Rory Johnston: AI optimism drives equity markets, geopolitical instability threatens oil supply, and the logistics of Canadian oil trade impact pricing | Bankless

AI optimism boosts equity markets while potential Middle East crises threaten global oil supply stability.

Listen on Bankless

Share

Add us on Google by Editorial Team Apr. 29, 2026

Key takeaways

• AI optimism is driving high equity markets despite an ongoing energy crisis.
• Oil remains a critical resource, with potential Middle East crises threatening supply.
• Shipping is integral to oil distribution, highlighting the importance of logistics in the oil market.
• Canadian oil primarily reaches US refineries via pipelines, contrasting with global tanker-based trade.
• The US is a net importer of crude but a net exporter of petroleum products due to natural gas liquids.
• Crude oil refining involves heating in a distillation tower to separate it into different fractions.
• Heavier crude oils require more intensive refining to produce lighter, more valuable products.
• Crude oil prices depend on grade, location, and timing, reflecting market complexities.
• Higher sulfur content in crude oil decreases its value due to additional refining costs.
• Each barrel of oil supports more economic activity now than in the 1970s, despite lower energy intensity.
• The refining process’s complexity impacts the economic implications of crude oil quality.
• Geopolitical instability in oil-producing regions can significantly impact global supply and prices.
• The logistics of oil transportation play a crucial role in maintaining global supply chains.

Guest intro

Rory Johnston is the founder of Commodity Context, a Toronto-based firm specializing in data-driven commodity market research with a focus on oil and gas. He previously served as Managing Director and Market Economist at Price Street Inc. and as Commodity Economist at Scotiabank. Known as the “oil quant,” he provides quantitative analysis of oil market disruptions like the Hormuz crisis.

The impact of AI on equity markets

• The reason equity markets are so high right now is all of this enthusiasm all this optimism around AI penetration

  — Rory Johnston

• Despite being in the largest energy shock in history, AI optimism is driving equity markets to all-time highs.
• The contradiction between technological optimism and energy challenges is significant for market behavior.
• Understanding the relationship between AI advancements and market dynamics is crucial.
• The energy-intensive nature of AI technology contrasts with current energy market challenges.
• Market dynamics are influenced by technological optimism even amid significant energy crises.
• AI’s penetration into various sectors is reshaping market expectations and valuations.
• The current market behavior reflects a complex interplay between technology and energy supply.

The critical role of oil in the global economy

• As we are going to feel if this crisis in the Middle East persists, we’re going to lose the marginal volume and supply of so many things

  — Rory Johnston

• Oil is essential for both transportation and non-transportation uses, making it a critical resource.
• A crisis in the Middle East could significantly impact oil supply and global economic stability.
• The geopolitical implications of oil supply disruptions are profound for the modern economy.
• Understanding the importance of oil in the economy is vital for assessing potential crises.
• Geopolitical instability in oil-producing regions can lead to unprecedented price shocks.
• The potential consequences of oil supply disruptions extend beyond immediate economic impacts.
• Oil’s role in supporting economic activity highlights its importance in global market dynamics.

The logistics of oil transportation

• The vast majority of oil gets to its end destination by tanker

  — Rory Johnston

• The shipping industry is crucial to the oil industry due to the transportation methods used.
• Logistics play a fundamental role in the global oil supply chain, impacting market dynamics.
• Understanding the relationship between shipping and oil distribution is essential for market analysis.
• The transportation of oil by tanker is a core component of the global oil industry.
• Shipping logistics influence the efficiency and cost-effectiveness of oil distribution.
• The role of shipping in oil distribution highlights the interconnectedness of global supply chains.
• The logistics of oil transportation are critical for maintaining stable global supply.

Canadian oil trade and its unique characteristics

• The vast majority of Canadian oil gets to US refineries and US consumers via pipeline

  — Rory Johnston

• Canadian oil trade primarily relies on pipelines, contrasting with global tanker-based trade.
• The logistical distinction in Canadian oil trade affects market dynamics and pricing.
• Understanding the differences in transportation methods is crucial for analyzing oil markets.
• Pipelines play a significant role in the Canadian-US oil trade, impacting supply chains.
• The cost-effectiveness of pipeline transportation influences Canadian oil market strategies.
• Canadian oil’s reliance on pipelines highlights regional differences in oil trade logistics.
• The unique characteristics of Canadian oil trade offer insights into broader market dynamics.

