Global fuel prices are likely to remain elevated for months even if the Strait of Hormuz reopens, contradicting assurances from United States President Donald Trump that consumers would see rapid relief once the conflict with Iran subsides, according to new U.S. government forecasts.
In its latest short-term energy outlook, the U.S. Energy Information Administration said the restoration of oil flows through the strategic waterway would be gradual and uncertain, keeping upward pressure on crude and refined fuel prices well beyond the end of hostilities.
The assessment underscores the lag between geopolitical events and retail fuel costs, as well as the structural dependence of global markets on Middle Eastern supply.
The warning comes as the U.S.–Israeli war with Iran enters its second month, with Tehran continuing to block the Strait of Hormuz, a chokepoint through which roughly one-fifth of global oil and gas supplies transit.
The disruption has driven sharp increases in energy prices worldwide and injected sustained volatility into oil markets.
The EIA now expects Brent crude to average US$96 a barrel in 2026, up from a prior forecast of $78.84, reflecting what it describes as a persistent “risk premium” tied to supply uncertainty.
“We expect uncertainty around future supply disruptions to keep prices above pre-conflict levels,” the agency said.
Even in a scenario where the strait reopens quickly, the EIA said supply chains would take months to normalise.
Oil production across the Middle East would need to recover, shipping schedules would have to stabilise, and inventories would need to be rebuilt before prices ease materially.
“What exactly that looks like remains to be seen,” the agency noted.
Retail fuel prices in the U.S. are already approaching recent peaks.
According to AAA data, the national average for petrol reached $4.14 a gallon this week, the highest level since August 2022.
The EIA forecasts a monthly average peak of $4.30 in April and an annual average above US$3.70.
Diesel, which is more directly tied to Middle Eastern crude grades, is expected to peak at $5.80 a gallon, with an annual average of $4.80.
Independent analysts warn that the upside risk remains significant.
Patrick De Haan of GasBuddy told Reuters that prices could exceed $5 a gallon within weeks without a clear reopening plan, potentially surpassing the June 2022 record.
The impact is extending beyond fuel markets.
The EIA has halved its global oil demand growth forecast for 2026 to 600,000 barrels per day, citing fuel shortages and policy efforts to curb consumption.
Total demand is now projected to reach 104.6 million barrels per day, down from earlier expectations of 1.2 million barrels per day growth.
Economists say the effects will be felt across supply chains, particularly in fuel-importing economies such as Australia.
David Ubilava, an associate professor at the University of Sydney, expects higher fuel costs to flow through to transport, processing and storage, lifting prices for groceries and other goods over the coming months.
While petrol prices may begin to ease once the conflict ends, the decline is likely to be gradual and incomplete, he added, with inflationary pressures persisting.
Shipping delays and the time required for crude to be refined and transported to end markets mean retail prices typically lag wholesale movements by weeks or months.
Financial markets are already adjusting expectations.
According to Ubilava, anticipated interest rate increases have risen as central banks respond to the inflationary shock, compounding cost-of-living pressures for households.
The EIA expects oil demand growth to rebound to 1.6 million barrels per day in 2027 once supply stabilises but warns that ongoing geopolitical risk could keep prices structurally higher than pre-conflict levels.
