Will the Iran ceasefire quickly ease U.S. gas prices? Here’s what experts think.
Following a last-minute truce between the U.S. and Iran, tensions have eased between the two countries. However, Americans may not see immediate relief from the high fuel costs that have led to soaring gasoline prices, according to energy experts and economists.
Patrick De Haan, a petroleum expert at GasBuddy, suggests that prices at the pump could begin to drop as early as this weekend, although the decrease may be minimal at first. He anticipates that the national average could potentially fall below $4 per gallon in the coming weeks.
Currently, the national average for a gallon of regular gas stands at $4.16, a significant increase from $2.98 just before the U.S. and Israel’s attack on Iran in late February. Some states have even seen prices exceed $5 per gallon, with diesel averaging $5.67.
De Haan cautions that any decline in gas prices could reverse quickly if the ceasefire agreement is compromised. “If there’s an abrupt halt or re-escalation, the decreases will stop, and prices could start to trend back up again.”
Global oil prices have dropped to below $95 a barrel, down from their levels prior to the ceasefire but still higher than the $65 to $75 range seen before the conflict in late February.
Bernard Yaros, lead U.S. economist at Oxford Economics, believes that if the ceasefire holds, gas prices may stabilize or decrease further. However, he emphasizes that the global energy market’s perception of safety in the Strait of Hormuz will play a crucial role in determining future price trends.
The situation in the vital Persian Gulf waterway remains precarious, with Iranian media outlets reporting a suspension of tanker traffic through the strait and contemplation of withdrawing from the deal with Washington over Israeli attacks in Lebanon. White House press secretary Karoline Leavitt has denied reports of the strait being closed.
Mark Zandi, chief economist at Moody’s Analytics, predicts that if oil prices stabilize around $90 per barrel, gas prices could retreat to around $3.75 per gallon in the near term. He anticipates oil prices to drop to $80 per barrel by the end of the year, with U.S. gas prices hovering around $3.50 per gallon.
Zandi notes, “I don’t think there is any going back to sub-$3 gallon for a while. Prices go up like a rocket, and they come down like a feather.”
