"The old economy is making a comeback!" Former Goldman Sachs commodities head: Fuel shortages are triggering structural inflation.

Brent crude oil broke through $107 a barrel, and diesel crack spreads soared to $110 a barrel—this round of commodity price increases is raising a deeper warning: years of systemic underinvestment in physical commodity production capacity is turning a supply shock into structural inflationary pressures.

Jeff Currie, former head of commodities at Goldman Sachs and now head of Real Macro, said in an interview with CNBC on Thursday that the current surge in Brent crude oil prices is increasingly difficult to characterize as a short-lived shock. He warned that the market is underestimating an inflation cycle driven by a long-term shortage of physical commodities. "The old economy is making a comeback," Currie said. "You're seeing it in the interest rate market, and you're seeing it in the commodities market."

Meanwhile, HSBC’s chief global commodities economist, Paul Bloxham, also warned in a research report this week that a “super squeeze” has begun, echoing Currie’s bullish assessment.

The return of Chinese demand has become the core driver of rising oil prices.

In response to external interpretations that the recent oil price surge is due to escalating conflict in the Gulf region, Currie clearly stated that he places greater emphasis on the resurgence of Chinese demand . He noted that after his trips to Singapore and Hong Kong, he observed strong buying interest from China.

Currie explained that earlier this summer, China reduced refinery operations and cut refined product exports due to tighter access to crude oil, which exacerbated the global supply shortage of refined products. However, unusually high diesel margins subsequently created a strong incentive to restart—refineries gradually resumed production, driving a renewed influx of crude oil demand into an already strained market.

"It was like an earthquake," Currie said. "They started chasing profits, reopening those refineries, and the shock just spread."

Diesel crack spread hits record high, refining profits exceed crude oil prices.

One of the most striking signals in this round of market activity is that the US diesel crack spread has risen to $110 per barrel—a figure that even exceeds the price of crude oil itself. The crack spread measures the profit margin a refinery earns by processing crude oil into refined products, rather than the absolute price of those products.

"That's a considerable profit," Currie said. Such high refining profits are both a direct incentive for the restart of Chinese refineries and a direct reflection of the current imbalance between supply and demand in the physical commodity market.

"This is not temporary": A narrative of structural inflation is taking shape.

Currie points out that this round of Brent crude oil price increases is showing stronger sustainability – both the stock market and forward oil prices are beginning to reflect a more persistent expectation of supply disruptions, rather than short-term shocks.

He traced the root cause of this round of inflationary pressures to years of systemic underinvestment in the production and transportation capacity of physical goods, and argued that this structural contradiction has been reflected in both the interest rate market and the commodity market.

"People are starting to realize this isn't temporary," Currie said. "This time it tastes different."

This assessment is consistent with his earlier summer warnings about scarcity in the physical market and corroborates HSBC's Paul Bloxham's latest warning that a "super squeeze" has begun, both pointing to a forming market consensus: structural shortages of commodities may become an unavoidable variable in future inflation trends.

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