NEW YORK: Fuel prices could keep rising for months even after the Strait of Hormuz reopens, the U.S. Energy Information Administration said on Tuesday, deviating from President Donald Trump’s assurances that consumers will see immediate relief when he ends the war with Iran.
The U.S.-Israeli war with Iran, now in its second month, has sent oil and fuel prices skyrocketing around the world as Iran has been blocking vessels from crossing the Strait of Hormuz, a key trade chokepoint. Trump, whose approval rating dipped to new lows as pump prices surged to multi-month highs, has repeatedly told Americans that the sticker shocks are temporary.
However, the EIA, the U.S. Department of Energy’s statistical arm, was less certain in its short-term energy outlook report. The trajectory of fuel prices depends on a number of variables, including the duration of the Strait of Hormuz’s closure and the amount of oil production that has been shut in the Middle East due to it, both of which the agency can only estimate, it said.
READ MORE: Oil prices rise as Hormuz stays shut ahead of Trump deadline, strikes on Iran intensify
“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,” the EIA said.
Trump has given Iran an ultimatum to open the Strait of Hormuz by the end of Tuesday. If an agreement is not reached on Tuesday, “a whole civilization will die tonight,” Trump threatened.
The EIA said it expects full restoration of flows through the Strait of Hormuz will take months even after the conflict ends, and it expects uncertainty around future supply disruptions to keep oil prices above pre-conflict levels through the rest of this year.
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