The U.S. Energy Information Administration (EIA) forecasts that energy prices will remain elevated throughout 2025 due to severe oil supply disruptions from the Middle East conflict and the closure of the Strait of Hormuz, with full recovery not expected until late 2026.
EIA Raises Price Forecasts for 2026 and 2027
The EIA has substantially increased its projections for oil, gasoline, and diesel prices for the coming years. The agency now anticipates that gasoline prices will peak at $4.30 per gallon in April 2025.
Historic Supply Disruption Details
- The conflict has prompted Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, and Bahrain to collectively shut in an estimated 7.5 million barrels per day of crude oil production in March 2025.
- This supply disruption is expected to intensify in April 2025, rising to 9.1 million barrels per day.
Recovery Timeline and Assumptions
The EIA's outlook assumes the war will not extend past April and that traffic through the Strait of Hormuz will gradually resume. However, the agency cautions that Middle East oil production will not return to pre-conflict levels until late 2026.
Tristan Abbey, EIA administrator, emphasized the uncertainty: "Just as we had never before seen the strait close, we’ve never seen it reopen. What exactly that looks like remains to be seen. Full restoration of flows will take months."