$5 Gasoline and Diesel at Record Highs: Oil Prices Continue to Soar

Crude oil prices have been volatile in recent times, with Brent crude touching $110 overnight before slipping back to around $103 by Friday morning. The International Energy Agency warned that soaring fuel costs could trigger demand destruction, causing prices to stay up more than 70 percent this year.

Diesel prices have broken records, reaching a national average of $6.0556 for the first time in U.S. history, according to AAA data released on Friday. This represents a 14 percent increase in just one month and over 60 percent from last year. Regular gasoline sits near $4.27.

Jeff Currie, founder and CEO of Real Macro, who previously ran Goldman Sachs' commodities research desk for over a decade, believes the odds of average U.S. gasoline hitting $5 a gallon before the November midterms are 'extremely high.' He argues that refiners have limited flexibility to shift production between gasoline and diesel, and that the market is nearing its limits.

Currie also thinks diesel could climb to $7 to $9 a gallon before the squeeze eases. He points to Chinese refiners restarting units to chase diesel margins that have blown out to $110 a barrel, more than the price of the crude that feeds them. 'That's a pretty big profit,' he said.