U.S. and Iran sign interim peace deal, gas slides below $4 as Strait of Hormuz reopens
The United States and Iran signed an interim peace agreement on Thursday, reopening the Strait of Hormuz and pushing the national average gasoline price below $4 a gallon for the first time in months.
Peace deal and Strait reopening
An interim peace agreement between Washington and Tehran took effect on Thursday, ending the war that had choked the Strait of Hormuz and roiled global energy markets since February. The deal allowed Persian Gulf oil supplies to resume flowing through the critical chokepoint, which normally carries about one-fifth of the world’s oil.
The U.S.-Iran interim peace deal took effect and Persian Gulf oil supplies resumed flows.
- U.S. and Israel attack Iran, Strait of Hormuz disrupted.
- U.S. and Iran sign interim peace agreement, oil flows resume.
- U.S. average gasoline price drops below $4 a gallon.
Gasoline prices drop
The U.S. average for a gallon of regular gasoline fell to $3.999 on Thursday, according to AAA, the first time the price has been below $4 since March. A month ago, the average stood at $4.5150. The drop provided some relief ahead of the Juneteenth holiday weekend, but drivers are still paying roughly $1 more than they did before the U.S. joined Israel in attacking Iran in February. Prices remain about 25% higher than a year ago.
- Pre-war (Feb 2026)
- 3 $
- Mid-May 2026
- 4.515 $
- June 18, 2026
- 3.999 $
Broader economic ripples
Brent crude futures ended Thursday near flat at $79.85 a barrel, while U.S. stocks rallied to cap a holiday-shortened week on a high note. The easing of Middle East tensions also pushed the average 30-year fixed mortgage rate down to 6.47%, the lowest in a month. Gold, however, slipped below $4,200 an ounce and headed for a third straight weekly loss as a hawkish Federal Reserve and rate-hike expectations overshadowed the peace relief. Fed Chairman Kevin Warsh vowed to restore price stability after the central bank held rates steady.
Expert warnings
Supply-chain experts cautioned that the sticker shock from the war will persist. Patrick Penfield, a professor of supply chain practice at Syracuse University, said depleted inventories and lingering consequences mean consumer prices will keep climbing through 2026.
Product prices across the United States are projected to keep climbing for the rest of 2026. Farmers already had to pay higher costs for fertilizer in the spring, which will ripple through to increased food prices by autumn.
He also noted that limited U.S. refinery capacity “remains a significant bottleneck” for fuel prices. The war had already pushed overall U.S. inflation to a three-year high, driven partly by gasoline costs that also inflated airline fares and consumer goods like groceries and shoes.
