<div class="grid grid--33-66-col"><div class="col"><img loading="lazy" src="/getContentAsset/061c994a-a452-418f-bfa0-f2cf3cf5c577/cb87803a-320c-480f-ab75-7b9029eaaf79/Ahmad-Al-Sati-new.png?language=en" alt="Ahmad Al Sati - insights" title="Ahmad Al Sati - insights" style="width: 180px" class="fr-fic fr-dii"></div><span style="font-size: 12px"><div class="col"><strong>AHMAD AL-SATI</strong><br><br>PRESIDENT OF GEMCORP CAPITAL ADVISORS LLC, PORTFOLIO MANAGER<br><br>Ahmad Al-Sati is Portfolio Manager of the Gemcorp Commodities Alternative Products strategy (GCAP) and President of Gemcorp Capital Advisors LLC, based in New York. He is responsible for leading Gemcorp’s commodities-focused investment strategy and overseeing the firm’s US advisory platform.</div></span></div><hr><p data-pasted="true">In the Book of Secrets, Al-Razi, a 10th-century Baghdad-based chemist and physician outlined how to distil crude into usable fuel. His method was lab-based and small-scale. As long as wood, coal and whale oil remained cheap and available, no one took it to scale. It was only after the whales started to disappear and oil increasingly became a source of energy that chemists developed industrial cracking, which now allows us to refine hard-to-use crude into fuel.</p><p>The 3-2-1 crack spread approximates refiners’ gross margin by calculating the price delta between crude oil and refined products (two barrels of gasoline and 1 barrel of diesel for every 3 barrels of crude oil). The spread can also signal a stressed fuel market. Normal crack spreads run US$10-US$20/bbl. A crack spread above US$40/bbl. indicates distress. Today, the 3-2-1 crack spread is above US$60/bbl. and the diesel crack spread above US$80/ bbl. (an all-time high).¹</p><p>The market is tight. Since the Middle East conflict began on 28 February 2026, diesel prices have risen 44%. According to Brown University’s Iran War Energy Cost Tracker as of 27 July 2026, the added cost to US consumers has been US$33 billion (US$250 per household) and rises to US$70 billion (US$500 per household) if gasoline is included.² The market has largely shrugged off these increases as gasoline took centre stage and crude prices declined.</p><p>It is true that today cars are more efficient, consumers appear more resilient, and the US economy is less reliant on fossil fuels. Yet, the elevated crack spread is a concern, as such spreads tend to fall more slowly than crude prices. The US is now refining roughly 5 million barrels per day less than six years ago. Russia’s crude processing rates are reportedly at a two-decade low. The Gulf’s refineries are off the market. Despite a fall of roughly 1.2 million barrels per day since 2019 (driven by refinery shutdowns), the US has been able to cover.³ But US refineries are close to capacity. Eventually, these shortages could flow through to the broader economy, curtailing activity and adding to inflationary pressure.</p><p>Although consumers see gasoline prices every time they fill up their car, the impact of higher diesel prices may prove more important. Diesel is a critical fuel. It is essential for shipping and trucking (higher transport prices), integral for mining production (higher metal prices) and necessary for food production (higher grocery bills). Increased operational costs for truckers (20-30% of operating costs), farmers (5-15% of operating costs), and miners (20%+ of operating costs) may cause financial distress that spills over into other sectors.</p><p>Portfolio resilience is key. So is diversification. Yet, the usual diversifiers may not deliver it. Asset-based lending has historically provided diversification benefits. Yet, rising fuel prices can weigh on credit quality and returns if those assets are only trucks or planes. Adding exposure to a broader set of assets and geographies might thus be warranted. Allocators may therefore wish to expand their playbook and look beyond a narrow set of options.</p><p style="margin-left: 0"><br></p><p style="margin-left: 0">Sources:&nbsp;</p><p style="margin-left: 0">¹ RBN Energy (2026). Crack Spreads Soar to Record Highs Despite Higher Crude Prices.</p><p style="margin-left: 0">² Brown University Research (2026). Iran War Energy Cost Tracker.</p><p style="margin-left: 0">³ Forbes (2026). Refining Stocks Soar As Crack Spread Hits Record High In 2026.</p><p style="margin-left: 0"><br></p><p style="margin-left: 0" data-pasted="true"><strong><span style="font-size: 12px">Important Information</span></strong></p><p data-pasted="true"><span style="font-size: 12px">This content has been prepared solely for informational purposes by Gemcorp (as defined below), is confidential and may not be reproduced.</span></p><p><span style="font-size: 12px">This content does not constitute an offer or solicitation of an offer with respect to the purchase or sale of any security and should not be relied upon when evaluating the merits of investing in any securities or form the basis of an investment decision. The information in this content has been obtained from various third-party sources, some of them forward-looking statements and/or projections. 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