Jeff Currie Says Oil Is ‘Mispriced’ at $100 Per Barrel

Summary

• Jeff Currie describes the oil market situation as "worse" and terms it a "molecular contagion" with physical shortages spreading globally.
• Physical product prices have spiked: jet fuel reached $230/barrel in Singapore and $220/barrel in Rotterdam, with similar issues in Thailand, Philippines, New Zealand, and Australia.
• A severe disconnect exists between paper markets (crude oil trading around $100/barrel) and physical markets (crude delivered in Asia at premiums around $30 over paper, with product prices above $200/barrel).
• The rally in Urals Russian crude oil, from $65-70/barrel to higher levels after sanctions were lifted, has closed the cost gap with WTI and Brent, eliminating spare barrels in the system.
• The supply shock is almost equal to the demand shock during COVID, which previously disrupted global supply chains, implying significant ongoing impacts.
• Currie emphasizes that this is a physical supply chain issue where financial tools like money printing are ineffective; it's "physics" with no policy fix or spare capacity.
• He dismisses futures market manipulation as a minor factor, attributing the disconnect primarily to structural adjustments in Russian oil prices.
• The market implication is a regime change towards physical assets, highlighting the need to rebuild and recover from supply shocks.
• Oil is fundamentally mispriced at $100/barrel and should be higher based on physical market conditions.