TLDR
- The national average gas price dropped to $3.999 per gallon, the first time below $4 in two months.
- President Trump and Iran’s President Pezeshkian signed a preliminary peace deal on Wednesday.
- The deal calls for Iran to reopen the Strait of Hormuz in exchange for lifted U.S. sanctions.
- Brent crude fell 1.9% to $78.07 a barrel and West Texas Intermediate dropped 2.5% to $74.13.
- Goldman Sachs expects Persian Gulf oil exports to return to pre-war levels by end of July, though risks remain.
Gas prices at the pump are giving American drivers a break just in time for the Juneteenth holiday weekend.
The national average dropped to $3.999 per gallon, according to AAA. That marks the first time prices have fallen below $4 in two months.
Prices are still about 25% higher than they were a year ago. But the drop of more than 50 cents from the $4.515 average just a month ago is a quick turnaround.
The relief at the pump comes directly from falling oil prices in global markets. Those prices moved sharply after a major diplomatic development.
On Wednesday, President Donald Trump and Iranian President Masoud Pezeshkian signed a preliminary peace agreement. The signing came ahead of the originally planned Friday date.
What the Deal Includes
The 14-point memorandum of understanding sets out a framework between the U.S. and Iran. Under the deal, Iran agrees to reopen the Strait of Hormuz. In return, the United States will lift its blockade on Iranian ports and remove sanctions on Iranian oil sales.
The Strait of Hormuz is one of the world’s most important shipping routes. It normally carries about one-fifth of the world’s daily oil traffic.
Following the announcement, oil prices fell. Brent crude futures, the international benchmark, were down 1.9% at $78.07 a barrel. West Texas Intermediate futures dropped 2.5% to $74.13 a barrel.
However, some questions remain about the deal’s long-term terms. The agreement states there will be “no charge” for commercial ships using the strait for 60 days only. Trump told reporters the waterway would be “toll-free” after that period, but that language was not included in the memorandum.
What Goldman Sachs Is Watching
Analysts at Goldman Sachs expect Persian Gulf oil exports to normalize to pre-war levels by the end of July.
But they also flagged possible obstacles. Analyst Yulia Zhestkova Grigsby wrote in a research note that “many shipowners reportedly remain cautious about clear guidelines for transit.”
She added that risk aversion from shippers, along with Iran’s broader geopolitical goals during the upcoming 60-day nuclear deal negotiations, could slow the return to normal oil flows.
It is not yet clear how quickly tankers will resume regular routes through the strait.
Gas prices in the U.S. are now more than 50 cents lower than they were a month ago, reflecting how quickly global oil market signals can feed through to consumers.
The Juneteenth federal holiday falls on Thursday, June 19, meaning many Americans will be driving this weekend with lower prices at the pump than they have seen since April.
Whether prices continue to fall will depend in large part on how smoothly the Strait of Hormuz reopens and whether the broader U.S.-Iran framework holds.
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