Gas prices could start falling within days, but ceasefire wild cards remain

The two-week ceasefire between the U.S. and Iran caused oil prices to plummet on Wednesday, meaning American drivers should see lower gas prices down the road.

Patrick de Haan, who tracks prices for Gas Buddy, said on social media Wednesday that gas prices could still rise at midweek but should start easing after 36 hours or so, resulting in a drop of 1 to 3 cents each day by the weekend.

Beyond that, analysts said any decreases would depend on what happens overseas.

“It will certainly depend on whether or not the ceasefire holds, and it’s still very early given that it was just implemented in the last 24 hours,” said Caleb Jasso, a senior policy adviser at the Institute for Energy Research, on Wednesday.

One major factor will be the actual volume of oil traffic that flows through the Strait of Hormuz, which Iran agreed to reopen for two weeks as part of the deal with President Trump, who agreed to pause strikes on the Islamic republic.

Maritime traffic through the strait appeared to increase on Wednesday, the first day of the ceasefire, but the uptick was mild, and countries were still working through issues, such as the degree of Iranian control over the strait and whether the country could charge tolls.

There were reports that Iran would re-close the strait because Israel kept up its attacks on Iran-backed Hezbollah in Lebanon.

As it stands, Mr. de Haan said the national average price for gasoline in the U.S. could fall back below $4 within one to two weeks.

The national average price of gasoline was slightly below $3 per gallon when Mr. Trump launched the military operation against Iran on Feb. 28.

Iran responded by attacking energy sites in Gulf states and choking off the strait, a critical waterway for oil exports in the region. The supply squeeze caused oil prices to spike.

Crude oil is the primary ingredient in gasoline, so any increase or decrease in crude prices means ups and downs at the gas pump.

The national average price per gallon stood at $4.14 on Wednesday. Yet word of a two-week pause in the fighting immediately caused crude oil prices to fall below $100 per barrel.

The AAA motor club, in response to an inquiry from The Washington Times, said it is difficult to predict how fast gas prices will fall, given the number of variables at play.

While oil prices have dropped to around $90 a barrel, it is uncertain how long that will last, given the fluid geopolitical situation. The price of Brent crude oil was more than $110 per barrel in the days before the ceasefire.

Also, gas prices tend to rise when demand increases around the spring and summer travel period, which could counteract decreases related to the ceasefire.

“When the price comes down, it will be noticeable, but it’s still going to be higher than it would be throughout other parts of the year, given that it is a high-travel season,” Mr. Jasso said.

Analysts warned that gas prices tend to fall more slowly than they rise when supply shocks occur, as businesses within the supply chain protect against losses or factor in future costs due to another disruption.

Any decrease in gas prices, however, would ease some political pressure on Mr. Trump as the midterm campaign season heats up.

Mr. Trump likes to boast about how gas prices fell during his second term from the sky-high levels they reached during the Biden administration, including an all-time high national average of $5.02 in June 2022.

At the same time, Mr. Trump and his top lieutenants said some short-term pain from high oil and gas prices had been expected. They believe it will be worth the long-term gain from peace in the Middle East.

Prices will “come down more than anyone understands” once the war is over, the president said in early March.