Gas prices – Gasoline’s national average slid to $3.99 on June 18 as U.S. and Iranian officials signed a memorandum of understanding aimed at ending their war. Oil prices also fell, but analysts warn the Strait of Hormuz may not return to normal shipping levels quickly, me
By the morning of June 18, the gas pump had started to look a little less frightening.
The national average for regular gasoline fell to $3.99 a gallon—below $4—for the first time since a jump that had been building over the last three months. It’s down from $4.52 last month, according to AAA, and it arrives just after U.S. and Iranian officials signed a memorandum of understanding meant to end the war between the two countries.
President Donald Trump, speaking during remarks at the G7 Summit, framed the shift as a direct unwind of energy costs. “Now that the oil is coming down, you’re going to see everything follow,” he said. “Everything follows the cost of energy.”
The drop in prices lines up with the market mood. Brent crude oil—used as a global benchmark—fell below $78 per barrel, its lowest level since early March. The war began Feb. 28.
Even with those signs, analysts warn the relief may be gradual rather than immediate—because getting barrels flowing through the Strait of Hormuz, which typically carries 20% of the global oil supply, back to pre-war levels will take time.
Patrick De Haan. head of petroleum analysis at GasBuddy. said in an X post on the evening of June 17 that after 100 days tracking oil’s swings. he hopes “flows will slowly return to normal” and that “the worst is behind us.” In separate posts. he said he expects the national average gasoline price to move toward $3.70 per gallon. “If everything goes well,” he predicted it could fall below $3 per gallon later this year.
That potential matters for a large chunk of Americans. AAA projects 67.2 million people will travel at least 50 miles by car or plane for trips celebrating the Fourth of July. A LendingTree survey published June 15 found 75% of Americans said higher gas and airfare costs had already affected their summer travel plans.
Hope is returning, but it’s not the same as recovery. The University of Michigan’s measure of consumer sentiment rose 9.2% this month after hitting an all-time low in May. While it’s still down 19.4% over the year. Surveys of Consumers Director Joanne Hsu said in a statement June’s spike in sentiment was tied to consumers experiencing relief at the gas pump.
“ We’re coming down from the highs. because with the memorandum of understanding. it looks like the Strait of Hormuz will be open faster than otherwise. ” Wayne Winegarden. a senior fellow in economics at the Pacific Research Institute. said. He added that even if the strait opens sooner than expected. it doesn’t automatically bring prices all the way back to where they were. “That’s providing relief from where we were. but I think it’s very important to recognize that that’s different than getting back to where we were in January.”.
Oxford Economics put the same caution into its own language. In a June 15 research note, the analysts called the agreement between the U.S. and Iran “a significant step. ” but said “there will likely be bumps in the road. ” and that it would still take time for shipping in the Strait of Hormuz to approach pre-war levels.
Trump had promised June 17 that the strait would be opened immediately, but shippers still face obstacles. Insurance costs are high. And there is uncertainty over their ability to travel safely through the waterway where Iran deployed sea mines.
Truist’s Head of U.S. Economics Mike Skordeles pointed to the operational unknowns that can slow the re-start of energy flows. “How wide is the channel is still an open debate. and that’s probably going to take several more weeks to ensure that that’s not a problem. ” he said. He added that Chinese ships managing to traverse the strait would be a key indicator.
Skordeles also described why risk tolerance differs by ship type. “The U.S. Navy — not to say they’re going to take more chances — but they’re not as concerned as. and they’re more sophisticated than. a plain Jane oil tanker from China.” He said that type of tanker “with 2 million gallons of crude oil” would likely be “very cautious.”.
As a result, even if crude prices keep easing, the price at the pump may not move in lockstep. Companies that paid more for crude oil over the past few months are still working through higher-cost inventory. Skordeles said he wouldn’t be surprised if inflation continues to run hot in June. July. August and perhaps even September.
Winegarden echoed the limits of what lower oil can do for everyday affordability. Even if inflation eases, he said it won’t erase the broader gap Americans have felt. “Prices are going to still be above where they were at the beginning of the year. and so that kind of discrepancy. in terms of what the economic news is going to say. but what people are going to feel. I think. is very important to recognize. ” he added.
The immediate story is clear: gas is now below $4 and oil is down sharply from recent highs after the U.S.-Iran memorandum of understanding. But the next chapter may be slower. shaped by shipping logistics. insurance and safety questions in the Strait of Hormuz—and by how quickly higher-cost supplies clear out of the system.
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