Carlyle Group Chief Strategy Officer of Energy Pathways Jeffrey Currie Talks Oil Markets

Summary

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Bloomberg Talks

Episode Summary: Carlyle Group Chief Strategy Officer of Energy Pathways Jeffrey Currie Talks Oil Markets

Date: March 18, 2026
Guest: Jeffrey Currie, Chief Strategy Officer of Energy Pathways, The Carlyle Group
Main Theme:
An emergency look into global oil market disruption as geopolitical shocks intensify, supply chains fracture, and a potentially historic gap emerges between physical and financial markets. Jeffrey Currie contextualizes current events, evaluates pricing disconnects, and warns of cascading effects across energy, agriculture, and the global economy.

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Key Discussion Points & Insights

1. Escalating Geopolitical Tensions and Immediate Market Repercussions

• [00:37-01:39]
  • Iran launches more missile attacks across the Middle East in retaliation for the assassination of its security chief.
  • The US is mass-producing attack drones modeled after Iranian technology to bolster its regional presence.
  • Japanese Prime Minister faces diplomatic friction with President Trump regarding support for US military objectives, highlighting Japan’s constitutional and capability constraints.
  • Broader context: these developments underscore global exposure to Middle East instability, especially among energy-importing nations like Japan.

2. Acute Physical Supply Disruption: "Molecular Contagion"

• [02:21-03:38]
  • J. Currie: "Worse. I like to call it molecular contagion."
    • Supply shortages are now intercontinental: severe price spikes have spread from Singapore ($230/barrel jet fuel), to Rotterdam ($220/barrel), and through Southeast Asia and Oceania.
    • "There's no more price spread, there's no more spare barrels, there's no policy fix and it's just physics at this point."
    • Financial “fixes” can’t solve physical shortages: "You can't print molecules, Jeff."
• Insight: The crisis is fundamentally about inelastic supply, not just financial market turmoil.

3. Breakdown Between Physical and Financial (Paper) Oil Markets

• [03:38-05:33]
  • Physical oil is trading at vastly higher levels than futures or financial contracts.
    • “Crude delivered in Asia... somewhere around $130 a barrel.... Product prices are spiraling above $200 a barrel. So the disconnect is between the paper market which is sitting around 100 and the physical market which is showing a very different environment.” – J. Currie [04:09]
  • Futures pricing may be misrepresenting the reality on the ground, setting up for severe correction as shortages materialize.
  • Speculation about manipulation in paper markets but Currie emphasizes the bigger driver: "You close that gap [between Russian and Western barrels], you don't have any more spare barrels in the system and this rest of the complex likely to start to rally." [04:52]

4. Comparison to Past Oil Shocks and Role of Energy Diversification

• [05:33-06:59]
  • Host contrasts today's situation with the 1970s, noting China's increased diversification into renewables, electric vehicles, and nuclear.
    • J. Currie: "Renewables, nuclear power [were] born out of the 1973 energy crisis... This is going to unleash enormous investment." [06:04]
  • Key warning: “We haven’t got to that transition… The type of oil consumption that's left is critical. And so if you pull those barrels out, the cascading effect through global supply chains is going to be significant."
  • Notably, agricultural markets remain underpriced relative to energy risks: “My the best sector to try to get value in right now would be agriculture because it hasn't priced it in.” [06:51]

5. Depleting Inventories and Escalating Risks

• [06:59-08:16]
  • China may draw down up to 1 million barrels/day from reserves over a month, but once those inventories are gone, “boom, you have to bring demand down in line with supply. And to do that, you’re going to need prices far higher than where we are right now.” [07:25]
  • Currie draws a parallel with COVID-19’s supply/demand shock:
    • "It took a minus $37 a barrel price to create that rebalancing back in 2020. Now we have the exact opposite environment."
  • Urges realism about demand destruction and potential upside volatility.

