SouthernWorldwide.com – Energy experts predict that motorists in the United States will continue to face high gasoline prices for several months, even if a peace agreement is reached between the U.S. and Iran and the Strait of Hormuz is reopened quickly.
Patrick De Haan, a petroleum expert at GasBuddy, stated that the normalization of fuel prices is contingent on when maritime traffic resumes through the Strait of Hormuz. He emphasized that even after traffic restarts, a full recovery could take many months, potentially even years.
As of Tuesday, the national average price for a gallon of regular gasoline was $4.29. This is a decrease from the peak of over $4.50 seen in May. Prior to the U.S. and Israel’s actions against Iran in late February, gas prices averaged $2.98 per gallon.
De Haan forecasts that pre-war fuel price levels may not be seen again until mid-to-late 2027. The Strait of Hormuz is a critical waterway, handling approximately 20% of the world’s crude oil and liquefied natural gas supplies. Its strategic importance makes any disruption significant for global energy markets.
While oil prices are expected to drop immediately upon the announcement of a peace deal, gasoline prices will likely decline more gradually. This lag is due to the time required for oil tankers to resume passage through the Strait, for global oil supplies to recover, and for crude oil to be transported to refineries for processing into gasoline and other products.
Jennifer Li, a senior geopolitical analyst at Rystad Energy, explained that even if Brent crude prices fall quickly due to positive sentiment following an agreement, it will take time for tanker traffic to normalize and for refineries to return to full operational capacity.
The Energy Information Administration reports that global oil prices constitute about 57% of the cost of a gallon of gasoline in the U.S. The remaining costs are attributed to refining, federal and state taxes, and distribution and marketing expenses.
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Richard Joswick, executive director and global head of near-term oil analysis at S&P Global Energy, noted that while an agreement would lead to an immediate drop in crude oil prices, this would not be instantly reflected in gasoline prices because the supply situation remains constrained.
Global oil inventories are currently low and will require a significant amount of time to be replenished. This will keep gasoline prices elevated for the foreseeable future, according to Joswick.
Even after the Strait of Hormuz is reopened, oil-producing nations will need several weeks to restart their facilities and reach their usual production levels. De Haan compared this process to filling an Olympic-sized swimming pool using only a garden hose, highlighting the gradual nature of the recovery.
He further elaborated that much of the oil flowing through the strait will be used to meet immediate demand, and it will take longer to rebuild inventory levels. Consequently, it could take months for this oil to reach the market, making this a protracted issue.
The impact of the conflict on consumer prices is already evident. U.S. inflation in April reached an annual rate of 3.8%, the highest since May 2023. This rise in inflation was largely driven by increased energy costs resulting from the Middle East conflict, according to the latest Consumer Price Index report.
Researchers at Brown University have estimated that American households have spent approximately $401 more on average for gas and diesel fuel since the conflict in Iran began.
