The historical correlation between crude and refined products has fractured. Refineries, not end consumers, dictate the demand for crude, yet the markets for gasoline, diesel, and jet fuel currently reflect a much tighter supply landscape than the headline figures suggest. This dislocation stems from roughly 100 million to 120 million barrels of crude trapped near the Strait of Hormuz, compounded by China’s decision to curtail refinery runs earlier this summer. By reducing domestic processing, China effectively exported the shortage downstream rather than resolving it.

Governments have traditionally relied on strategic reserve releases to dampen price volatility, a strategy Currie argues has created a dangerous illusion of abundance. This time, the scale and duration of the disruption render those tactics ineffective. With diesel prices up 46% year-over-year, the impact on trucking, shipping, and industrial costs is immediate and inflationary. While refiners are expected to eventually ramp up production to capture record margins and restore price equilibrium, current energy benchmarks fail to capture the financial pressure felt by the real economy.