The White House says oil prices will fall soon, but the EIA immediately 'poured cold water': they expect prices to keep rising for at least several months

The U.S. Energy Information Administration (EIA) released its latest Short-Term Energy Outlook on Tuesday, stating that even if the Strait of Hormuz reopens,international crude prices and U.S. refined fuel prices could continue to rise over the coming months, which sharply contrasts with U.S. President Trump'spublic assurancesTrump had said that consumers would soon see prices fall after the U.S.–Iran conflict ended.

The U.S.–Iran conflict has now entered its second month, with Iran blocking the Strait of Hormuz — a global energy chokepoint through which roughly one-fifth of oil and gas trade is transported — directly driving international oil prices sharply higher. U.S. gasoline prices have climbed to multi-year highs, contributing to a drop in Trump's approval ratings, and he has repeatedly stressed to the public that the price increases are only temporary.

EIA raises oil-price outlook; supply restoration will take time

In the report the EIA sharply raised its oil-price forecast, revising its 2026 global Brent crude spot average from$78.84 per barrel to $96 per barrel, and forecasted that U.S. retail gasoline and diesel prices willcontinue to rise.

The EIA noted that even if the conflict ends and the strait reopens, it will take months for Middle Eastern oil producers' logistics and output to fully recover, and prices will remain elevated in the meantime. The agency said that because uncertainty over supply disruptions persists, crude prices will carry a long-term risk premium and remain above pre-conflict levels.

Signs of easing in U.S.–Iran tensions

According to reports,the U.S. and Iran have accepted Pakistan's ceasefire proposal.Pakistan had earlier asked the U.S. to extend the “deadline” by two weeks and urged Iran to temporarily open the Strait of Hormuz for two weeks as a goodwill gesture.

On Tuesday morning local time, Trump issued an ultimatum to Iran, demanding it open the strait that day or face severe consequences.

U.S. refined fuel prices set to peak

The EIA predicts U.S. retail gasoline prices will peak in April at$4.30 per gallonwith the annual average exceeding $3.70 per gallon. According to the American Automobile Association (AAA), as of Tuesday the national average gasoline price had reached$4.14 per gallon, a new high since August 2022.

GasBuddy analyst Patrick De Haan warned that if the strait remains closed, gasoline prices could break through$5 per gallon, potentially setting a new record above the June 2022 high of $5.017 per gallon.

Diesel price increases are more pronounced; the EIA expects diesel to reach$5.80 per gallonat its peak in April, with an annual average of $4.80 per gallon. AAA data show the current U.S. diesel average has reachedUS$5.65/gallon, approaching the historical peak of US$5.82/gallon in June 2022.

Conflict drags down global oil demand

Affected by supply disruptions and fuel shortages in some regions, the EIA halved its 2026 global oil demand growth forecast to600,000 barrels per day, bringing total demand to an estimated 104.6 million barrels per day, far below the prior expectation of 1.2 million barrels per day. The demand decline is mainly concentrated in Asian regions with higher dependence on Middle East crude.

The EIA also expects that, as supplies normalize later, global oil demand will rebound significantly in 2027, with a potential daily increase of1.6 million barrels per day.