The Energy Department’s statistics arm on Wednesday sharply raised its forecast for U.S. diesel prices next year, citing tight global supplies that have pushed domestic inventories to unusually low levels.
According to an Axios report, the higher forecast suggests fuel costs in the U.S. could remain elevated well into 2027. President Donald Trump acknowledged Wednesday that oil prices may not fall until after November’s midterm elections.
The escalation of the conflict in the Middle East and Ukraine’s drone attacks on Russian refineries have contributed to rising prices in recent months.
The latest Energy Information Administration outlook expects retail diesel prices to average $4.40 a gallon in 2027, up 33 cents, or 8.2%, from its previous forecast of $4.07. The EIA said in an email Wednesday evening that low distillate inventories are the primary driver of the increase in its 2027 diesel price forecast.
READ: DOE finalizes $1.9 billion loan to restart Iowa nuclear plant backed by Google (September 9, 2026)
The outlook also expects the inventory shortage to be particularly acute this fall and winter as refinery maintenance cuts production just as agricultural and winter demand increases. The EIA also raised its 2026 diesel price forecast by 22 cents to $5.07 a gallon.
“We forecast U.S. distillate fuel oil inventories will drop below 100 million barrels in September and will remain below the five-year (2021-2025) low through much of 2027,” the agency said in a statement.
“Tightness in the global distillate market has raised domestic prices and incentivized U.S. exporters to increase distillate exports,” it added.
“We assume global production of distillate fuel will remain below last year’s levels in the coming months, contributing to low U.S. diesel inventories and high diesel prices,” the agency said.
Trump said Wednesday that oil prices would start “tumbling downward” after the election, but that it would take longer for consumers to see relief.
READ: U.S. DOE Appoints Three Indian-Americans to Key Advisory Roles (February 5, 2026)
“I think for gasoline, we’ll get them below $2 a gallon. But not until after the midterms,” Trump said.
The comments mark a shift from Trump’s previous statements that oil prices would fall “precipitously” after the U.S. wins the Iran war and that the decline would happen “quickly.”
Before the Iran war, the EIA expected diesel prices to average $3.47 a gallon in 2027, which is 93 cents lower than its latest forecast.
The Axios report noted that the EIA updates its outlook monthly and that its forecasts are subject to frequent revisions as market conditions and underlying assumptions change.
The Iran war has led to a sharp rise in energy costs in the U.S. A recent study by Brown University’s Watson School of International and Public Affairs estimates that Americans have paid nearly $100.8 billion to date in additional gasoline and diesel costs. The figure is increasing by roughly $1 million every two minutes.