- Veteran commodities strategist Jeff Currie has spent the summer warning that scarcity in physical commodity markets is becoming a persistent source of inflationary pressure and giving way to a commodities supercycle.
After appearing on CNBC on Thursday, he joined Bloomberg Television on Friday morning to amp up that message, warning that tightening crude products supplies make $5-a-gallon US gasoline highly likely by November.
"Crude is the signal, and now we think about products ... they are the noise," Currie said.
Currie, the founder and chief executive of Real Macro and former Goldman commodities head, also warned that scarcity and currency debasement were driving the next phase of the energy shock, with shortages spreading from refined products into crude oil.
Currie described the probability of average US gasoline prices reaching $5 a gallon by the midterm elections as "extremely high."
Currie warned that refiners shifting production between diesel and gasoline would eventually exhaust their operational flexibility, limiting their ability to relieve shortages. US diesel prices could reach $7 to $9 a gallon, he added.
The latest AAA data show the national average price of diesel in the US has topped $6 a gallon.
Supertanker rates on the Baltic Exchange's benchmark Middle East-to-China shipping route have jumped to nearly $1 million a day.
The jump in tanker rates comes as the Bab el-Mandeb Strait in the southern Red Sea falls further under the control of Iran-backed Houthi rebels, while the Strait of Hormuz remains highly contested, an indication that two critical maritime chokepoints are under severe threat.
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Learn More:
https://www.zerohedge.com/commodities/old-economy-taking-revenge-jeff-currie-warns-fuel-squeeze-driving-structural-inflation
https://www.zerohedge.com/energy/mideast-chaos-sends-supertanker-rates-soaring-800000-day
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