US gas prices fall below $4 as Iran deal eases oil markets

U.S. gasoline prices fell below $4 a gallon Thursday for the first time in nearly three months, offering drivers some relief after fuel costs surged during the war with Iran and the near-closure of the Strait of Hormuz.

The national average for a gallon of regular gasoline dropped to $3.999, or about $3.99, its lowest level since March 30, according to AAA. Prices remain more than $1 higher than before the war began Feb. 28 and about 25% higher than a year ago, The Guardian reported.

The drop followed a preliminary agreement between the United States and Iran to end the conflict and reopen the Strait of Hormuz, a critical waterway through which one-fifth of the world’s oil supply normally flows. The passage had been virtually closed since the war began, pushing oil and gasoline prices sharply higher.

More ships began moving through the strait after President Trump formally signed a memorandum of understanding Wednesday, CBS News reported, with at least 10 commercial vessels traversing the waterway. The Guardian, citing maritime data from Lloyd’s List Intelligence, reported that major shipowners had begun sending vessels through the strait, though some operators said only more limited side shipping routes were open.

U.S. Central Command said Thursday it had lifted its blockade on all maritime traffic entering and exiting Iranian ports and coastal areas in the Strait of Hormuz. “American forces are not impeding the transit of vessels to or from Iranian ports on the Arabian Gulf and Gulf of Oman,” it said.

Oil prices also eased. Brent crude, the international benchmark, fell Thursday to below $78 a barrel, while the U.S. benchmark dropped to just over $74 a barrel, The Guardian reported. CBS News reported Brent crude sank 1.4% to $78.46 a barrel and West Texas Intermediate fell 2.2% to $75.10. Crude prices remain above the prewar level of roughly $70 a barrel but far below the more than $100 level seen a few weeks ago, according to The Guardian.

Patrick De Haan, a petroleum expert at GasBuddy, said this week that the national average could keep falling “provided there isn’t a drastic reversal and the U.S. and Iran continue moving in a positive direction.” He estimated regular gasoline could fall below $3 a gallon by the end of this year or in early 2027, depending on events in the Middle East.

“One note that could improve the timeline is that Iran is allowed to sell oil on markets again, which could speed up the recovery for global oil inventories,” De Haan told CBS News in an email.

Still, prices vary widely across the country. AAA data cited by The Guardian showed regular gasoline averaged about $5.64 a gallon in California and $5.57 in Hawaii on Thursday, while drivers in Indiana and Texas paid about $3.40 and $3.49, respectively.

The broader economic effects may take longer to fade. The Guardian reported that higher gasoline prices have contributed to rising airline fares and increased costs for consumer goods including groceries and shoes amid global supply chain disruptions. Rising fuel costs have already pushed U.S. inflation to its highest level in three years, the outlet reported.

“Product prices across the United States are projected to keep climbing for the rest of 2026,” Patrick Penfield, a professor of supply chain practice at Syracuse University, told The Associated Press on Thursday, according to The Guardian. Penfield cited depleted inventories, higher spring costs for fertilizer and farm supplies, and limited U.S. refinery capacity as continuing pressures on prices.

Experts also cautioned that maritime traffic through the Strait of Hormuz could take weeks or months to return to prewar levels, The Guardian reported.