Iran’s chokehold on the Strait of Hormuz in its ongoing war with the US and Israel has upended global energy markets as millions of barrels per day of Middle Eastern energy exports have been stranded, flaming concerns of fuel shortages around the world. In the US, prices for gasoline, diesel and other fuels have hit multi-year highs, posing a major political challenge for President Donald Trump just months ahead of midterm elections in November.
The US Energy Information Administration now expects US retail gasoline prices to average $3.88 a gallon this year, about 18 cents more than its prior forecast issued in April, according to the agency’s monthly short-term energy outlook report.
The forecast assumes that the Strait of Hormuz will be effectively closed through late May, before a gradual reopening starts next month, the EIA said. Traffic through the Strait of Hormuz, which prior to the war amounted to a fifth of global oil supplies, is not expected to return to pre-conflict levels until later this year, the EIA said.
Some 10.5 million barrels per day of crude oil output was shut in during April collectively from Iraq, Saudi Arabia, Kuwait, the UAE, Qatar, and Bahrain, the EIA said.
Global oil inventories are set to fall by an average of 8.5 million bpd in the ongoing second quarter, keeping Brent crude oil prices near $106 a barrel in May and June, the EIA said.
