Brent at $90.94 may look manageable, but Jeff Currie — Goldman Sachs' longtime head of commodities research — says that is exactly the problem: the market is focused on crude even as the real shock is showing up in the fuels people actually use.

“Nobody on the planet earth consumes crude oil,” Currie told CNBC. Refineries do. Everyone else consumes gasoline, diesel and jet fuel, and those markets, he said, look much worse.

During the interview, Currie said European diesel was trading at about $170 per barrel, nearly twice Brent’s $90.94. WTI was trading at $84.94 on Tuesday.

That diesel reading carries weight beyond the pump. Europe had long relied on Russia for a large share of its diesel imports, and those flows came under strain after the invasion of Ukraine, while global refining capacity had shrunk following pandemic-era plant closures — a backdrop that left product markets with less slack.

Historically, crude and refined-product prices moved closely enough that crude served as a useful shorthand for the broader energy market. Currie said that relationship has now broken down.

One reason for the disconnect, he said, is that roughly 100 million to 120 million barrels of crude became trapped inside the Strait of Hormuz after a surge in supplies in late June and early July. China then cut refinery runs, which helped keep crude prices softer but tightened product supply.

In Currie’s view, that did not solve the shortage. It pushed it downstream.

He also argued that governments have spent decades creating an “illusion of abundance” during supply disruptions by releasing strategic reserves and talking markets down. The United States, for its part, had been drawing down its Strategic Petroleum Reserve at a record pace in 2022 as part of a coordinated effort with other consuming nations. That approach has worked before, but Currie said this disruption is different because of its scale, its duration and the tighter product market.

The inflation effects are more immediate. CNBC noted that gasoline prices are about 30% higher than a year ago, while diesel is up 46%. Diesel feeds directly into trucking, shipping and industrial costs, and its price is often read as a gauge of freight and industrial activity.

Currie said the crude-product gap should eventually narrow as refiners chase historically high margins and increase runs. For anyone tracking that adjustment, the signals to watch are refining margins and distillate inventories rather than headline crude benchmarks. Until then, he argued, $91 Brent is giving investors a reassuring picture of an oil market that consumers stopped living in weeks ago.

By Julianne Geiger for Oilprice.com