Oil Today Looks Exactly Like Gold Before Its Historic Breakout

Oil today bears a striking resemblance to Gold eighteen months ago.

Then, precious metals were ignored, side-lined in favour of artificial intelligence and high-growth equities. Positioning was light. Capital allocation was minimal. Yet the structural case was strengthening beneath the surface. When the rotation came, it was decisive.

The global energy complex now sits at a similar inflection point.

While capital crowds into mega-cap technology and overstretched equity indices, Crude markets are tightening in plain sight. Positioning remains historically light. Upstream investment is still well below the levels required to materially expand global supply.

And yet structural demand continues to grind higher.

This is the anatomy of a coming energy rotation.

A Decade of Capital Starvation

Over the past ten years, the Oil industry has been systematically deprived of capital.

ESG orthodoxy, subsidy-driven renewable expansion and peak-demand narratives have shaped institutional flows. Banks have restricted financing. Policymakers have signalled managed decline rather than expansion.

The data is unambiguous: global upstream investment has not returned to pre-2014 levels. Spare capacity outside OPEC remains thin. U.S shale growth – once the world’s swing supplier – is moderating as capital discipline replaces expansion-at-any-cost.

Demand, however, has not collapsed.

According to Lars Hansen, Head of Research at The Gold & Silver Club, the imbalance is structural rather than cyclical.

“We are witnessing a market priced for abundance when the data increasingly points to constraint. Investment has lagged for nearly a decade. Supply growth cannot simply be willed into existence once capital has been withheld.”

That imbalance does not resolve itself gently.

The AI Boom Is an Energy Story

Artificial intelligence is widely framed as a software revolution.

In reality, it is an Energy story.

Data centres are among the most energy-intensive assets ever constructed. Training large-scale AI models requires vast computational power, advanced cooling infrastructure and resilient grids. Hyperscale facilities are expanding rapidly across North America, Europe and Asia.

More compute. More fabrication. More automation. More cooling.

Energy demand scales with technological progress. It always has.

Despite rapid renewable build-outs, fossil fuels remain critical for baseload stability, petrochemicals, aviation, maritime transport and heavy industry. Oil remains deeply embedded across global logistics and manufacturing supply chains.

Hansen adds: “AI does not reduce energy intensity – it amplifies it. Every digital layer rests on a physical foundation. Markets are underestimating the scale of the energy requirement beneath the AI transition.”

The structural demand floor appears materially stronger than consensus forecasts imply.

Geopolitics: The Underpriced Variable

Layer geopolitical fragility onto constrained supply and the asymmetry becomes clearer.

A significant portion of global seaborne Crude still transits through the Strait of Hormuz – a chokepoint exposed to persistent regional tensions. Yet markets continue to price relative stability.

History suggests that when chokepoints destabilise, price reactions are abrupt rather than gradual. Volatility expands. Hedging accelerates. Capital scrambles for exposure.

The current geopolitical risk premium appears modest relative to the potential scale of disruption.

Scarcity Precedes Rotation

The view at The Gold & Silver Club is direct: Oil today resembles Gold before its breakout phase – under-owned, cash generative and structurally tightening.

That combination is powerful.

“When a sector is structurally under-owned yet fundamentally improving, reallocations can be swift,” Hansen notes. “Rotations do not begin with consensus approval. They begin with scarcity.”

Oil now sits at the intersection of three forces: constrained supply, AI-driven demand expansion and mounting geopolitical fragility.

The downside appears increasingly cushioned by years of underinvestment. Upside risks are building quietly beneath the surface.

In markets dominated by narrative extremes, the most asymmetric opportunity is often the one few are discussing – until price forces recognition.

Underinvestment. Rising demand. Policy miscalculation.

The message is becoming clearer: momentum is building, capital is rotating and 2026 may prove to be the year Energies outperform the Precious Metals.