US drivers face long-term pain at pump, analysts say; Trump bets they are wrong

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WASHINGTON – US President Donald Trump and congressional Republicans are betting the oil-price shock sparked by the Iran crisis will be too short-lived to hurt them politically in November.

Traders and industry analysts, however, see signs that US pump prices will stay painfully high long after any diplomatic breakthrough.

Oil prices have surged as the conflict disrupted global supply. US crude topped US$100 (S$128) a barrel for the first time since the 2022 Russia-Ukraine shock. US diesel climbed above US$5 a gallon (about 3.8 litres), its highest since late 2022.

The disruptions stem, in large part, from Iran’s effective blockade of the Strait of Hormuz, the chokepoint through which roughly a fifth of global oil normally flows.

Mr Trump has repeatedly said the higher energy costs are a small price to pay for neutralising Iran. He again predicted on March 17 that energy prices would “drop like a rock” after the conflict ends.

But oil futures, government forecasts and seasonal summer demand point to elevated crude and petrol prices persisting even if tensions ease, analysts warn, noting that energy costs tend to fall slower than they rise.

“It’s going to take time for those prices to come back down,” said Mr Matt Smith, an analyst at energy consultant group Kpler.

If fuel costs stay high through the summer, voters could blame Mr Trump’s Republican Party for straining household budgets and punish its candidates in November’s midterm elections.

Polls show voters are worried about the cost of living. Affordability is the key issue for Democrats, who are within reach of getting a majority in the House of Representatives and narrowing Republicans’ margin of control in the Senate.

Mr Trump has long used social media and the White House megaphone to shape the political narrative, but petrol prices are hard to spin, said Professor Chris Borick, a pollster who teaches political science at Muhlenberg College in Pennsylvania.

“It’s the most in-your-face reminder of affordability concerns, and it’s almost impossible to convince voters of some kind of contextual case that outweighs their emotional reaction,” Prof Borick said.

White House spokeswoman Taylor Rogers said Mr Trump has been “right about everything”, and oil prices are no different.

“Once the military objectives of Operation Epic Fury are completed and the Iranian terrorist regime is neutralised, oil and gas prices will drop rapidly, potentially even lower than before the strikes began,” Ms Rogers said.

Signs point to higher for longer

The US Energy Information Administration sharply raised in March its outlook for crude and fuel prices.

It now projects Brent crude will average about US$79 a barrel in 2026, up 37 per cent from a prior forecast of US$58, while US retail petrol is expected to average US$3.34 a gallon, up nearly 15 per cent from its prior estimate.

For 2027, the revised government forecasts put global crude prices about 22 per cent higher and US petrol prices roughly 8.4 per cent higher than previous projections, underscoring expectations that tighter supplies and geopolitical risks could keep energy costs elevated for years.

Oil futures markets tell a similar story, with contracts for delivery well into 2027 trading above levels seen earlier in 2026.

US crude futures have averaged US$68.10 a barrel so far in 2026 but are expected to average US$85.25 for the remainder of 2026 and US$71.35 in 2027, according to LSEG. That compares with an average of about US$64.70 a barrel in 2025.

Ms Florence Schmit, an energy strategist at Rabobank, said any normalisation would be gradual.

“Even if they signed a peace deal tomorrow, it would take months before we see a full resumption of traffic and energy flows,” she said, adding that prices could ease to the mid-to-high US$70s by end-2026.

US drivers are feeling the impact.

The national average for regular fuel climbed on March 17 to US$3.79 per gallon from US$3.54 a week ago and US$2.92 a month ago, according to industry data.

Prices are up sharply from US$3.08 a year earlier, reflecting broader inflationary pressures in energy markets and tighter crude supplies.

Since the conflict began on Feb 28, Mr Trump has reviewed a range of options to ease price pressure, with chief of staff Susie Wiles taking a lead role in the effort.

The administration has already taken several steps to blunt the supply shock and stabilise global markets, including easing certain sanctions on Russian energy exports to bring additional crude to the market and joining allied nations in a historic, coordinated release of strategic petroleum reserves.

The US release of roughly 200 million barrels from its Strategic Petroleum Reserve is expected to occur over several months, limiting its immediate impact on prices. REUTERS