Oil is one of the most important commodities in the world. Despite that, it’s probably one of the most misunderstood and underappreciated markets even by sophisticated market participants. Especially when you consider that oil is about a third of global energy, more than 90% of transportation energy, and the price of oil directly impacts everything else in the economy.
But that’s not the whole story. As our guest Bob McNally so eloquently points out, part of what makes this market so fascinating and so complex is how volatile oil prices can be and how often the load-bearing assumptions of market participants break down.
Arguably the entire history of oil is the history of our repeated attempts to manage its price volatility. And no one understands that better, or has been right more often during times of crisis, than Bob McNally.
In this episode, we sit down with Bob—founder of Rapidan Energy Group, former White House energy advisor to President George W. Bush, longtime hedge fund analyst at Tudor Investment Corporation, and author of Crude Volatility—to add historical context to the crisis in the Strait of Hormuz, to better understand how oil markets work, and to shed light on the psychology of market participants and policy makers.
You can find Bob on X (@Bob_McNally) and LinkedIn. You can find Rapidan Energy Group at https://www.rapidanenergy.com/
Chapters
(01:38) Variant perception and Bob’s Iran call
(08:19) Why the market misread Hormuz
(10:56) Why oil prices are uniquely volatile
(17:06) The Texas Railroad Commission: OPEC before OPEC
(23:00) Spare capacity and the swing producer
(30:38) How the U.S. lost the swing producer role
(38:11) How OPEC took over market management
(49:50) How shale changed the oil market
(54:11) How policy makers make decisions during energy crises
(1:01:28) Second and third order effects from the current crisis
References
Crude Volatility: The History and the Future of Boom-Bust Oil Prices by Robert McNally (Link)
“Ships stranded by Strait of Hormuz closure” 60 Minutes on CBS, March 15 2026 (Link)
Chart: oil supply shocks and spare capacity since 1955 (Link)
Oil Market Black Swans: Covid-19, the Market-Share War, and Long-Term Risks of Oil Volatility by Robert McNally (Link)
A Crude Predicament: The Era of Volatile Oil Prices by Robert McNally and Michael Levi (Link)
Sponsors
Big thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn how EQT is unlocking energy to power AI, go to PoweredByEQT.com.
Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed.
