Fuel prices are expected to remain elevated for several months even after the Strait of Hormuz reopens, the U.S. Energy Information Administration (EIA) indicated on Tuesday. This outlook contrasts with President Donald Trump’s assurances that consumers would experience immediate relief once the conflict with Iran concludes.
The ongoing U.S.-Israeli confrontation with Iran, now entering its second month, has caused oil and fuel prices to surge globally. Iran’s blockade of the Strait of Hormuz—a critical passage responsible for transporting one-fifth of the world’s oil and gas—has significantly disrupted supply. Despite Trump’s repeated promises that the spike in pump prices would be short-lived, the EIA’s latest short-term energy outlook presents a more cautious perspective.
The agency raised its forecast for the global benchmark Brent crude oil spot price to an average of $96 per barrel this year, up from its previous estimate of $78.84. It also anticipates continued increases in retail gasoline and diesel prices. The EIA explained that even after the war ends, fully restoring oil flows through the Strait of Hormuz will take months, keeping prices high until normal production resumes among Middle Eastern suppliers.
“We have never before witnessed the strait’s closure, nor its reopening. What that process will look like remains uncertain,” the EIA stated. Meanwhile, President Trump has issued stark warnings to Iran, demanding the reopening of the Strait of Hormuz by Tuesday, threatening catastrophic consequences if his demands are not met. Indirect negotiations between the U.S. and Iran, facilitated by Pakistan, have yet to yield any agreement.
The EIA noted it maintains a risk premium on crude oil prices throughout the forecast period due to ongoing uncertainties about future supply disruptions, which are expected to keep prices above pre-conflict levels.
In a significant development for U.S. consumers, the EIA projects that retail gasoline prices will peak at a monthly average of $4.30 per gallon in April and remain above $3.70 per gallon for the entire year. As of Tuesday, the national average stood at $4.14 per gallon, the highest since August 2022. GasBuddy analyst Patrick De Haan warned that prices could surpass the June 2022 record of $5.017 per gallon within weeks if the Strait of Hormuz remains closed.
Diesel prices have surged even more sharply, reflecting the Middle East’s role as a major supplier of both diesel fuel and crude oil grades that produce high diesel yields. The EIA expects diesel prices to peak at a monthly average of $5.80 per gallon in April and average $4.80 per gallon for the year. Diesel reached a peak of $5.82 per gallon in June 2022 following Russia’s invasion of Ukraine, and as of Tuesday, the average price was $5.65 per gallon.
Meanwhile, the EIA has revised downward its forecast for global oil demand growth, halving its previous estimate due to reported fuel shortages in some regions and government measures to reduce fuel consumption and exports. Global oil demand is now projected to increase by about 600,000 barrels per day to 104.6 million barrels per day, compared to an earlier forecast of 1.2 million barrels per day growth this year.
The agency highlighted that demand reductions are expected mainly in Asia, which relies heavily on Middle Eastern crude supplies. However, oil demand is anticipated to rebound next year, with growth averaging 1.6 million barrels per day as supply flows normalize later this year.
