U.S. gasoline prices have fallen below $4 a gallon for the first time since mid-April, as a preliminary U.S.-Iran deal to reopen the Strait of Hormuz promises to restore global oil flows and ease inflationary pressure.
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U.S. gasoline slips below $4 a gallon as Iran deal nears signing
U.S. average retail gasoline prices dipped below $4 a gallon Monday for the first time since mid-April, as optimism over a preliminary U.S.-Iran deal to reopen the Strait of Hormuz sent crude oil lower and raised expectations of restored global supply.
"The bond bid reflects positioning for a BoJ pause," said Takeshi Minami, chief economist at Norinchukin Research.
Brent crude fell more than 3% toward $84 a barrel Sunday after President Donald Trump announced the agreement on Truth Social, calling it "complete" and authorizing the "toll free opening of the Strait of Hormuz" alongside the removal of the U.S. naval blockade. West Texas Intermediate traded near $81. The declines extended a slide that began Friday, when Trump first signaled a deal was within reach and oil fell below $90.
The memorandum of understanding, expected to be signed June 19, would end competing blockades of the Strait of Hormuz — a chokepoint that carried about a fifth of the world's oil supply before the war began in late February. Under the 14-point draft, shipping would resume immediately without tolls and return to prewar levels within roughly 30 days, according to a regional source and a diplomat familiar with the text. The U.S. would lift its naval blockade of Iranian ports, and Iran would receive relief from sanctions targeting its overseas oil sales.
The agreement caps months of indirect negotiations that have dragged on since a ceasefire took effect in mid-April, with intermittent clashes threatening to derail diplomacy. Iran shut the strait shortly after U.S. and Israeli bombardments triggered the conflict, disrupting global energy markets and pushing gasoline prices above $4 a gallon. Treasury Secretary Scott Bessent said the deal would bring lower energy prices for Americans, adding that "the challenging time with gasoline will pass by."
Key details remain unresolved. Iran's Foreign Minister Abbas Araghchi said Tehran intends to charge a service fee for ships passing through the strait and that Iran's "sword will remain poised over the Strait of Hormuz indefinitely." The two sides have yet to finalize terms on Iran's nuclear program — the stated U.S. objective of the conflict — and the release of billions of dollars in frozen Iranian assets. Senator Lindsey Graham warned that any deal allowing Iran to maintain nuclear enrichment capacity would be "awful."
For American consumers, the decline in gasoline prices offers relief ahead of the November midterm elections, where the war has been deeply unpopular. Regular unleaded averaged $3.97 nationally Monday, down from an April peak above $4.30, according to AAA data. Each 10-cent drop at the pump frees roughly $13 billion in annual consumer spending, according to JPMorgan estimates — a potential boost for discretionary sectors if the decline holds.
The reopening of the strait would also ease inflationary pressures that have complicated the Federal Reserve's policy path. The conflict-driven energy shock had pushed headline CPI above 4% in March for the first time since 2023. Lower gasoline prices could give the Fed room to consider rate cuts later this year, with futures markets now pricing a greater probability of easing by September.
This article is for informational purposes only and does not constitute investment advice.
[1] U.S. gasoline slips below $4 a gallon for first time since April[2] U.S.-Iran deal expected to reopen Strait of Hormuz could be signed within days, both sides say - NBC News[3] Proposed Iran-U.S. deal would reopen Hormuz strait and lift oil sanctions, Iran state media says - CNBC[4] U.S., Iran strike deal to reopen Strait of Hormuz, sending oil lower - World Oil[5] U.S., Iran reach peace deal to reopen Strait of Hormuz - World Oil
