The average price of a gallon of gasoline fell to $4.06 on Monday following President Trump’s announcement that the United States and Iran had reached an agreement to end hostilities and reopen the Strait of Hormuz.
U.S. gas prices rose sharply after the United States and Israel started bombing Iran on February 28, rising from less than $3 a gallon on average to a peak of $4.56 in the third week of May, per AAA. Prices have moved lower since then, falling for three straight weeks as oil prices retreated.
With crude oil prices moving toward multi-month lows, the downward trend in gas prices could continue. U.S. crude futures slipped below $80 a barrel on Monday for the first time since early March, according to CNBC, while Brent crude futures fell to roughly $83.
The road to even lower prices for oil and gas could be long and bumpy, though. There are still questions about the details of the agreement between the United States and Iran, with officials from each country making conflicting statements about possible tolls for crossing the Strait of Hormuz. Even if the agreement rolls out smoothly and as promised, energy experts have warned that it could take months for oil to begin moving normally again. According to CNN’s David Goldman, futures indicate that traders don’t expect crude oil prices to fall below $70 per barrel until 2031.
Dan Pickering, chief investment officer at Pickering Energy Partners, told CNN that gas prices probably aren’t headed back to their pre-war levels. “We’ll figure out what the new normal is,” he said. “But it isn’t going to be $2.85 gasoline.”