Jeff Currie: Everything You Know About Oil Markets Is Wrong

Commodity markets function as spot assets driven by immediate fundamentals rather than anticipatory expectations, a framework tested by recent geopolitical volatility in the Strait of Hormuz. Time spreads in oil markets serve as the ultimate indicator of current supply-demand balances, as they cannot sustain speculative expectations without being corrected by market participants. Liquidity and investor positioning frequently override fundamental signals, triggering extreme volatility that discourages long-term capital investment and exacerbates supply constraints. The current geopolitical landscape, characterized by the "revenge of the old economy" and a shift toward deglobalization, has rendered traditional risk-pricing models inadequate, evidenced by the widening disconnect between crude oil prices and refined product cracks. Jeff Currie, a veteran commodity researcher, highlights that these structural shifts, combined with low inventories and the rise of AI-driven warfare, create a precarious environment where volatility remains the dominant market force.