Physical oil prices have reached record highs near $150 per barrel as an escalating conflict involving Iran raises concerns about global energy supply disruptions. The Strait of Hormuz, a critical shipping route for global oil supplies, remains a focal point of the crisis.

The Energy Information Administration has significantly revised its oil price forecasts upward, raising its 2026 Brent crude projection to $96 per barrel from a previous $79 forecast. West Texas Intermediate crude is now expected to average $87 per barrel, up from the March outlook of $74 per barrel.

Gasoline prices in the United States are averaging above $4 per gallon nationally, with analysts warning that prices could approach $5 per gallon if the Strait of Hormuz remains closed. Diesel prices have set new records in six states, according to AAA data, as the conflict continues to impact fuel markets.

The aviation industry is experiencing significant strain from rising jet fuel costs. Major airlines have reduced flight schedules and increased ticket prices in response to supply concerns and elevated fuel expenses related to the ongoing Middle East conflict.

OPEC oil output fell by its largest amount in decades last month due to the war, according to industry surveys. Middle East oil production is projected to drop by 9 million barrels per day, creating substantial supply shortages in global markets.

Even if the Strait of Hormuz reopens, the EIA warns that fuel prices could continue rising for months. The uncertainty has prompted inflation expectations to jump, according to Federal Reserve surveys, as businesses and consumers brace for potentially prolonged energy market disruptions.