Episode summary
War With Iran: Why Oil Didn’t Spike As Expected | Prof G Markets
Prof G Markets
· · 31 min · Hosts: Ed Elson, Scott Galloway · Guests: Matt Smith, Alex Heath
Summary
The episode opens on the US-Israel strikes on Iran and the market reaction that was notable less for panic than for restraint. Brent crude jumped 7% to just over $77, but Matt Smith argues that oil did not spike as much as feared because traders had already priced in a worst-case scenario and are now focused on whether flows through the Strait of Hormuz are actually disrupted. He says the broader energy complex is still being hit, with diesel and European natural gas rising sharply and fertilizer markets also at risk.
Smith’s core argument is that a harder US push against Iran could eventually reduce uncertainty and even pull Iranian barrels back into the market at fairer prices, which would pressure oil lower over time. But he also warns that a prolonged conflict could bottleneck tankers in the Gulf and force producers to shut in output. For investors, he frames the main issue as stability: markets prefer a resolved geopolitical backdrop, even if that means lower oil prices and weaker returns for energy assets.
The episode then turns to AI, where Alex Heath says OpenAI’s $110 billion funding round and $730 billion valuation reflect intense investor FOMO and a scramble for strategic alliances. He argues that the Anthropic-Pentagon dispute shows how political values, government contracts, and consumer perception are now shaping the AI race in real time.
Key takeaways
- Matt Smith says oil markets were braced for a 15% to 20% spike, so the actual move looked less severe than feared even after the Iran strikes.
- Smith argues the biggest energy risks are no longer just crude, but diesel, European natural gas, and fertilizer supply chains.
- Smith says investors generally want geopolitical stability, because a resolved Iran crisis could unwind oil’s war premium and lower prices.
- Alex Heath says OpenAI’s $730 billion valuation and $110 billion raise show strong investor FOMO and a rush to secure strategic AI alliances.
- Heath says the Anthropic-Pentagon fight is as much about politics and values as business, and it could reshape consumer sentiment around both companies.
Notable quotes
“because there was the expectation we could open up 15 20% and we only opened up 12% as you just mentioned”
“I think it's it's a stability thing, right? So OPEC as a whole, this group of oil producers, they want stability of price”
“The round boosts OpenAI to a $730 billion pre- money valuation. nearly double the valuation of its closest rival, Anthropic”
“Anthropic has in their view legitimate concerns that extend beyond how the law currently operates today”
“your stock portfolio is about to become even more volatile than it already was”
How the episode opens
Today's number six. That's how many Olympic medals Eileen Goo has won, making her the most decorated free skier of all time. The 22-year-old achieved this while also balancing full-time studies at Stanford as well as a successful modeling career.
Today's other number is 99. That is the percentage of parents who wish their kid was Eileen Goo. Welcome to Profy Markets.
I'm Edson. It is March 3rd. Let's check in on yesterday's market vitals.
The major indices rode out a volatile session after the USIsrael strikes on Iran. More on that in a moment. Still, the indices ended the day in the green.
Meanwhile, the yield on 10-year Treasury surged the most since April. Oil spiked, the dollar rose, and gold climbed above $5,300. Okay, what else is happening?
The United States is at war with Iran. The US and Israel struck the country on Saturday, killing Supreme Leader Ayatollah Kmeni. Iran responded with retaliatory strikes across the region, including attacks on US military bases.
The president said the military operation will last around four to 5 weeks, but could continue for quote as long as it takes. Markets opened in the red on Monday, but by midday, the major indices had recovered. Meanwhile, Brent crude, the global price gauge for oil, jumped 7% to just over $77 per barrel.
Oil prices were already up 17% this year in anticipation of a possible attack. Okay, joining us to discuss what this war means for us, what it means for markets, we're speaking with Matt Smith, oil analyst at energy consulting firm Kepler. Matt, welcome to the show.
Let's get right into it. Obviously quite rattling news for all of us for many reasons. When you look at what's happened in the markets here, what is jumping out to you?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- war with iran
- oil prices
- energy markets
- openai funding
- anthropic pentagon tensions
Companies and tickers mentioned
- Kpler
- OpenAI
- Anthropic
Watch the episode
Watch “War With Iran: Why Oil Didn’t Spike As Expected | Prof G Markets” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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