6. What Would It Take to Rebalance: “Buckle Up”

• [08:16-09:18]
  • J. Currie: “Get long, buckle your seatbelt and hang on for the ride… Don’t underestimate the type of volatility.” [08:22]
  • Warns of extreme bumpy ride ahead: volatility in European gas in 2022 as a model—prices shot up to $300-$400, then collapsed.
  • “We haven’t even really started the rebalancing process yet... The upside here I would argue is substantial.”
  • Criticizes those shorting energy: “Picking up pennies in front of the steamroller right now.”

7. Magnitude of Potential Price Moves & Disconnection

• [09:18-10:49]
  • Physical market showing $173/barrel Oman crude and jet fuel at $230/barrel in Asia, “and we haven’t started the rebalancing process.”
  • Localized shortages and hoarding are emerging (export bans in Thailand and China), while US gasoline reaches $8/gallon in Los Angeles.
  • “There is a massive disconnect between the physical world and the paper world... We have the exact mirror image of the same similar sized shock hitting the world right now [as COVID] and the market... is not keying off the signals.” [10:36]

8. Closing the Gap: When Financial Markets Wake Up

• [10:49-12:03]
  • It will “get real” for financial markets with “visual images of real shortages in the United States and Europe.”
  • US may delay disruption via export controls, but Europe will feel shortages first.
  • US equity markets are globally exposed: “When this energy crisis begins to hit places like Europe, it’s going to impact the earnings of those [American] companies... The US equity market is not a US domestic market. It’s global.” [11:35]
  • Americans will first feel the impact in wealth, Europeans will feel it both in wealth and income.

9. Inflationary Risks to Food Supplies and Agriculture

• [12:16-12:39]
  • 40-50% of global urea supply (crucial for fertilizer) is being withdrawn from the market at the start of planting season.
  • Currie: “We cannot overlook this … a lot of people are watching with concern the world’s food supplies.”
  • Highlights knock-on risks from energy supply crunches into agriculture and food security.

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Notable Quotes & Memorable Moments

• Molecular contagion: “This thing’s going intercontinental... There’s no more spare barrels, there’s no policy fix and it’s just physics at this point. ... You can’t print molecules, Jeff.” — Jeff Currie [02:56 & 03:35]
• On market disconnect: “The disconnect is between the paper market which is sitting around 100 and the physical market which is showing a very different environment.” — Jeff Currie [04:09]
• On possible market manipulation: “You could argue that Monday last week there was a mysterious 11 million barrel seller... It’s not enough to really change the dynamic. The bigger factor... is you don’t have any more spare barrels in the system and this rest of the complex likely to start to rally.” — Jeff Currie [04:41]
• On demand destruction: “Once those inventories are exhausted... you have to bring demand down in line with supply. And ... you’re going to need prices far higher than where we are right now.” — Jeff Currie [07:25]
• On historical parallel: “It took a minus $37 a barrel price to create that rebalancing back in 2020. Now we have the exact opposite environment.” — Jeff Currie [07:59]
• On volatility ahead: “Get long, buckle your seatbelt and hang on for the ride. ... Don’t underestimate the type of volatility.” — Jeff Currie [08:22]
• On US market vulnerability: “The US equity market is not a US domestic market. It’s global. So it’ll feel the impact.” — Jeff Currie [11:35]
• On agriculture as the next risk: “I think my the best sector to try to get value in right now would be agriculture because it hasn’t priced it in.” — Jeff Currie [06:51]
• On urgency: "You cannot print barrels and two, even at 100, this is not price. In the shock that he sees playing out..." — Host paraphrasing [12:16]
• On food security: “40 to 50% of the world’s urea, which is a key ingredient in fertilizer, is being withdrawn from the market right at the same time that you would have a planting season is a reason why... a lot of people are watching with concern the world’s food supplies.” — Host [12:19]

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Important Timestamps

• 02:56 — Currie describes “molecular contagion” and global shortages.
• 03:44 — Explains disconnect between financial (paper) and physical oil markets.
• 05:33 — Comparisons to 1970s oil shock and role of renewables/nuclear.
• 06:59 — Discusses China’s potential massive inventory drawdown.
• 07:25 — Outlines rebalancing mechanism and risk of price spikes.
• 08:22 — “Get long, buckle your seatbelt...” Volatility warning.
• 09:33 — Spot prices in physical market up to $230/barrel; US gasoline at $8/gallon.
• 11:07 — What causes financial markets to “get real.”
• 12:16 — Cascading impacts into agriculture, global food security highlighted.

