Patrick De Haan, head of petroleum analysis at GasBuddy, said the national average gasoline price in the United States could “start reversing nationally in 48 hours or so, by a few cents every day,” adding that prices could fall below four dollars per gallon within one to two weeks. He cautioned, however, that his projections were “tentative based on current markets” and that “changes are highly likely as the situation unfolds.”
The announcement came hours before a White House deadline was due to expire, following days of escalating rhetoric over potential military action and control of the Strait of Hormuz.
Oil Slides Sharply as Markets Respond to Pause in Fighting
The price of US crude oil fell more than 15% to around $95 per barrel on Wednesday morning, according to NBC News, a dramatic reversal after it had traded as high as $117 on Tuesday. US crude remains up more than 65% since the start of the year, and more than 40% since hostilities began on 28 February, when the US and Israel launched strikes on Iran in what was designated Operation Epic Fury.
Stock futures responded in kind. S&P 500 futures rose more than 2.7%, Dow futures spiked by over 1,100 points, and Nasdaq 100 futures climbed 3.5%. Markets in Asia and Europe followed suit, with Japan’s Nikkei 225 rising 5.5% and Europe’s Stoxx 600 gaining 3.8%.
The Strait of Hormuz, a narrow waterway that ordinarily carries more than 20% of the world’s daily oil supply, had been effectively closed to marine traffic since early March, as tankers avoided the corridor amid drone strikes and military threats. Iran’s foreign affairs minister, Seyed Araghchi, said on Wednesday that safe passage through the strait would be possible for two weeks “via coordination with Iran’s Armed Forces,” though the precise conditions attached to that passage remained unclear.
Fuel Costs Remain Elevated Despite Ceasefire Optimism
Despite the market relief, fuel prices remain at historically elevated levels. According to AAA, the national average price of petrol in the United States stood at $4.164 per gallon as of Wednesday morning, the first time it has exceeded four dollars since 2022. In Hawaii, California, Nevada, Oregon and Washington, average prices have surpassed five dollars per gallon.
Diesel prices, at $5.64 per gallon, are approaching their all-time high of $5.82 recorded in 2022. De Haan noted that diesel “may lag slightly” in its recovery, predicting prices could fall below five dollars within six to eight weeks.
Neil Roberts, head of the Lloyd’s Market Association, welcomed the ceasefire from an insurance standpoint but struck a note of caution. “Time will tell whether it is a pause or a peace but, in the meantime, it is highly unlikely that trade into the Gulf will simply resume,” he said, noting that the region “remains at heightened risk with none of the underlying tensions resolved.” The White House has said negotiations will continue, with press secretary Karoline Leavitt stating that the announcement represented “a workable basis to negotiate.”
