Oil prices dip on US-Iran two-week ceasefire. Will gas prices follow?

American consumers are hunting for cheaper gas following President Donald Trump’s announcement of a two-week ceasefire between the United States, Israel, and Iran, contingent on reopening the Strait of Hormuz. 

It’s unclear if they'll find it any time soon.

Pentagon Chief Pete Hegseth told reporters April 8 the American military had “done its part for now,” but “remains ready” to resume fighting if Iran violates the ceasefire agreement. While negotiations take place, Iran has agreed to allow "safe passage" through the waterway that typically carries about 20% of the global oil supply, where nearly all traffic has been disrupted since the start of the war.

"We actually don't know whether the conflict ends, but it's one thing for the conflict to end, it's another for supply chains to be essentially addressed," Bankrate Senior Economic Analyst Mark Hamrick said, adding consumers should not expect to see gas prices fall to pre-war levels right away. "This was an unprecedented interruption in crude oil supplies, and it's not as if one can flip a switch on and off to get all these things moving again."

Fuel prices could continue to rise for months even after the waterway reopens, according to the U.S. Energy Information Administration.

“Just as we had never before seen the strait close, we’ve never seen it reopen,” EIA Administrator Tristan Abbey said in an April 7 statement. “What exactly that looks like remains to be seen. Full restoration of flows will take months.” 

The price of a barrel of Brent crude, the global oil benchmark, was hovering around $109 at the end of the day April 7 before the ceasefire announcement, and plunged to about $92 by the morning of April 8. The price still remains about 26% higher than it was before the start of the war on Feb. 28.

The national average price of a gallon of regular unleaded gas held steady from the day before at about $4.17 on the morning of April 8, according to GasBuddy’s real-time tracker. Patrick De Haan, head of petroleum analysis at Gas Buddy, predicted it could fall below $4 within one or two weeks. 

“Gas prices could start reversing nationally in 48 hours or so  — by a few cents every day,” De Haan said in an X post. "Diesel prices may lag slightly — but where things stand now, diesel is NO longer likely to reach a record."

That scenario would represent welcome relief for consumers, about a third of whom have already adapted their spending or savings habits due to higher gas prices, according to a March LendingTree survey. It found 62% of those with a gas-powered vehicle said their finances would be “significantly altered” if prices remained high for a month or more. 

As retail costs rose unevenly across the country, some California drivers saw gas prices as high as $9 a gallon. According to AAA, regular unleaded is averaging $5.93 in the state as of April 8. AAA's national average for a gallon of regular unleaded gas stands at $4.16, barely changed from $4.14 the day prior, and still up from $3.45 a month ago.

"While uncertainty remains elevated, we view the ceasefire as a constructive step toward ending the conflict in Iran and restoring crude oil flows through the Strait of Hormuz," Brock Weimer, an investment strategy analyst at Edward Jones, said in a note to USA TODAY. "That said, even if traffic resumes, we expect global oil supply normalization to take time, with prices likely to remain elevated relative to pre-conflict levels in the months ahead."

Reach Rachel Barber at [email protected] and follow her on X @rachelbarber_

(This story was updated to add new information)