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Summary Takeaways

• Physical oil shortages and rapidly rising prices are rapidly outpacing muted futures markets; a dangerous disconnect is forming.
• The situation is not static—risks are mounting each week as inventories are depleted and alternative supply sources are limited.
• Investors and policymakers are warned to prepare for significant volatility, not just in energy but also agriculture and ultimately in global equity markets.
• The shocks threaten not only energy prices but also food supply chains, with fertilizer shortages looming as a secondary crisis.
• Currie’s core message: This is a historic event with major ripple effects. The financial system is not accurately pricing the risk, and the time to recognize and prepare for it is now.

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Transcript

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[Podcast Host 1]

Bloomberg Audio Studios Podcasts Radio news

[Podcast Host 2]

on our radar this morning, Iran launching more missile attacks overnight targeting the uae, Saudi Arabia, Kuwait and Tel Aviv. Tehran vowing revenge following the assassination of their security chief. Elsewhere, the Pentagon planning to mass produce one way Lucas attack drones. The drones were created by reverse engineering Iran's cheap and deadly shahed system and are being used in the war in the Middle East. And finally, Japanese Prime Minister Tanai Takiichi saying she's facing a, quote, extremely difficult summit with President Trump tomorrow. The statement coming after Tokyo's refusal to send warships to Hormuz. Takechi citing Japan's pacifist constitution.

[Podcast Host 1]

Yeah, and part of the issue that Takaichi is presenting is the lack of capabilities that they have to really support US troops, which is something that NATO's allies have highlighted as well, she said. I intend to convey these points clearly and I'm sure the US Side understands these laws in terms of the pacifist laws, given our history. Either way, it highlights how difficult it is for international leaders to come to the White House and have any kind of discussion with President Trump, given some of the domestic pressure that they are all facing.

[Podcast Host 3]

Two things I imagine the White House is going to bring up after World War II and obviously Japan has this pacifist regime in place. They did send minesweepers to the Middle east after Operation Desert storm and in 1991 when the US wrapped up the Gulf War. That's the first point I think the White House will say, well, can't you just send a minesweeper? The second point, I imagine this president, because he's insinuated in the last few days, is going, going to go through all the countries that refuse to help the United States right now. How many US Men and women are stationed in those countries right now as a force of deterrence? Japan has some 55,000 and counting US service members, and I imagine that's going to come up in the meeting.

[Podcast Host 2]

And they are very exposed to what's happening in the Middle east given how exposed they are on the energy side. Jeff Kerry of Color writing this the cost of rebuilding and recovering from the Hormuz shock will be enormous and underscores the regime change towards physical assets. Jeff joins us now for more. Jeff, welcome to the program. It's always good to catch up with you sir. Fluid environment. So allow me to go through the headline of the last five or ten minutes or so. One headline, one report coming from Iran that their energy assets have been struck. Now I have limited information beyond that. But Jeff, from your standpoint, in the week since we last spoke, has this got worse or better?

[Jeff Curry]

Worse. I like to call it molecular contagion. You know last week we were talking about shortages in Singapore. You know prices of jet fuel spiked to 230 doll a barrel. This week it's in Rotterdam. Rotterdam's $220 a barrel. Thailand, Philippines, New Zealand, Australia. So this thing's going intercontinental and so you look at Singapore, Rotterdam, the spread, there's no more price spread, there's no more spare barrels, there's no policy fix and it's just physics at this point. I want to emphasize these are physical supply chains and the idea of around financialization and the ability to print money doesn't apply here. And I think the title of that piece says it all. You can't print molecules, Jeff.

[Podcast Host 2]

With that in mind, where and how do you think we're underpricing this risk still in financial markets?

