The new inflation war has already begun

XBR/USD

Key zone: 81.50 - 85.00

Buy: 86.50 (on strong positive fundamentals); target 90.00; StopLoss 85.70

Sell: 80.00 (on a decisive break above 81.00); target 76.50-75.00; StopLoss 80.70

While the market continues debating whether Brent can establish itself above the $80-per-barrel mark, the key signals of inflationary pressure are coming from an entirely different segment of the energy market. Today, refined petroleum products—not crude oil—are providing a far more accurate picture of the real costs facing the global economy.

The defining factor has become the price of diesel fuel. Diesel sits at the core of global logistics, industrial production, mining, and agriculture. Current diesel prices already reflect a full-scale energy crisis scenario, even though crude oil prices remain well below their historical extremes.

Reminder:

The defining factor has become the price of diesel fuel. Diesel sits at the core of global logistics, industrial production, mining, and agriculture. Current diesel prices already reflect a full-scale energy crisis scenario, even though crude oil prices remain well below their historical extremes.

The gap between crude oil and diesel prices has reached multi-year highs. Refining margins now exceed the value of the crude feedstock itself.

European diesel crack spreads have approached $60–65 per barrel, while at several U.S. trading hubs they have surpassed $80. This indicates that today's primary supply bottleneck is no longer crude oil production but rather the production and distribution of refined petroleum products.

Several factors are intensifying the situation simultaneously:

• Russia has temporarily suspended diesel exports following attacks on oil refineries and in an effort to stabilize its domestic fuel market. For Europe, North Africa, Türkiye, and Brazil, this means fiercer competition for alternative diesel supplies.
• The geopolitical risk premium remains elevated. Any disruption to shipping through the Strait of Hormuz or the Red Sea affects refined petroleum products first and foremost, causing the fuel market to tighten much faster than the crude oil market.
• The latest IEA report showed an unexpected decline of approximately 5 million barrels in U.S. distillate inventories, despite market expectations for an increase. This confirms that diesel demand remains resilient even as global economic growth slows.
• Rising diesel crack spreads are becoming a leading indicator of inflation. While this trend has not yet been fully reflected in CPI figures, corporate earnings, or central bank expectations, it is already directly impacting business operating costs.
• The greatest risk of margin compression is emerging for logistics companies, airlines, agriculture, mining, and retail chains operating with long and complex supply networks.

What does this mean?

Real inflationary pressure does not begin when crude oil reaches $100 per barrel. It begins when diesel prices become high enough to fundamentally change the economics of transportation, manufacturing, and global trade.

For traders, monitoring Brent alone is no longer sufficient. Close attention should be paid to the performance of European gasoil and U.S. ULSD relative to Brent and WTI, the IEA's weekly distillate inventory reports, and the earnings releases of the world's largest logistics companies.

Even if crude oil stabilizes in the $70–80 per barrel range, transportation, agriculture, construction, and mining companies continue buying diesel—not Brent. Distillate prices determine the cost of freight transportation, food production, heavy equipment operation, and backup power generation.

A new inflationary wave does not require oil to reach $100 per barrel. It is enough for crude to remain around $75–80 while diesel holds above $130–140 per barrel. Under such conditions, the global economy will be forced to cope with expensive energy even without a full-scale oil market crisis.

For now, the crude oil market appears relatively stable. The diesel market, however, is behaving as though a major disruption is already just around the corner.

So we act wisely and avoid unnecessary risks.

Profits to y’all!