Former Goldman Sachs Head of Commodities, Jeff Currie, warns: Brent crude breaking above $107/barrel and diesel crack spreads surging to $110/barrel indicate that fuel shortages are triggering structural inflation.
Jeff Currie, former head of commodities at Goldman Sachs and now head of Real Macro, told CNBC on Thursday that the market is underestimating an inflation cycle driven by a long-term supply shortage of physical commodities, stating that "the old economy is fighting back" and that the current rally in crude oil can no longer be characterized as a transient shock. He pointed out that the return of Chinese demand is the core driver of rising oil prices, with exceptionally high diesel margins prompting Chinese refineries to resume production, leading to a surge in crude oil demand entering the market. Paul Bloxham, HSBC's chief economist for global commodities, also issued a warning this week, stating that a "super squeeze" has begun, echoing Currie's assessment.
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