[Jeff Curry]

That's the peculiar thing about this is that you look at the paper markets, they've entirely disconnected from the physical markets. Crude oil on a no man basis, you know, on the other side of the strait, the side that's free, spiked to $173 a barrel yesterday. Crude delivered in Asia is a blend of of Dubai in Oman which is trading somewhere around 130 and 170. And today, this morning they're one call it 120 to 150. So you're delivering crude into Asia at somewhere around $130 a barrel. Product prices are spiraling above $200 a barrel. So the disconnect is between the paper market which is sitting around 100 and the physical market which is showing a very different environment.

[Podcast Host 1]

Jeff, some people have speculated that's because of certain types of manipulation in the futures market. And that's the reason why you have seen this gap blow out. Do you think there's credence to that?

[Jeff Curry]

You know you could argue that Monday last week there was a mysterious 11 million barrel seller. I don't want to get into that. It's not enough to really change the dynamic. I think that the Bigger factor that was likely driving WTI and Brent and staying lower is the price of euros. Russian crude oil, it's rallied 65, $70 a barrel once they took off the sanctions. So WTI and Brent were the high cost barrels, the Russian was the cheap. What happened? You close that gap and now that you've closed that gap, you don't have any more spare barrels in the system and this rest of the complex likely to start to rally. You know, I go back to the point that John started with is, you know, we're dealing with an enormous supply shock. By the way, the supply shock is almost equal to the demand shock during COVID and we know what that did to global supply. So I think, you know, at $100 a barrel, this thing's mispriced. This even against the physical market.

[Podcast Host 1]

There is a sense though that this time is a bit different than say the 1970s in terms of the world's reliance on oil, especially China. How much they diversified to electric vehicles, to nuclear energy and other places as well. How much do you think that that is going to be the growing trend to diversify the sources of energy in myriad ways beyond what we were doing even during the so called green revolution as people try to avoid these types of shocks.

[Jeff Curry]

Well, I absolutely argue that, you know, the, the renewables, nuclear power born out of the 1973 energy crisis and this is going to unleash enormous amount of investment into renewables, nuclear power and other localized energy sources. The problem though is we call this the new jewel order. The problem is that we haven't got to that transition where we have electrified everything, localized it in the type of oil consumption that's left in the global economy is critical. And so if you pull those barrels out of the system, the rippling factor, the cascading effect through global supply chains is going to be significant. You go from gas to urea, urea to fertilizers, fertilizers to the dinner table. Or you go from LPG is synthetic fibers, synthetic fibers of cotton. You switch out of soybeans and corn into cotton. By the way, I think my the best sector to try to get value in right now would be agriculture because it hasn't priced it in.

[Podcast Host 3]

Jeff, when it comes to barrels coming off the market. This came from an industry consultant. In terms of China, they're looking at potentially a drawdown in commercial and operational stockpiles amounting to as much as 1 million barrels a day. That can happen over the next four to six weeks. What would that mean for the price of crude.

[Jeff Curry]

I think the key point is once you exhaust exhaust those inventories, there's nothing left. Think about it this way. You have demand up here, supply down here. Once those inventories are exhausted, boom. You have to bring demand down in line with supply. And to do that, you're going to need prices far higher than where we are right now. I like to do the mirror image of COVID Let's go back to Covid. It was the exact opposite. You had a situation which you had demand up here and the other way, you had supply up here, here and demand down here. And so what happened? The demand collapse. Eventually you filled all the inventory capacity in the world and you had to bring supply down in demand immediately. What did that require? A minus $37 a barrel price to create that rebalancing of supply and demand. Now we have the exact opposite environment. So just imagine what it's going to do to require that reduction in demand to bring it in line with supply if it took a minus $37 price to create that rebalancing back in 2020.

[Podcast Host 2]

So, Jeff, I'm going to ask you the question, what would it take? What's the opposite?

