We're Going Towards a Cliff on Oil Says Hochstein
Summary
Amos Hochstein warns of an impending cliff for oil and oil products by the end of the month due to physical shortages. He explains that the paper and physical oil markets are diverging, with physical barrels trading far above paper prices, and tankers are not moving. The shortages will cascade from poor to developed countries, making summer travel very expensive.
- Physical shortages of oil and oil products are worsening and will reach a cliff by the end of the month.
- Brent crude paper price is around $110 but physical barrels are selling for $115-$177.
- Tankers are not moving to Asia or Europe due to ongoing conflicts and lack of true ceasefire.
- Shortages are currently affecting poor countries but will spread to middle-income and developed nations.
- Hochstein expects oil prices to rise as physical market forces converge with paper.
- Jet fuel and diesel will become more expensive, impacting summer travel and driving.
- The speaker also discusses the need for infrastructure investments to bypass the Strait of Hormuz.
Trade Ideas
Physical oil shortages will drive prices higher
Physical shortages of oil and oil products are worsening and will spread from poor to middle-income to developed countries, creating a cliff by end of the month. Tankers are not moving, physical Brent barrels are trading far above paper prices ($115-$177 vs ~$110), and the divergence between paper and physical will likely resolve with physical prices moving higher. This will drive up the cost of crude oil, jet fuel, and diesel, making summer travel and driving very expensive.
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This Bloomberg Markets video, published May 07, 2026, features Amos Hochstein discussing BNO, USO. 1 trade idea extracted by AI with direction and confidence scoring.
Speakers: Amos Hochstein · Tickers: BNO, USO