The federal government’s energy forecasters expect fuel prices to climb sharply this year as the war with Iran keeps oil from flowing freely through the world’s most important shipping lane. The U.S. Energy Information Administration laid out the outlook in its monthly Short-Term Energy Outlook, released June 9.

The agency expects the global oil benchmark, Brent crude, to average around $105 a barrel through June and July, assuming the Strait of Hormuz stays largely closed to shipping in the near term. It projects the wholesale price of gasoline will rise by about 50% in 2026 compared with the agency’s pre-conflict forecast from February, with diesel and jet fuel up more than 60%.

Those are wholesale figures, the prices charged before fuel reaches the corner station, but they flow straight to the pump. Drivers have already felt it. The national average for a gallon of regular gasoline jumped well above $3 this spring as the conflict disrupted oil supplies, and the government’s forecast suggests relief is not coming soon.

The cause traces back to the Strait of Hormuz, a narrow waterway between Iran and Oman that carries roughly a fifth of the world’s oil. The agency assumes shipping through the strait stays effectively closed in the near term, with traffic only beginning to resume in the third quarter of 2026 and not returning to normal until early 2027. Until those flows recover, the world is short of oil, and shortages push prices up.

There is a path back down. Once oil moves through the strait again and producers restore output, the agency expects Brent to fall to an average of $79 a barrel in 2027. But that depends entirely on the war winding down, which remains uncertain after fresh U.S. strikes on Iran this week.

The strain is showing up in America’s emergency reserves. The Strategic Petroleum Reserve, the nation’s backup supply of crude, has been drawn down sharply since the conflict began and is heading toward its lowest level since the early 1980s. That cushion helps soften price spikes, but it cannot be drained indefinitely.

For households, the effect goes far beyond the gas tank. Energy is woven into the price of nearly everything. When fuel costs rise, it costs more to grow food, manufacture goods, and truck them to stores. That is why energy did most of the damage in this week’s inflation report. The Bureau of Labor Statistics said consumer prices rose 4.2% over the past year, the fastest in three years, and that energy alone accounted for more than 60% of the monthly increase.

Small businesses feel it acutely. Delivery companies, contractors, landscapers, and anyone who runs a fleet of vehicles watches fuel costs eat into already thin margins. Many face a hard choice between absorbing the expense or raising prices on customers who are themselves stretched. Farmers face higher costs for diesel and fertilizer, much of which is tied to energy prices, which can ripple forward into grocery bills.

The travel industry is caught too. Airlines just cut their global profit forecast in half, blaming the same jump in fuel costs. Higher pump prices also weigh on summer road trips, a staple of the warm-weather economy, as families recalculate whether the drive is worth it.

The forecast itself carries a clear caveat: it assumes the strait stays disrupted. Energy prices have been less explosive than some feared, in part because traders have found workarounds and quiet routes to keep some oil moving. But the government’s central expectation is for elevated prices to persist through the year, easing only when the conflict does.

For now, the message to consumers and business owners alike is to plan for higher fuel costs through the summer and beyond. The next monthly energy outlook is due July 7, and it will show whether the war, and the prices it is driving, are getting better or worse.

JBizNews Desk — Energy

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