When Will US Fuel Prices Fall if Peace with Iran Is Achieved?

There is good news for motorists in the United States. Fuel prices are predicted to continue falling following a tentative agreement between US and Iranian officials to end the armed conflict that has lasted for the past four months. President Donald Trump stated via a social media post on Sunday (15/6/2026) that a deal with Iran had been concluded. A report from the Wall Street Journal also confirmed the statement through Iranian government sources. The announcement immediately sparked market optimism, marked by a surge in stock market futures and a drop in global crude oil prices. “Ships of the world, fire up your engines. Let the oil flow!” Trump wrote in his Truth Social post. Since the conflict erupted nearly four months ago, shipping traffic through the Strait of Hormuz—a vital artery for global oil supply—had almost ground to a complete halt. Although petrol prices are expected to soon fall below the psychological threshold of US$4 per gallon, energy experts are warning consumers not to expect a drastic price drop in the short term. Analysts often refer to this phenomenon as ‘rocket and feather’, meaning petrol prices tend to shoot up like a rocket during a crisis but float down slowly like a feather when the situation improves. According to AAA data on Monday (16/6/2026), the national average petrol price stood at US$4.06 per gallon. Meanwhile, data from GasBuddy showed a slightly lower figure of US$3.99 per gallon. For comparison, a month ago the average price was still at US$4.52, far above last year’s price of just US$3.13 per gallon. Pavel Molchanov, senior investment strategist at Raymond James, explained that a drop in crude oil prices typically takes one to two weeks to be reflected at retail pumps. Conversely, a rise in oil prices only takes three to five days to impact consumer prices. “The signing of the agreement is not the end of everything. This is actually the beginning of a long logistical process to restore oil supply from the Persian Gulf,” Molchanov said. He predicted the national average would fall to US$3.90 within one to two weeks. Patrick De Haan, head of petroleum analysis at GasBuddy, offered an optimistic projection that the national average could reach US$3.75 per gallon by the Fourth of July celebrations. However, he noted that the intensity of the late summer hurricane season could be a major variable that changes the situation. Besides petrol, diesel prices are also beginning to show a downward trend. This provides a tailwind for the macro economy because diesel is the primary fuel for logistics trucks that distribute goods to retail stores. Despite this, analysts doubt that petrol prices will return to pre-war levels (around US$2.98 per gallon) anytime soon in 2026. Andrew Lipow, president of Lipow Oil Associates, said that such low prices would only be possible if the world experienced a severe recession that triggered a drastic drop in demand.