The National Energy Assistance Directors Association (NEADA) released a forecast stating that U.S. households using heating oil are expected to see a significant increase in utility costs this winter. The rise in prices is attributed to geopolitical conflicts in the Middle East and Eastern Europe.
Global energy prices have been affected by the war involving Iran and Ukrainian strikes on Russian oil infrastructure. Mark Wolfe, an energy economist and executive director of NEADA, stated that oil flows through the Strait of Hormuz have slowed, contributing to the price increases. Additionally, a drone attack on a pipeline in Saudi Arabia recently disrupted oil flows, according to a report from Eurasia Group.
NEADA estimates that households using heating oil will pay an average of nearly $2,300 between mid-November and mid-March. This represents an increase of more than 30% compared to the previous year. The U.S. Energy Information Administration (EIA) reports that Brent crude, the international standard, was trading at approximately $106 a barrel on a recent Tuesday, a 30% increase since the war erupted in late February.
The day-to-day change for these residents will be reflected in higher bills when heating oil trucks make deliveries or through increased monthly utility statements starting in mid-November. These increases follow a five-year trend where costs for electric-powered heating have risen 35%. NEADA attributes the long-term rise to aging power infrastructure repairs and the expansion of data centers, which place higher demand on the national power grid. The forecast notes that an El Niño weather pattern may bring warmer temperatures, which could partially offset costs by reducing the overall need for heat.
The knock-on effects of these high energy prices impact the broader economy. With Brent crude remaining elevated, supply disruptions from drone attacks and regional warfare continue to dictate market volatility. The forecasted price peak is expected to last through mid-March, with market analysts from Eurasia Group suggesting prices will remain elevated in the near term.