Next Phase Of The Global Energy Shock

JPMorgan argues that the energy shock has moved from crude oil to refined products like jet fuel and diesel due to severe inventory collapses and refining constraints. This shift makes refined product prices, rather than crude oil, the primary driver of economic demand destruction.

Key Takeaways

• 1.The energy shock is transitioning from crude oil markets to refined products due to a lack of elasticity in the crude side of the system.
• 2.Refining is a zero-sum game; increasing production of one fuel (like jet fuel) typically reduces the supply of another (like diesel).
• 3.Refined product prices are rising significantly faster than crude oil, acting as the primary channel for demand destruction.

Table of Contents

• Introduction
• The Shift from Crude to Products
• Which Products are Most Vulnerable
• How Refining Actually Works
• Economic Consequences and the Diesel Tug-of-War

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