American consumers are hunting for cheaper gas following President Donald Trump’s announcement of a two-week ceasefire between the United States, Israel, and Iran, contingent on reopening the Strait of Hormuz.
It’s unclear if they’ll find it any time soon.
What Happened to Oil Prices?
Pentagon Chief Pete Hegseth told reporters April 8 the American military had “done its part for now,” but “remains ready” to resume fighting if Iran violates the ceasefire agreement. While negotiations take place, Iran has agreed to allow “safe passage” through the waterway that typically carries about 20% of the global oil supply, where nearly all traffic has been disrupted since the start of the war.
But fuel prices could continue to rise for months even after the strait reopens, according to the U.S. Energy Information Administration.
“Just as we had never before seen the strait close, we’ve never seen it reopen,” EIA Administrator Tristan Abbey said in an April 7 statement. “What exactly that looks like remains to be seen. Full restoration of flows will take months.”
The price of a barrel of Brent crude, the global oil benchmark, was hovering around $109 at the end of the day April 7 before the ceasefire announcement, and plunged to about $92 by the morning of April 8. The price still remains about 26% higher than it was before the start of the war on Feb. 28.
When Will Gas Prices Drop?
The national average price of a gallon of regular unleaded gas held steady from the day before at about $4.17 on the morning of April 8, according to GasBuddy’s real-time tracker. Patrick De Haan, head of petroleum analysis at Gas Buddy, predicted it could fall below $4 within one or two weeks.
“Gas prices could start reversing nationally in 48 hours or so — by a few cents every day,” De Haan said in an X post. “Diesel prices may lag slightly — but where things stand now, diesel is NO longer likely to reach a record.”
How Consumers Are Affected
That scenario would represent welcome relief for consumers, about a third of whom have already adapted their spending or savings habits due to higher gas prices, according to a March LendingTree survey. It found 62% of those with a gas-powered vehicle said their finances would be “significantly altered” if prices remained high for a month or more.
As retail costs rose unevenly across the country, some California drivers saw gas prices as high as $9 a gallon. According to AAA, regular unleaded is averaging $5.93 in the state as of April 8. AAA’s national average for a gallon of regular unleaded gas stands at $4.16, barely changed from $4.14 the day prior, and still up from $3.45 a month ago.
Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_
This article originally appeared on USA TODAY: Oil Prices Dip on US-Iran Two-Week Ceasefire. Will Gas Prices Follow?
Reporting by Rachel Barber, USA TODAY / USA TODAY
USA TODAY Network via Reuters Connect
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