Oil prices slide near pre-Iran war levels – but it could take months for gasoline to fully drop

Oil prices experienced a significant drop of about 10% this week, reaching their lowest point since the start of the Iran war. This decline followed President Trump’s signing of a deal to reopen the Strait of Hormuz. However, the reduction in oil prices may not immediately translate to lower gasoline prices, with experts suggesting that it could take months for gasoline prices to return to pre-war levels.

On Thursday, Brent crude futures fell to $77.18 a barrel, a decrease of 0.1%. The prices had briefly dipped to $75, which is close to the pre-war norm of around $72.50. West Texas Intermediate crude also saw a decline, dropping to $75.78 a barrel.

During the conflict that began on Feb. 28, oil benchmarks had surged to as high as $126 a barrel. The recent decrease in gasoline prices marked the first time in over five months that the national average fell below the $4 mark.

Analysts caution that it may take several months for gasoline prices to stabilize around the mid-$3 range. They predict that gas prices in the US might not drop below $3 per gallon until winter, contingent on the maintenance of the US-Iran peace agreement.

Experts anticipate that it could take up to six months for tanker traffic flows to normalize fully. Additionally, repairs to damaged energy facilities in the Middle East could range from six months to two years.

President Trump’s signing of the US-Iran memorandum of understanding on Wednesday included a commitment to ease sanctions on Iran. However, uncertainties remain following the agreement.

While some energy vessels have started sailing through the strait of Hormuz, experts emphasize that this is just the beginning of a gradual process towards normalization.

There are logistical challenges such as delayed deliveries, production halts, and safety concerns due to potential threats like mines in the strait. These factors could impede the swift recovery of oil and gasoline operations.

The peace agreement between the US and Iran initiates a negotiation period for the two countries to address Iran’s nuclear program. The outcome of these talks could impact the stability of oil prices in the future.

Prior to the agreement, oil inventories were dwindling, raising concerns about a potential resurgence in oil and gasoline prices if hostilities resume.