Inside today’s Daily Journal…

Editor’s note: In honor of Good Friday and Easter, Porter & Co. will be off tomorrow: But just like Jesus, The Daily Journal and our customer service team will return – on Monday.

The world needs one barrel of this fuel for every three people on Earth, every single day.

It can’t be replaced with any other fuel. And virtually every industrial and agricultural process depends on it.

I’m not talking about oil. Or gasoline.

I’m talking about the fuel that powers every economy on Earth: diesel.

Every day, the world consumes roughly 29 million barrels of diesel and similar gasoil fuels. Global oil demand of all kinds is about 105 million barrels per day. So diesel alone is only about a quarter of that. But it’s the most important fraction. And it’s impossible to replace.

Diesel is no ordinary commodity. It is distilled from crude oil in a precise alchemy that begins when raw barrels – pumped from the deserts of Saudi Arabia, Iraq, and the UAE – are heated in towering refinery columns. Lighter fractions rise first (gasoline and naphtha), followed by the middle distillates boiling between 315°F and 450°F that yield diesel.

Hydrotreating these middle distillates scrubs out sulfur to meet ultra-low-sulfur diesel standards. The result: a dense, high-energy fuel that powers 99% of the heavy trucks, locomotives, ships’ auxiliary engines, farm tractors, mining haulers, and emergency generators that underpin modern civilization.

Virtually every long-haul truck on every continent runs on diesel. Without it, global supply chains seize.

One barrel of crude typically yields about 23% diesel after refining – far more than gasoline in many complex facilities – making it the workhorse of freight, agriculture, and construction.

In large-population economies, the stakes are existential:

If the Strait of Hormuz remains closed, the world’s economy will collapse. And the reason it will collapse is diesel.

In a typical year, New York Harbor ultra‑low‑sulfur diesel trades somewhere in the $2.25 to $3.25 per gallon range. When diesel pokes above $3.50, people in the business start using words like “tight.” On March 20, the price hit $4.71. If you own a trucking fleet, your single largest operating cost just went vertical. The only time prices have ever been higher was at the beginning of the Russian-Ukraine war. The price hit $5.33 on May 11, 2022.

Europe has its own benchmark called ICE Low Sulphur Gasoil. In calm times it trades between $600 and $900 per metric ton. But when Russia rolled into Ukraine in February 2022, that contract raced up, peaking around $1,250. Today, it’s trading over those previous records around $1,400.

Asia is telling the same story. Singapore’s 10‑ppm (parts per million) gasoil, the key reference price for diesel in the Pacific basin, is trading at an all-time high near $200 per barrel, up from $90 pre-Iran-war.

The “crack spread” is the margin a refinery earns for turning crude into diesel. Think of it as the toll the market pays per barrel to get crude oil converted into usable fuel. Normally the crack spread is $15 to $20 per barrel – not a major factor in energy cost. During the worst of the Russia‑Ukraine shock, diesel cracks rose above $50 per barrel.

Today, the crack spread is over $70 per barrel.

Refiners who can still make diesel are being paid three to four times the normal margin, because there’s a global race on to secure diesel.

The world can’t simply replace the Gulf’s heavy oil with more light sweet crude from the U.S. Permian Basin. The crisis isn’t merely geopolitical. It’s a molecular mismatch.

The Gulf’s heavy, sour crude contains more “middle distillate” precursors. Complex refineries use hydrocrackers and delayed cokers to squeeze every drop of energy out of these molecules to create diesel fuel. The Permian’s light sweet crude contains more “light” molecules. When you put light crude into a complex refinery, the machine produces gasoline and naphtha – not diesel. Even if the world’s refineries could run at 100% capacity on U.S. light crude, their diesel yield would drop 20%.

Modern engines require ultra-low sulfur diesel – diesel with less than one ppm of sulfur. Middle Eastern crude oil is “sour” (high sulfur). To “crack” it, complex refineries use hydrotreaters that operate at 800°F and 2,000 psi (pounds per square inch) using massive amounts of hydrogen. These enormous refineries are sized specifically for the sulfur content of the intended crude. When you switch to a different crude grade, the chemical balance of the entire refinery shifts. If the hydrogen plant or the hydrotreater can’t keep up with the new “slate,” the refinery must slow down production or risk damaging the multibillion-dollar catalysts.

The Nelson Complexity Index (“NCI”) is a scale used in the petroleum industry to measure a refinery’s ability to convert heavy crude oil into lighter, high-value products like diesel. This is an objective, short-hand to describe the quality and value of a refinery. They’re like enormous kitchens. A Nelson Complexity Index of 1.0 is describing a microwave. It can heat things up, but that’s about it. A Nelson Complexity Index of 15 is an enormous modern kitchen that feeds an entire cruise ship. It adds tremendous value.

Every time a refinery adds a specialty tool – like a cracker or a coker – it gets extra points. The more expensive and high-tech the tool, the more points it adds to the score.

There are only about 35 refineries in the world that operate at a scale large enough to impact global supplies:

And here’s the real problem.

Of these 35 mega-facilities, nearly half are either located inside the Persian Gulf (Ruwais, Ras Tanura, Al-Zour) or are directly dependent on the Strait of Hormuz for their crude (Jamnagar, Ulsan, Yeosu).

As a result, the global supply of diesel is directly linked to the Persian Gulf and the Strait of Hormuz.

Iran has not just cut off “oil” – it has effectively disabled the world’s most efficient diesel-making kitchens.

We are now relying on smaller, simpler refineries that produce far less diesel per barrel, just as global demand for trucking and shipping fuel is hitting a seasonal peak. This is why the ICE Gasoil crack spread is at a record $66 per barrel (remember, it’s normally $15 to $20): the market is frantically trying to bid for the few remaining molecules of high-quality diesel left.