[Jeff Curry]

I mean, I stick to the same answer I gave you last week. Get long, buckle your seatbelt and hang on for the ride. We'll know when we start to get to that point where the system starts rebalancing. But I want to emphasize, don't underestimate the type of volatility. If you take European gas in 2022, we saw Russia cut it and by the way, the market ignored it in June of 2022. By August and September, you were at 3, $400 a barrel. Do you know where prices were in December of that year after you destroyed so much? Dan? They went negative. So I'm not going to say oil is going negative, but what I'm trying to tell you is it's going to be a really bumpy ride. You've seen no evidence of demand destruction that rebalance this market yet. So we haven't even really started the rebalancing process yet. So the upside here I would argue is substantial. Again, we want to be long. And I look at the market, it's shorting energy stocks and getting long. Everything else that is short energy. I think you're picking up pennies in front of the steamroller right now.

[Podcast Host 3]

Jeff, we buckled up. That's why we have you on again this week. Can you give us a range of how high though prices could go? I don't know. I Know you don't want to give us an exact definition of where you think Brent oil is going to hit, but give us a range of when you say get long, I mean how long are we talking?

[Jeff Curry]

But look at Oman's already traded at $173 a barrel. Jet fuel in Rotterdam is $220 a barrel. In Singapore it was $230 a barrel. And we haven't started the rebalancing process. All we have seen is what happened. Places like Thailand and China hit export bans that then creates ripple on effects and shortages. Then you have the hoarding that begins to take place. Your $8 a gallon gasoline in Los Angeles right now. So you know the upside here. Again, I don't want to speculate on how high but you've already witnessed something like 173 in the physical market. So that's my point here. There is a massive disconnect between the physical world and the paper world. And the paper world includes the financial world. You know I like to point out in it was in January of 2020 when Covid hit. I remember I was looking at at the what was going on in China. It was the second largest economy in the world just shut down. Stock market rallies, oil is hanging in, they're not selling off. And I'm going guys, we got to get short this thing. You can't hit the global economy with a shock of that magnitude and not expect bad things to happen. And we have the exact mirror image of the same similar sized shock hitting the world right now in the market on the paper and financial side is not keen off the signals that it's providing at this point in time.

[Podcast Host 2]

So Jeff, at some point it gets real for the market. And with COVID it was when the northern Italian cities started to shut down. There was a sense that this was getting real that was spreading beyond China. It was hitting Europe and could hit the US as well. What makes this get real? What closes the gap between physical and paper markets?

[Jeff Curry]

I think it has to be physic visual images of real shortages in the United States and in Europe. Now the US will be hard particularly if they do export, export controls on that Europe will likely be the first one to get. And I think the implication here is the US believes it's safe because of energy dominance. And this is the point I made it last week from an equity market perspective. That equity market, the United States is a global market. All of those Mag 7 companies earned their earnings in Europe and Asia and all over the world. So when this energy crisis begins to hit places like Europe, it's going to impact the earnings of those companies that sit inside the US because the US Equity market is not a US Domestic market. It's global. So it'll feel the impact. And I think that if the Americans are going to feel it first on the wealth impact before they'll ever feel it in the at the income cash flow level, the Europeans, unfortunately, they're likely to feel it at both sides relatively soon.

[Podcast Host 2]

Jeff, it's good to see you. Thanks for making time for us again. We'll catch up soon, no doubt. Jeff Curry there of Carlisle. A few headlines there, of course. One, you cannot print barrels and two, even at 100, this is not price. In the shock that he sees playing

[Podcast Host 1]

out, yeah, he sees it in the physical market and he says that it's only going to get worse until you get lines lining up to get energy. That's going to be a problem. He also said something about agriculture and I think that this, we cannot overlook this. The idea that 40 to 50% of the world's urea, which is a key ingredient in fertilizer, is being withdrawn from the market right at the same time that you would have a planting season is a reason why I think a lot of people are watching with concern concern the world's food supplies.

[Podcast Host 3]

Jeff Curry is a breath of fresh air for the people who continuously message me and that is why I bring up Oman and Dubai grades, because they are 50, 60, $70 north of where the financial markets is pricing in Brent crude. That is this massive gap. Second point he mentioned, unless the US does export controls, that is something. And I don't know what level it

[Podcast Host 2]

is coming up, doesn't it?

[Podcast Host 3]

I don't know what level it is right now on the menu for this White House, but is certainly on the

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