MW Here's when gas prices will come down if the U.S. deal to end the Iran war pans out

Andrew Keshner

The average retail gasoline price was just above the psychologically significant $4-per-gallon mark on Monday

Get ready to pay less at the pump - but how much less, and when?

Drivers can expect cheaper gas prices in the wake of a tentative deal between U.S. and Iranian officials to end the Iran war.

Although gasoline prices could drop below the psychologically crucial $4 per-gallon mark soon, drivers shouldn't bank on deeper price cuts coming quickly after that.

Instead, they should prepare for gradual price drops. That's because gas prices tend to shoot up like a rocket and float down like a feather, energy experts say.

President Donald Trump said in a Sunday social-media post that a deal with Iran was complete, and the Iranian government, the Wall Street Journal reported, provided confirmation. The White House has said the deal will be signed Friday.

Since the conflict started nearly four months ago, shipping traffic through the Strait of Hormuz has been at a virtual standstill. The strait is a vital shipping channel for the world's oil supply as well as other cargo.

"Ships of the World, start your engines. Let the oil flow!" Trump wrote Sunday on a Truth Social post as stock-market futures soared and oil prices fell.

The cost of oil contributes to over half the cost of a gallon of gas, according to the U.S. Energy Information Administration.

Gasoline prices tend to shoot up like a rocket and float down like a feather, energy experts say.

The national average price for a gallon of gasoline was $4.06 on Monday, according to AAA. Prices had already been sliding in anticipation of a deal. A month ago, the average price was $4.52, according to AAA. A year ago, it was $3.13 per gallon.

A different look at prices from GasBuddy showed a national average of $3.99 per gallon on Monday.

The next couple of days will be critical in determining whether the pact holds up, said Patrick De Haan, head of petroleum analysis at GasBuddy. If signs are good, the national average could "continue to fade," he wrote on X on Sunday in the wake of the peace-deal news.

Related: It could take years for oil prices to return to $67 a barrel. Here's why.

In an "optimistic timeline," the national average price could be $3.75 per gallon by the Fourth of July, he wrote. The intensity of hurricane season later in the summer could be a major variable, he added.

The cost of diesel fuel is also dropping, De Haan noted. That's a win for consumers, because that fuel category powers the tractor-trailer trucks and other types of transportation infrastructure that move goods to stores.

Other factors also serve as complication that could slow price cuts at the pump. On the supply chain, there's damage to Middle Eastern energy infrastructure, as well as cautious insurers that will charge more to cover ships and cargo.

At U.S. gas stations, there's seasonally higher demand for gas during the summer, which tends to elevate prices. Gas-station owners will be slow to lower prices until they deplete inventory they purchased at higher prices.

When oil prices increase, it typically takes three to five days for retail gasoline prices to go up, said Pavel Molchanov, a Raymond James senior investment strategist focused on energy. When oil prices decrease, in contrast, it takes between one and two weeks for gas prices at the pump to reflect the oil-price move, Molchanov said.

"Once there is a deal signed, that is not the end of the road. That is actually the beginning of a lengthy logistical process of restoring the oil supply from the Persian Gulf," Molchanov said in a Friday interview.

Oil prices have tumbled in the wake of the news of the apparent progress toward peace. The West Texas Intermediate contract for July delivery (CL.1) (CLN26) has fallen by more than 5% to $80.30 a barrel.

Based on the oil-price drops that have already happened and positive signs that markets were already seeing, the national average gas price should drop to $3.90 per gallon in the next one to two weeks, Molchanov said. "Anything that happens to the price of oil in the next week or later, that will be reflected at the pump, really, into July," he added.

In early April, prices crossed the $4-per-gallon threshold. Just before the U.S. and Israel attacked Iran in late February, drivers were paying $2.98 on average, according to AAA.

Molchanov said he doubts drivers will see prewar prices return this year. Others agree that $2.98-per-gallon gas prices won't be back in 2026. And if that did happen, it could be troubling, because it would signal fast-slowing demand, said Andrew Lipow, president of Lipow Oil Associates, a Houston consulting firm.

"The condition for it to happen would be the world goes into recession," because it could not absorb the energy-price shock, he told MarketWatch in late May.

Drivers are hoping price cuts materialize sooner than later. Gas costs are important for consumers' moods and budgets. As prices at the pump have gone up, people have put less fuel in their tanks and sought out the cheapest gas, corporate earnings show. Consumers have also dipped into emergency savings to cover gasoline costs.

In addition to the question of when drivers will see lower prices, there's also the question of where that will happen.

The arrival of a tanker truck to refill a gas station's supply is when owners lower their prices, Lipow said. Major gas stations with large volumes get fresh supplies each day, he noted, while smaller stations might get new supplies somewhere between every five and 15 days.

That means big-box retailers and grocers with major gas-station operations, like a Costco $(COST)$ and Walmart $(WMT)$, will likely drop their prices faster than smaller retailers, Lipow said. Those large retailers typically already offer cheaper-than-average gas.

Costco has chalked up a win from Americans' hunt for pump-price bargains. The company reported record demand for gas in its most recent quarter.

See also: This is as good as it gets for gas prices, new Goldman Sachs oil analysis suggests

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-Andrew Keshner

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June 16, 2026 11:41 ET (15:41 GMT)

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