Key facts
- US gasoline prices have fallen for three consecutive weeks.
- The national average gas price remains above $4 per gallon.
- A deal to end the war with Iran has been reached, with President Trump announcing the reopening of the Strait of Hormuz.
- Crude oil prices have dropped sharply, with Brent crude trading around $83 and WTI around $80 per barrel.
- The conflict in Iran had previously driven the national average gas price up by as much as $1.50 per gallon.
Gasoline prices in the U.S. have fallen for three consecutive weeks, but the national average remains just above $4 per gallon. This decline follows indications that a deal to end the war with Iran is imminent, leading to a sharp drop in crude oil prices.
President Trump announced on Sunday evening that he was authorizing the reopening of the Strait of Hormuz upon the signing of a deal on Friday. Oil futures prices sank approximately 4% after this announcement, and had already fallen significantly in the preceding days in anticipation of a resolution. By Monday, crude oil prices were down nearly 13% from the middle of the previous week. Brent crude, the global benchmark, was trading around $83 per barrel, while West Texas Intermediate, the U.S. benchmark, was around $80 per barrel. At one point during the conflict, global oil prices had reached $126 per barrel.
While oil prices are still elevated compared to pre-war levels in the $60s, they are now at their cheapest since the early days of the conflict. The war in Iran had previously driven the national average gas price up by as much as $1.50 per gallon. The disruption of traffic through the Strait of Hormuz, which handled about 20% of the world's oil and liquefied natural gas before the war, caused a significant oil supply shock. Experts suggest that while the reopening of the strait will ease inflationary pressures, a full return to pre-war oil supply levels and prices could take months, as some production fields and refineries may have been damaged or taken offline.