The US EIA warns that fuel prices may continue to rise for several months following the reopening of Hormuz.
The U.S. Energy Information Administration warned on Tuesday that fuel prices may 'continue to rise for months after the Strait of Hormuz is reopened,' despite President Donald Trump’s assurances consumers would?see immediate relief once he ends his war with Iran. Oil and fuel prices have soared around the globe as a result of the U.S./Israeli war 'with 'Iran. It is now in its second full month. Iran has blocked vessels from passing the Strait of Hormuz - a major trade chokepoint. Trump's approval rating dropped to new lows when pump prices soared to multi-month levels. He has told Americans repeatedly that sticker shock is temporary.
The EIA (the statistical arm of the U.S. Department of Energy) was less confident in its report on short-term energy forecasts. Fuel prices are affected by a variety of factors, including the length of the Strait of Hormuz closure, and the amount of Middle East oil production that has been halted due to the closure. The agency, however, can only make estimates.
We've never seen the Strait reopen before, just as we never saw it close. "What exactly this looks like is yet to be seen," said the EIA. Trump has given the?Iran a deadline to open the Strait of Hormuz before the end of the day on Tuesday. Trump has threatened that if an agreement isn't reached by Tuesday, "a entire civilization will die tonight."
EIA expects that it will take several months to restore full flow through the Strait of Hormuz, even when the conflict is over. It also expects the uncertainty surrounding future supply disruptions will keep oil prices higher than pre-conflict rates for the remainder of this year.
The EIA's short-term energy forecast series stated that U.S. gasoline prices will likely peak in April at an average monthly price of $4.30 per gallon and average over $3.70 per gallon throughout the year.
GasBuddy data shows that the national average gasoline price in the United States was $4.14 per gallon on Tuesday. This is a record high since August 2022. GasBuddy analyst, Patrick De Haan, said last week that motor fuel prices could rise to $5 per gallon in a few weeks if a plan is not made to reopen Strait of Hormuz.
Diesel prices have risen even faster than gasoline, as the Middle East has been a major supplier of?fuel and crude oil grades which?offer the highest yield after refining.
The?EIA stated that it expects diesel to average $4.80 per gallon and reach a peak of $5.80 in April. According to GasBuddy, the record U.S. average retail diesel price was $5.83 per gallon in June 2022. Shariq Khan, New York; Chizu Nomiyama, editing.
(source: Reuters)