US oil import/export dynamics

• The United States remains a net importer of crude oil but in terms of total products… the vast majority of the growth of which has been in what we call natural gas liquids

  — Rory Johnston

• The US is a net importer of crude oil but a net exporter of total petroleum products.
• Natural gas liquids play a significant role in the US petroleum market dynamics.
• Understanding US oil import/export statistics is crucial for market analysis.
• The growth of natural gas liquids influences US petroleum trade strategies.
• The US petroleum market reflects complex interactions between imports and exports.
• Market trends in US petroleum trade are shaped by natural gas liquids’ growth.
• The US oil trade dynamics offer insights into broader global market trends.

The refining process and its economic implications

• In the refining process you basically put into a big distillation tower you heat it

  — Rory Johnston

• Crude oil refining involves heating in a distillation tower to separate it into different fractions.
• The refining process’s complexity impacts the economic implications of crude oil quality.
• Understanding the basics of crude oil and its derivatives is fundamental to the oil industry.
• The economic value of crude oil is influenced by its refining process and product yield.
• The refining process highlights the transformation of crude oil into usable products.
• Market implications of crude oil quality are shaped by refining process complexities.
• The refining process is crucial for understanding the economic value of crude oil.

The influence of crude oil quality on market value

• The heavier your crude oil, the more intensive it needs to be refined

  — Rory Johnston

• Heavier crude oils require more intensive refining to produce lighter, more valuable products.
• The economic implications of crude oil quality are significant for market strategies.
• Understanding crude oil types and their market implications is crucial for analysis.
• The refining process’s intensity affects the market value of different crude oil types.
• Crude oil quality influences refining costs and product yield, impacting economic value.
• Market strategies are shaped by the economic implications of crude oil quality.
• The relationship between crude oil quality and refining processes is critical for market analysis.

The complexities of crude oil pricing

• The price you see on your screen for let’s say a given futures price is for a particular grade of crude

  — Rory Johnston

• Crude oil prices depend on grade, location, and timing, reflecting market complexities.
• Understanding commodity pricing in the oil market is crucial for market analysis.
• The complexities behind crude oil pricing highlight the nuances of market dynamics.
• Market analysis requires a deep understanding of crude oil pricing mechanisms.
• The factors influencing crude oil prices are critical for assessing market trends.
• Crude oil pricing complexities offer insights into broader market dynamics.
• The nuances of crude oil pricing are essential for understanding market behavior.

The impact of sulfur content on crude oil valuation

• The higher your sulfur content the less valuable your grade of crude is

  — Rory Johnston

• Higher sulfur content in crude oil decreases its value due to additional refining costs.
• Understanding the refining process and sulfur content’s impact is crucial for market analysis.
• The economic value of crude oil is influenced by its sulfur content and refining costs.
• Market strategies are shaped by the economic implications of sulfur content in crude oil.
• The relationship between sulfur content and crude oil valuation is critical for market analysis.
• Sulfur content’s impact on crude oil valuation highlights the complexities of market dynamics.
• The refining process’s costs are influenced by sulfur content, affecting economic value.

The evolving role of oil in modern economies

• Each barrel of oil now supports more economic activity today than it did in the nineteen seventies

  — Rory Johnston

• Oil supports more economic activity today than it did in the 1970s despite lower energy intensity.
• Understanding the relationship between oil consumption and economic growth is crucial.
• The evolving role of oil in modern economies offers insights into market dynamics.
• Market strategies are shaped by the relationship between oil consumption and economic activity.
• The historical perspective on oil’s role highlights its importance in modern economies.
• The relationship between oil and economic growth is critical for understanding market trends.
• The evolving role of oil in modern economies reflects broader market dynamics.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.