed me and asked if this is a good entry point for the shares. Well, the CEO and CFO have been buying shares recently. Company insiders sell shares for many reasons. They buy shares for one reason: because they think the price is going higher.
No major news this month.
No major news this month.
That’s it for this month.
John Polomny
I am listing the Portfolios as pdf’s on Dropbox. Note, you will need to use the password below to access them. It is the same password for both portfolios. I will periodically change them. Too many guys were subscribing for a month, downloading the content, then canceling or disputing charges. If it doesn't work, let me know, and I will fix it.
Portfolio Access Password: Uzbekistan2026!
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