Jeff Currie Sees ‘Extremely High’ Chance of $5 Gas by Midterms

Veteran commodities strategist Jeff Currie says the odds that the U.S. average gasoline price hits $5 a gallon before the November midterms are “extremely high.” The former Goldman Sachs commodities chief, now founder and CEO of Real Macro and co-founder of 1947 Oil and Gas, told Bloomberg the energy shock has entered a dangerous new phase: shortages that started in refined products are spreading upstream into crude, layered on top of currency debasement.

Currie has been consistent on the mechanism. Refineries cannot freely maximize gasoline without starving diesel, and diesel is the product already in the tightest bind. When crude is near $100 a barrel, the refined barrel has been worth far more. In recent interviews, he has pointed to diesel crack spreads around $110 a barrel and 3-2-1 cracks at multi-decade extremes—products near $160 when crude is $100. China returning to the market after cutting runs and exports only adds crude demand into an already strained system.

Make no mistake: one of the underlying stories behind high diesel and gasoline prices is the inflationary component of the Market that the Fed is powerless to stop. I’ll write more about that in some of our finance articles rolling out. The U.S. Treasury has taken over what the functions of the Fed would do, and it does spark the question: “Do we really need the Fed?”

The national regular-gasoline average is already about $4.29 a gallon. Diesel has set a new U.S. record above $6.05. That is the backdrop for Currie’s call—not a distant scenario, but a short walk from here if product tightness persists into fall.

Diesel Is Already a $200 Barrel

Wholesale ultra-low-sulfur diesel on the U.S. Gulf Coast closed near $4.83 a gallon on September 9. Multiply by 42 gallons in a barrel and the product is worth about $203 a barrel before taxes, freight, and retail markup. Retail diesel at $6.05 is more than $250 a barrel equivalent. European diesel has also traded near $200 a barrel. That is why Currie tells markets to watch products, not just WTI and Brent. Crude can look “contained” while the fuels that actually move trucks, farms, ships, and aircraft are already in crisis.

Jet fuel is in the same family. Gulf Coast kerosene-type jet fuel was about $4.34 a gallon on September 9; national jet averages at FBOs are far higher. Distillates move together. When diesel cracks explode, jet usually follows.

No Slack Left in the Refining System

U.S. refinery utilization was 97.8% for the week ending September 4. The Midwest ran above 100% of operable capacity. The Gulf Coast was at 98.3%. The West Coast sat lower at 93.2%—not because demand is soft, but because California has already lost capacity.

At 95–98% utilization, there is almost no margin for a hurricane, an unplanned outage, a delayed turnaround, or another geopolitical shock. Distillate production has not kept pace with the extra crude being run. Inventories of distillate are forecast by EIA to drop 100 million barrels below in September and stay below the five-year low through much of 2027. That is the definition of no buffer.

Two Chokepoints, Record Tanker Rates

The Strait of Hormuz has been disrupted since the U.S.–Iran war began in late February. Now the second gate is closing. Iran-backed Houthis have seized Mocha on Yemen’s Red Sea coast and pushed toward Perim Island in the Bab el-Mandeb Strait. Transits through the strait have plunged. Saudi crude that already cannot move freely through Hormuz now faces a second threat on the Red Sea route that carries a large share of Gulf oil toward Asia and the Suez system. About 12% of global oil trade normally moves through Bab el-Mandeb.

The shipping market has priced the risk. VLCC earnings on the Middle East–China benchmark have hit records near $800,000 a day. A U.S. Gulf–Asia VLCC fixture has been reported at a $29.5 million lump sum—on the order of $15 a barrel in freight before war-risk premia and delays. Longer routes, ship-to-ship transfers, and scarce hulls lock vessels for weeks. High tanker fees are no longer a rounding error; they are a structural tax on every barrel that still moves.

California Is the Weakest Point

California already pays the nation’s highest pump prices and has the least resilience. Statewide regular gasoline is near $5.93. Diesel is about $7.98, with some Bay Area and Central Valley stations hitting the pump maximum of $9.999 a gallon. EIA weekly data showed California on-highway diesel at $7.764 for the week of September 7—already a record and roughly $1.80 above the national average.

The state lost major capacity when Phillips 66 Wilmington and Valero Benicia closed. Refining capacity on the West Coast has fallen sharply over five years. California requires unique CARB gasoline and CARB diesel. It is an isolated market that now depends more on imports, just as Asian and Middle Eastern product exports have been disrupted. West Coast utilization looks “lower” than the Gulf only because the remaining plants are running hard against a smaller base. One outage, one delayed cargo, or one more jump in tanker rates hits California first and hardest.

And with President Trump’s Jones Act Waiver, that may not help California, as the Panama Canal is having issues due to drought and has to lengthen travel times. You can pay to cut the line, but that may add millions to each tanker load.

Do Other Analysts See Gasoline, Diesel, and Jet Coming Down Soon?

Not in a way that helps before the midterms—and not cleanly even after.EIA’s latest Short-Term Energy Outlook raised, rather than cut, its diesel path. It now sees U.S. retail diesel averaging $5.07 a gallon in 2026 and $4.40 in 2027. Gasoline averages $3.84 in 2026 and $3.35 in 2027. Those 2027 numbers are still high by recent standards and rest on an assumption that Hormuz traffic normalizes and inventories can rebuild. Distillate stocks are expected to stay below the five-year low through much of 2027. EIA also notes diesel cracks remaining above $2 a gallon into late fall before easing only if Middle East distillate exports resume.

Goldman Sachs more than doubled its 2027 diesel-margin forecasts, to about $63 a barrel in the U.S. and $49 in Europe. HSBC raised oil-price and refining-margin assumptions and expects product tightness through 2027 even as crude balances improve. Traders and refiners at recent Middle East conferences said Gulf and Russian refinery damage (Bapco, Qatar GTL, large Russian units hit by Ukrainian drones) cannot be rebuilt quickly. A Hormuz reopening could dump crude onto the market and widen cracks further if product capacity stays missing. Ishka and IATA-linked work on jet fuel likewise see price pain lingering into 2027 even if supply fears ease.

President Trump has said gasoline could eventually fall below $2 a gallon—but “not until after the midterms,” and that oil might take “a little bit longer than the midterms” to tumble. That is a political timeline, not a physical one. Physical balances—destroyed refining capacity, two chokepoints, record freight, 98% U.S. runs, and California’s isolated spec—do not reset on Election Day.

The honest synthesis is this: most serious forecasters do not see a sustained collapse in gasoline, diesel, or jet in the next eight weeks. They see elevated product prices through the rest of 2026 and into 2027, with the timing of any real relief tied to whether Hormuz and Bab el-Mandeb reopen and whether enough refining capacity comes back. Currie’s $5 national gasoline call is aggressive relative to EIA’s annual averages, but it is not disconnected from the tape.

The national average is already $4.29. California is already past $5. Diesel is past $6. One more supply scare, one more refinery trip, or a few more weeks of $800,000-a-day VLCCs is enough to close the gap.

There is no margin for error anywhere—not in the Strait of Hormuz, not in Bab el-Mandeb, not in the tanker list, not at 97–98% utilization, and least of all in California. The world is healing, and it will get bumpy, but do your own research and trust nothing you see without verifying. – We will be covering this and 10 other huge stories on the Energy News Beat Stand Up.

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