Refineries can switch the mix of fuels they make. They cannot make more of all of them at the same time.
That is the warning Goldman Sachs is sending the rest of the energy market this week.
A barrel of crude gets split at the refinery into different products like gasoline, diesel, jet fuel, and naphtha for plastics. Push the dial toward one and you pull supply away from another.
Right now the dial is being yanked toward jet fuel, with prices up sharply because the war with Iran took Middle East supply offline just ahead of summer travel.
Jerome Dortmans, who runs global oil and products trading at Goldman, said refiners are doing what they always do when prices move: chasing the high margin. In this case, that means cranking up jet fuel output.
The catch is what gets left behind.
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Diesel powers freight, farming, and a big chunk of industrial activity, while naphtha is the feedstock for plastics. Both come from the same crude that gets turned into jet fuel.
Dortmans put it bluntly: solving the jet fuel problem could just push the squeeze somewhere else. The barrel only contains so much.
That means refined fuel prices could stay high this summer even if crude itself calms down, with truckers, farmers, and manufacturers all running on diesel and packaging makers running on naphtha.
The story has shifted. Energy markets started this year worried about a crude shortage - now the worry is the refinery system itself.
Crude prices are not helping, with President Trump and Iran both rejecting the latest peace proposals over the weekend and oil ripping higher Monday morning. Brent settled near $106 while WTI traded around $100, with both grades up more than 4%.
Europe has strategic jet fuel stocks to lean on for a while, Dortmans said, but the rest of the refined fuel market does not have the same cushion.
The peak travel season has not even started.
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