Title: Jeff Currie: Watch China as it takes advantage of record margin between crude & diesel Show: CNBC International Live Guest: Jeff Currie — Chief Strategy Officer, Energy Pathways, Carlyle (ex-Goldman Sachs global head of commodities research) Date: 2026-09-08 URL: https://youtu.be/t_YtpalkxXA Length: 4:10 (250s) Note: Auto-captions, lightly cleaned — fillers (um/uh/you know as interjection) removed and stutters collapsed; wording otherwise verbatim. Every (mm:ss) cue kept in place.
00:00 Now, look, US diesel hitting an all-time high, $5.90 a gallon here. At normal refining margins, some would say that implies Brent at around 135 bucks a barrel. It's now trading at around 97. So, what's going on out there at the moment? Jeff, walk us through it. >> Well, I think we turn to the war in Russia, Ukraine.
00:22 That's where this really started. The Ukrainians were using drone technology to strike within 1,300 km inland of Russia taking out refining capacity. At one point, there was more than 50% of that capacity taken off, and they represent 10% of global exported diesel. It was so bad that you had the Russians importing diesel and jet fuel from places like Japan, India, which underscores the severity of the shortage.
00:56 Now, that was a lot of it, but the other factor that I think is really important to be watching this morning is China. Everybody goes, "Oh, China drove down the crude price cuz it didn't buy it." But it also has a lot of refining capacity. Remember what does China do in copper, aluminum, steel, whatever? It dominates processing or critical minerals, dominates processing.
01:14 And it doing that, yeah, it drove down the crude price, but it also drove up the diesel price. And why so everybody's focused on the diesel price right now, I'd be watching crude cuz China is back. Actually, this morning, Shanghai futures traded over $100 a barrel, which is an indication, "Hey, the Chinese are looking at that $107 profit margin between crude and diesel price is gone, it's time to take advantage of it.
01:39 " And so, I think what you're going to see in the coming weeks is more of a normalization in that spread as that refining capacity in China begins to come back online. And so, I'd be watching China right now, be watching the crude. In fact, I don't want to go as far as to say I want to be short diesel cracks, but I do want to be long crude here.
01:57 >> Okay. And Jeff, really interesting commentary from the UAE presidential advisor, Dr. Anwar Gargash, in the last 24 hours. He is a super respected voice on the ground here, and he weighed in in a summit in Abu Dhabi yesterday, saying the UAE and this region is not going to be held hostage, particularly when it comes to its energy exports.
02:19 And that brings me to the alternative pipeline investment equation. It also brings me to OPEC, which we know on Sunday kept output unchanged for October. Just quickly on the OPEC equation here and what these Gulf producers are actually able to get to market at the moment. How influential is this group right now? >> With if you don't have spare capacity, it's no longer a functioning cartel by definition.
02:43 If you just go to the economic literature, it'll tell you that. So, I think the key point here to regain the same market power that they have before, they need to reestablish spare capacity. To get that spare capacity, you have to get these choke points opened. And again, they're bigger now than what they were three or four months ago. They're growing.
03:01 They're not decreasing. Because if you think about trying to get oil out of the Gulf region, you have to go through the Straits of Hormuz, or you use the East-West pipeline to get into the Red Sea. You either have to go out down through Bab el Mandeb, or you have to go up through Suez.
03:19 And if you look at the Suez, it's a small, much smaller way to get out. So, the situation's going to be very difficult for the region to reestablish that dominant position with global spare capacity. We're talking probably another, probably bare minimum if we solved it tomorrow, another 6 months or more.
03:42 So I think the key message is once they're up and running, they're going to want to take this up as fast as they possibly can. Whether if it's in, I think at this point, the commitment to building alternative routes like pipelines is going to happen. But you're talking that's a 2027 story.
03:58 It's not like in the next 3 to 6 months story. So it's going to be a while before they reestablish that position. I'm not saying they're not going to and I really believe they'll likely get there. But it's not going to happen immediately.