Chris’ note: It’s been nearly a year since Russia invaded Ukraine. This not only sparked the bloodiest war in Europe since World War II. It’s also sent global energy markets haywire…

After the invasion, U.S. crude oil shot up to $123 a barrel. It trades back down at about $75 a barrel now. But geopolitical strategist and friend of Legacy Research Peter Zeihan warns that oil won’t stay this low for long.

It’s all in an interview he did with our go-to “macro” investor here at Legacy Research, Nomi Prins. She spent 15 years at the top echelons of Wall Street. But since quitting, she’s been on a mission to help ordinary investors level the playing field with Wall Street elites.

For Nomi, that starts with getting the big picture right. That’s why she’s recorded a series of quarterly interviews with Peter. And she’s kindly agreed to share those insights with you and your fellow Daily Cut readers.

Q&A With Nomi Prins and Peter Zeihan

Nomi: One of the geopolitical developments on readers’ minds right now is Russia’s war in Ukraine. It’s sent energy markets haywire. It’s also pitted the U.S. and Russia against each other in a way we haven’t seen since the Cold War. How do you see that clash turning out?

Peter: Let’s start with why Russia went to war in Ukraine last year…

One of the big problems for Russia is it’s sparsely populated outside of the big cities such as Moscow and St. Petersburg. And it doesn’t have great transportation links, either. That makes it difficult to defend.

Without decent roads, how do you move large quantities of troops? They have to walk or use rail. And rail can only go so many places.

So, if an invasion force makes it into Russian territory, it has the upper hand. Russian troops can’t repel it swiftly enough.

Foreign powers have invaded Russia more than 50 times. And it never ends well for the Russians. They’ve lost most of the direct battles they’ve engaged in. The victories they’ve had were thanks to the dreaded Russian winter.

Vladimir Putin knows this. His goal is to halt new invaders from reaching Central Russia. To do that, he needs to put into position a series of static forces to plug the access points to the Eurasian space. These are the Baltic states, the Bessarabian gap near Romania, and the Polish gap in Poland and Germany.

If he can build up permanent military footprints in these access points, he can plug the gaps. Then Russia doesn’t have to fight a war of movement it has no chance of winning.

Under Soviet rule, Russia plugged all these gaps. But the Soviet Union collapsed in 1991. And Moscow lost control of all but one of them.

Putin has been trying to reestablish those forward military stops ever since. That means conquering countries with a combined population almost twice as large as Russia’s.

There is no version of this where Russia and its neighbors feel secure. It’s one or the other. You have to pick.

That’s the “why.” The “why now” is that the Russian demographics are in terminal decline.

Nomi: You mean the balance of young and old people?

Peter: Exactly. It’s a rapidly aging, very unhealthy population. We don’t have great data out of Russia. The government hasn’t updated its numbers in about a decade. But in the post-Cold War collapse, the death rate doubled, and the birth rate halved. And it’s held like that for 30 years.

This means there’s no up-and-coming generation to fill the ranks of a future military. If Putin was going to move, he had to do it now. Otherwise, he wouldn’t have the troops.

Nomi: So, Putin invaded Ukraine to neutralize any future invasion of Russia?

Peter: The idea is to secure Russia’s perimeter while it still has a military force. Again, it’s easier for Russia to fight a static war defense against invaders than a war of movement.

If Putin can plug those access points, that buys him time. If he fails, we’re talking about the disintegration of Russia as a country within 20 years.

Nomi: So, this was both a military and economic bid for survival?

Peter: Definitely more military. When Russians leaders think of economics, they don’t think like we do. They ask, “Is anyone marching on the Duma or on Red Square? No? Okay, then the economy is good.”

Nomi: The U.S. saw a sharp spike in energy prices after the war broke out. And Europe has been facing its own energy crisis due to its reliance on imports of Russian natural gas to heat homes and generate power. But how does Russia fare?

Peter: Oil in Western Siberia isn’t like oil in Texas. If it freezes, Texans lose their minds. But oil production there, broadly speaking, is fine. If you have to shut in a well, you can turn it back on in a couple of weeks when the weather gets better.

It doesn’t work like that in the permafrost. As anyone who’s from the North knows, if you’re moving, you’re okay. But if you stop, you freeze. It’s the same with oil.

If Russia has to stop production at its wells due to sanctions, it has to shut them in. Engineers inject a thick mud into the wellhead to stop the flow of oil. And pressure builds up all the way back to the wellhead.

Then everything stops moving in the permafrost, which means it freezes. You get cracks throughout the entire system – the valves, the wellhead, the pipes. You then have to send engineers and teams of workers out to fix everything.

The last time Russia’s oil network went offline was in 1992, after the Soviet Union collapsed. This killed off the Soviet industrial base. And there was no more domestic demand for Russian oil.

It took them 30 years and several tens of thousands of foreign engineers working nonstop to fix. That’s no longer an option. Halliburton, ExxonMobil, BP… they all left because of the war. And they’re not coming back.

We’re looking at 4 to 6 million barrels a day of Russian oil going away and never coming back. That’s about 4% to 6% of global daily oil consumption.

Nomi: Where does this leave oil prices?

Peter: We’ve seen a dearth of investment in the last few years on a global basis. That means it’s hard to bring on new production. So, $150 oil would be optimistic.

Chris here again – Make sure to tune in this Thursday, January 12, at 8 p.m. ET for Nomi’s next big macro call… and how to play it.

She’ll reveal the winners and losers behind a massive $46 trillion shift she sees coming out of Washington… and the strategy you can use to profit.

It’s free to attend. Just go here to automatically sign up.

And if want to learn more about the big-picture trends shaping the world – and markets – check out Peter’s new book.

It’s called The End of the World Is Just the Beginning. And it charts what he believes will be the biggest trend over the next decade – the collapse of globalization.

Nomi has arranged a special discount just for Legacy subscribers with Peter’s publishers. You can find out more about that here.