EIA Raises U.S. Gasoline Forecast Amid Iran Blockade

The Energy Information Administration (EIA) raised its 2026 U.S. retail gasoline price forecast to an average of $3.88 per gallon, an 18-cent increase over April projections. This adjustment follows an Iranian blockade of the Strait of Hormuz during an ongoing war between Iran, the United States, and Israel. The closure has stranded millions of barrels of Middle Eastern energy exports, causing U.S. fuel prices to reach multi-year highs.

In April, approximately 10.5 million barrels per day of crude oil output from Saudi Arabia, Iraq, Kuwait, the UAE, Qatar, and Bahrain were shut in. This contributed to a projected global inventory drop of 8.5 million barrels per day in the second quarter. The EIA expects traffic to resume gradually in June, though volumes will not reach pre-conflict levels until later in the year.

In a subsequent report, the EIA lowered its 2026 average price for Brent crude to $94.85 per barrel and West Texas Intermediate to $85.68. However, the agency raised its 2027 projections for both benchmarks. Despite the short-term downward revision for 2026, the EIA expects global oil inventories to decrease by 2.6 million barrels per day this year—a sharper decline than the previously forecast 0.3 million barrels per day—which may sustain elevated prices due to continued geopolitical instability.