NEED TO KNOW

• Hochstein says oil and oil products hit a "cliff" by end of May 2026.
• Brent's listed price diverges from real barrels selling above $150.
• Hormuz remains effectively closed since late February despite "Project Freedom."

LOS ANGELES, CA (TDR) — Amos Hochstein, former senior Middle East advisor to President Biden, told Bloomberg at the Milken Institute Global Conference that global markets are heading toward "a cliff on oil and oil products by the end of this month," with the supply bite deepening every day.

The big picture: The warning lands with the US-Iran ceasefire on its 10th week of fragility, the Strait of Hormuz effectively closed, and global oil supply running roughly 14 million barrels per day below pre-war levels.

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• The International Energy Agency estimates the conflict is removing around 14 million bpd from global supply.
• Brent crude trades near $100, but Hochstein told Middle East Eye that "$110 of Brent oil is only available on a Bloomberg terminal. You can't buy that barrel. That barrel of Brent oil is selling for $150."
• Sri Lanka has reportedly paid as high as $286 per barrel, according to HSBC's CEO cited in the same interview.

Why it matters: The pain is already real for energy-poor countries, and Hochstein argues it's marching toward American consumers in stages.

• The US national average gasoline price hit $4.48 a gallon, up from $2.98 pre-war, and could reach $5 if Hormuz stays closed into June.
• "We have physical shortage already, but it's just in countries we don't care about," Hochstein said. "Then it goes to Japan and Korea, and then it comes here."

Driving the news: President Trump's "Project Freedom" initiative, launched May 4 to escort commercial ships through Hormuz, has so far moved only a fraction of normal traffic.

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• Only four ships crossed the strait on day one, versus the pre-war average of 120 per day.
• Iran responded with drone and missile attacks on the UAE and commercial vessels in the strait.
• US Defense Secretary Pete Hegseth insisted the ceasefire holds, citing two US commercial ships transiting under military protection.
• Hochstein told CNBC that another round of US-Israeli strikes on Iran is "very likely" before any durable deal, a scenario investors are underpricing.

What they're saying:

• Amos Hochstein, former Biden Mideast Advisor — "The Strait of Hormuz is under Iranian control forever. Nobody in the market should look at what the deal says eventually and believe it on the straits."
• Mike Wirth, Chevron CEO — "I think as people look at the realities of very tight supplies, it's not just a question of price."
• Donald Trump, US President — "If Iran agrees to give what has been agreed to, the US naval blockade of Iranian ports in the Gulf of Oman would allow the Hormuz Strait to be OPEN TO ALL."

Yes, but: The "cliff" framing assumes the current trajectory holds, and it may not.

• Iran is still reviewing the US memorandum to end the war, with a response expected via Pakistan within days.
• Goldman Sachs estimates global oil stocks remain at roughly 101 days of demand, falling to 98 by end of May, above emergency thresholds.
• Hochstein himself is now Managing Partner at TWG Global, an investment firm with positions exposed to energy market outcomes.

Between the lines: The Hochstein quote that should travel furthest is the one about who feels the shortage first. Markets aren't priced for what's already happening in Sri Lanka, Vietnam, and Thailand. They're priced for when it reaches Japan, Korea, and the US. That ordering implies the West will spend the next 60 to 90 days believing the crisis is contained while it isn't, then react in panic when its turn arrives. The administration's "Project Freedom" framing leans on the appearance of throughput rather than the volume of it. Four ships through Hormuz versus 120 isn't a reopening. It's a press release.

What's next:

• Iran's response to the US memorandum, expected within days through Pakistani channels.
• Whether Project Freedom escort operations meaningfully scale beyond single-digit daily transits.
• US gasoline price trajectory through Memorial Day and the start of summer driving season.

Is this a supply crisis the administration can negotiate its way out of, or one priced in months ago that no deal reverses on the timeline voters are watching?

Sources

This report was compiled using reporting from Bloomberg, Middle East Eye, CNBC, CNN, Al Jazeera, and Trading Economics.

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