US oil prices are likely to soar again! Former Goldman Sachs commodity strategist warns: gasoline may break through $5 and diesel may reach a maximum of $9 before the midterm elections

The Zhitong Finance App learned that Jeff Currie, a senior commodity strategist at Goldman Sachs for a long time and founder and CEO of Real Macro, warned that as the shortage of energy supply in the US spreads further from refined oil products to the crude oil side, the possibility that US gasoline prices will rise to 5 US dollars per gallon before the mid-November elections is “extremely high”, and diesel prices may even soar to 7 to 9 US dollars per gallon.

Currie said in an interview on Friday that the current energy market is entering a more dangerous phase. Previously, supply was tight, mainly concentrated in the field of refined oil products such as gasoline and diesel, but now it has begun to spread to the crude oil market upstream of the industrial chain. Due to the combination of scarce supply and currency depreciation factors, American consumers may face a new round of energy price shocks.

“Crude oil is the real signal, while refined oil products are more of a noise,” Currie said. He believes that the crude oil market is sending a signal of further worsening supply constraints, which will eventually be transmitted to terminal fuel prices such as gasoline and diesel.

The US gasoline price breaking through $5 per gallon has important psychological and political significance, especially in the context of the November 3 midterm elections approaching and contesting congressional control.

The last time the US national average retail price of gasoline surpassed $5 per gallon was it during a period of sharp rise in inflation after the 2022 pandemic. Today, with the recent escalation of the US-Iran war, the average US gasoline price had risen above $4.29 per gallon as of Thursday, further shrinking from the $5 mark.

The pressure on the diesel market is even more obvious. US diesel prices have surpassed $6 per gallon for the first time. Currie predicts that if the current tight energy supply situation continues, the price of diesel in the US may rise further to $7 to $9 per gallon in the future.

Currie's judgment on the possibility that gasoline prices will break through $5 before the midterm elections is “extremely high.” He pointed out that at present, US refineries can still adjust production by adjusting production and switching production capacity between diesel and gasoline, thereby adjusting according to the supply conditions in different refined oil markets. However, this flexibility is not limitless; as supply pressure continues to build up, refineries may eventually run out of space to cushion market shortages by adjusting product structures.

Meanwhile, the release of the US Strategic Petroleum Reserve (SPR), which previously helped fill the energy supply gap, is currently showing no sign of restarting, which means the market may lose an important supply buffer tool.

Currie's warning shows that the current energy shock facing the US is not just the rise in oil prices itself. As supply constraints spread from refined oil products to crude oil, if gasoline and diesel prices continue to rise, high energy costs may further burden consumers and become a more sensitive economic and political issue before the midterm elections.

In particular, with the average price of gasoline in the US already exceeding $4.29 and diesel exceeding $6, if Currie's predictions for gasoline to rise to 5 US dollars and diesel to reach 7 to 9 US dollars are fulfilled, the new round of fuel price increases may further increase the pressure on the living costs of US households, and make the energy market an important risk factor for investors before the November midterm elections.