Rory Johnston: 'Ragingly Tight' Diesel Markets, Skyrocketing Inflation & The Escalating Iran War

Rory Johnston, founder of Commodity Context, identifies the ongoing Middle East conflict as the primary driver of a severe global energy supply disruption. Escalating attacks in the Strait of Hormuz have caused tanker transit costs to surge tenfold, effectively balkanizing the global oil market into isolated regional pockets. A critical shortage in refining capacity, particularly for middle distillates like diesel and jet fuel, has pushed crack spreads to record highs, far outpacing crude oil price volatility. While crude oil flows have shown intermittent recovery, structural damage to refining infrastructure—compounded by Ukrainian strikes on Russian facilities—maintains extreme pressure on finished fuel prices. Consequently, even if crude oil prices stabilize, the scarcity of diesel will likely persist, forcing a gradual downshifting of the global economy as businesses and consumers absorb these persistent inflationary costs.