US Gas Prices Dip Below $4 for First Time Since March

The average price of a gallon of regular gasoline in the United States fell below $4 for the first time since late March, reaching $3.999 on Thursday, according to AAA. The decline follows President Donald Trump’s signing of a memorandum of understanding with Iran on Wednesday, which calls for the reopening of the Strait of Hormuz to oil shipments and a permanent end to hostilities.

While the drop offers relief to American consumers heading into the summer travel season, prices remain approximately 25% higher than the same period last year ($3.19) and roughly $1 more per gallon than before the U.S.-Iran war began on February 28, 2026.

Context: The War and the Deal

The conflict, which began when the U.S. joined Israel in attacking Iran, severely disrupted shipping through the Strait of Hormuz — a critical chokepoint carrying roughly 20% of the world’s crude oil. Oil prices surged from approximately $70 per barrel to over $100 per barrel at the conflict’s peak. The war lasted approximately 110 days.

On June 17, Trump signed a 60-day memorandum of understanding with Iran during a dinner at Versailles. Under the agreement, Iran agreed to dilute its stockpile of highly enriched uranium, while the U.S. waived sanctions on Iran, immediately allowing it to sell its oil freely. The deal establishes a 60-day negotiating clock for a final nuclear agreement, though Trump left the door open to resume attacks if negotiations fail.

Key Developments

According to AP News, the national average has now declined for four consecutive weeks, down from $4.52 per gallon in mid-May. Brent crude, the international benchmark, fell below $78 per barrel on Thursday, while U.S. benchmark West Texas Intermediate dropped below $76 per barrel — still above the pre-war level of roughly $70 but far below the $100-plus peak.

Patrick De Haan, head of petroleum analysis at GasBuddy, said in a post on X that after 100 days of tracking oil’s ups and downs, “flows will slowly return to normal” and “the worst is behind us.” He projected the national average could head toward $3.70 per gallon, and if conditions remain stable, it could fall below $3 per gallon later this year.

Major ship owners have begun moving vessels through the Strait of Hormuz since the agreement was signed, according to maritime data from Lloyd’s List Intelligence, though some operators reported that only more limited side routes were open. U.S. Central Command confirmed on Thursday that “American forces are not impeding the transit of vessels to or from Iranian ports on the Arabian Gulf and Gulf of Oman.”

Analysis: Relief, but Not a Return to Normal

Wayne Winegarden, a senior fellow in economics at the Pacific Research Institute, told USA Today that “we’re coming down from the highs” because the Strait of Hormuz will likely reopen faster than otherwise expected. However, he cautioned that “that’s different than getting back to where we were in January.”

Experts warn that inflation pressures will persist for months. Pat Penfield, a professor of supply chain practice at Syracuse University, said product prices across the U.S. are projected to keep climbing for the rest of 2026. He pointed to depleted inventories and supply chain disruptions caused by the war, noting that farmers paid more for fertilizer this spring, which will “ripple through to increased food prices by autumn.” Limited U.S. refinery capacity also remains a significant bottleneck.

Mike Skordeles, head of U.S. economics at Truist, noted that the full reopening of the Strait of Hormuz may take weeks. “How wide the channel is still an open debate,” he said, adding that shipping companies will be cautious about safety risks, including sea mines deployed by Iran.

President Trump struck an optimistic tone at the G7 Summit, saying, “Now that the oil is coming down, you’re going to see everything follow. Everything follows the cost of energy.”

What to Watch

Several factors could influence the trajectory of gas prices in the coming months:

• The 60-day nuclear negotiations: If talks collapse, Trump could resume attacks, sending oil prices soaring again.
• Strait of Hormuz safety: Shipping companies may be slow to return if safety concerns persist, with high insurance costs and sea mines posing ongoing risks.
• Hurricane season: Tropical Storm Arthur and other Gulf Coast storms could disrupt refinery operations.
• Summer demand: Rising gasoline demand during the peak travel season could limit price declines.

AAA projects 67.2 million Americans will travel for the Fourth of July holiday. A LendingTree survey found that 75% of Americans said higher gas and airfare costs have already affected their summer travel plans. The University of Michigan’s consumer sentiment index rose 9.2% in June after hitting an all-time low in May, though it remains down 19.4% year-over-year.

As The Guardian noted, even if oil and other core necessities begin flowing from the Middle East again, the sticker shock is likely to outlast the fighting. For American consumers, the road back to pre-war prices remains long and uncertain.