Fuel Prices to Stay High for Months Despite Potential Peace Deal, Experts Warn

Consumers should brace for persistently high fuel costs for several more months, even under optimistic scenarios involving a US-Iran peace agreement and the swift reopening of the Strait of Hormuz. Oil market specialists warn that the path to normalization will be lengthy.

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It all depends on when the ships start transiting the Strait of Hormuz.

Patrick De Haan, an oil expert at GasBuddy, explained that the timeline for recovery hinges on when shipping traffic resumes through the vital waterway. "If that happens, it will be a very long process, from several months to several years, until the situation completely normalizes," he told CBS News.

In the United States, the average price for a gallon of regular gasoline stood at $4.29 on Tuesday. This marks a decrease from over $4.50 in May but remains substantially elevated compared to the $2.98 per gallon average recorded just before the conflict involving Iran escalated in late February. De Haan predicts that pre-conflict price levels might not be seen again until mid-to-late 2027.

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If that happens, it will be a very long process, from several months to several years, until the situation completely normalizes.

The Strait of Hormuz, a critical strategic chokepoint, accounts for approximately 20% of the global crude oil and liquefied natural gas supply. Even if an agreement to end the conflict is announced, a rapid drop in oil prices is unlikely. The time required for tankers to resume passage, for global oil reserves to replenish, and for crude oil to be transported to refineries for processing into gasoline, diesel, and other products means prices will decline more slowly.

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We will not see those levels until possibly mid-to-late 2027.

According to the Energy Information Administration, global oil prices constitute about 57% of the cost of a gallon of gasoline in the US. The remaining costs are attributed to refining, federal and state taxes, and distribution and marketing expenses. De Haan likened the process of reactivating production facilities and resuming normal output levels to filling an Olympic pool with a garden hose, emphasizing that most of the oil flowing through the strait will meet immediate demand, with reserve recovery taking additional time.

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Most of what comes through the strait will be used to meet demand. Reserve recovery will take longer.