Even with aggressive rerouting – U.S. Gulf Coast, West Africa, and Brazil are running hard and sending every spare barrel overseas – the world likely ends up short at least 2 million to 3 million barrels per day of diesel versus “normal” needs. That is like erasing the combined diesel output of several Jamnagar‑sized complexes.

The world is about to run out of diesel. This isn’t a hypothesis, a prediction, or a guess. It is a physical reality.

It will start with the poorest countries.

Laos will run out of diesel in three days (on April 5). It has zero refining capacity. It relies on imported diesel from Thailand. Already 40% of its diesel stations are closed. Cambodia and Myanmar will be next (on April 7). Then Bangladesh (April 9).

No one will notice, most likely. But on April 10, Pakistan will run out of diesel. Pakistan is a nuclear power with more than 250 million people.

They have eight days of fuel left.

Unless the Strait of Hormuz is fully re-opened, the world faces the largest humanitarian crisis since the Black Death of 1347-1353.

Tell me what you think of today’s Journal: [email protected]

Good investing,

Porter Stansberry
Stevenson, Maryland

1. The world will soon run on very expensive oil and diesel. Instead of offering an exit ramp for the war, last night President Trump vowed to hit Iran “extremely hard” over the next two to three weeks, with no plan to reopen the Strait of Hormuz. Equity futures immediately turned lower, while energy prices rose sharply… both West Texas Intermediate (“WTI”) and Brent crude oil jumped above $110 per barrel, U.S. average gasoline prices hit a recent high of $4.08 per gallon, and, most concerning, European diesel surged to a record $200-plus per barrel as shortages of the world’s most important transportation fuel (as outlined above) spread west from Asia. The world runs on diesel, and every week the Strait remains closed is another turn of the screw on the global economy.

2. Blue Owl’s private-credit crisis grows. The leading private-credit player was hit with $5.4 billion in Q1 redemption requests – 40.7% of its $3-billion tech-lending fund and 21.9% of its $20-billion flagship fund. In February, Blue Owl fire-sold 34% from one private-credit fund in what analysts called an “orderly liquidation.” Management attributes the surge in redemption requests to “AI-related disruption to software companies.” Contagion risk is spreading – and expect redemption requests to keep piling up.

3. Half of planned U.S. data centers to be delayed or canceled. A shortage of electrical equipment – transformers, switchgear, and batteries – is creating a bottleneck in data-center construction. The U.S. lacks the manufacturing capacity to produce the key parts domestically, forcing reliance on imports. The irony is sharp – AI is repricing the software-as-a-service (“SaaS”) borrower base fast enough to trigger a private-credit crisis, but the physical buildout required to deliver that AI can’t keep pace with demand.

Yesterday, the FDA approved Eli Lilly’s (LLY) GLP-1 weight-loss pill Foundayo. With orders of $25 per month for insured customers set to begin April 6, this move sparked a 5% rally in Lilly shares. Complete Investor recommended Eli Lilly on June 26, 2025… it’s now up 19.52% since then.

Yesterday, we asked Journal readers “How does President Trump end the Iran war?” Survey takers were divided – there was a near-even split between the opposite solutions, with 37% selecting “unilateral withdrawal” and 36% selecting “ground invasion.” Just over a quarter of survey takers (27%) hoped the president would find middle ground, selecting “ceasefire with conditions.”

Kathy D. writes:

​​​​​Porter Comment: Oh no. That’s a risk of letting everyone watch how the sausage is made.

Yes, we’ve been frustrated with Core Natural Resources’ performance. It hasn’t been a good recommendation (it has barely made any money after almost two years!) and it seems to have fundamental management weaknesses.

But… you might have noticed that we’re in the midst of an energy war.

In the end, we decided not to recommend selling it because we were hopeful that higher energy prices would give us a better exit price.

Either way, I don’t think Core Natural Resources (CNR) is a great business – Porter

Steve H. writes:

Christine L. writes:

Porter Comment: Every 10% rise in diesel adds 1.5% to consumer prices within a quarter. If diesel doubles from here (entirely plausible in a genuine global production shortfall), you’re looking at CPI running well into the double digits within a year. Where would interest rates go if the CPI was 10%+ and there’s ongoing war in the Middle East?

In that scenario, I do not believe the existing federal debt can be financed without a technical default.

One-third of all of the outstanding debt held by the public ($10 trillion) must be refinanced by the end of 2026.

The weighted average coupon on this maturing debt is about 2.5%. If it has to be rolled at 8% to 10%, the incremental interest cost is roughly $500 billion to $700 billion per year, on top of the already-$1+ trillion interest bill. Each 100 bps (1% higher rate) adds about $310 billion annually in interest expense. At 10% across-the-board rates, you’re looking at net interest expense approaching $2 trillion to $2.5 trillion per year – within 12 to 18 months. Current federal revenue is $5.6 trillion. If interest alone hits $2+ trillion within 12 months, that’s roughly 40% of the budget going to debt service – just the interest! In this scenario, the dollar collapses as the deficit soars to over 10% of GDP. That’s the end.

There will be a panic to get out of bonds.

In that scenario, the proper allocation is 50% cash (Treasury bills with less than 90 days duration) and 50% gold. Why not 100% gold? Because, in the very short term, gold may end up being sold, heavily, for dollars to meet redemption demands, collateral calls, etc. That’s exactly what happened in the fall of 2008, too.

I want to reiterate that I believe it’s inevitable that the U.S. will default – just as it did in 1933 and in 1971. The only question is when and what will trigger the panic. Soaring diesel prices, an ongoing war in Iran, and rates soaring over 10% would do it. So, for me, if the 10-year cracks 5%… I’m out. The markets will no longer be investable.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current recommendations page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.