Federal Reserve Bank of Richmond President Thomas Barkin said on Thursday that it could take several months for gas prices to fall once the Strait of Hormuz reopens. The waterway handles roughly 20% of global oil flows, with traffic severely restricted by Iran since the start of the war on February 28.
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A permanent loss of supply and damage to infrastructure in the Middle East could limit how quickly production recovers, keeping prices elevated even after Hormuz reopens.
EIA Sees Slow Recovery, Says Gas Prices Likely Peaked
The U.S. Energy Information Administration (EIA) echoed Barkin’s claim, forecasting that a complete recovery could take several months. “Just as we had never before seen the strait close, we’ve never seen it reopen,” said the EIA. “What exactly that looks like remains to be seen.”
Still, the agency believes the monthly average gas price has already peaked and expects it to average just over $3.70 for the full year. The average price currently stands at $4.56, up from $2.98 at the start of the war on February 28.