Driving to a gas station to fill up your car’s gas tank is becoming less and less painful by the day.
But not painless. Not yet anyway.
Gas prices in most parts of the U.S. fell below $4 a gallon for the first time since late March and have fallen an average of about 13 percent since peaking at about $4.57 in mid-May. AAA And Gas buddy
A cease-fire between the U.S. and Iran taking effect at the end of the week and the prospect of the Strait of Hormuz reopening next month or so should mean: lower oil prices and lower gas prices ahead.
The U.S. national average was about $3.95 a gallon on June 18, according to GasBuddy. The AAA estimate was $3.999.
GasBuddy’s lowest statewide average was $3.382 in Indiana. The state with the lowest AAA value was also Indiana, with an estimate of $3.399.
According to both AAA and GasBuddy, the most expensive states are still Hawaii, California, Washington, Alaska (all above $5 per gallon) and Oregon.
So how low can retail prices go?
Maybe up to $3.50 in the next few weeks Crude oil John Kilduff, a veteran oil and gas trader in New York, says the price has fallen to $68 a barrel. It doesn’t matter if you’re watching Gas buddy or AAA Fuel Prices.
raw settled at $76.60 per barrel. On June 18. Kilduff chose $68 as a possible landing point because that is essentially where it settled before the first missile attack on Iran on February 27.
RELATED: Goldman Sachs quietly resets oil price forecast for 2027
But there’s also a good chance they could go much lower. AAA data shows a national price of $2.839 on December 31, 2025. GasBuddy’s year-end price was $2.82.
So, in practical terms, this is what we are talking about. At $3.50 per gallon, a 15-gallon fill could cost you $52.50.
Here’s how it compares.
Using the June 18 price of $3.96 per gallon, your cost would be $59.40. (In California it would be $84.)
Assuming a peak May price of $4.56 per gallon. Cost to fill 15 gallons: $68.40. (About $91.60 in California)
Assuming the price was $2.84 on December 31, 2025, the cost to fill would be $42.60. (California’s average was close to the national average, according to Gas Buddy data.
So, yes, lower gasoline prices will make sense for anyone who needs a motor vehicle to get to work, take the kids to school, do routine shopping, take the family on vacation.
However, low oil and petrol prices will not please investors. They have already seen the stocks of oil companies such as Chevron, ExxonMobil and Shell plummet.
Will that be all?
Maybe to some extent. Kilduff says history says that a sudden price shock that hits a sharp peak, suppresses demand, and then falls sharply.
If you want some history, check out what happened in 2022. Oil prices rose after Russia invaded Ukraine. AAA’s average gas price increased, reaching $5.016 per gallon on June 14, 2022.
By September, the price had fallen 23.7 percent to $3.829 and ended the year at $3.195. That was down more than 36 percent from June’s peak.
Gas prices fall in 2023, 2024 and 2025.
What changed in 2026: US-Israel war with Iran.
And what happens in the coming months will tell whether Kilduff and others are right.
To begin with, the Strait of Hormuz must reopen. Before the war, about 120 tankers a day passed through the strait, distributing approx. 20% of the world’s crude oil to global markets.
It will take time for the strait to open. “The backlog of stranded ships and the need for crew changes and rest means shipping patterns will not return to normal for weeks, if not months.” The Wall Street Journal noted. On June 18
Iran will have to remove the mines and move its ships to the sidelines.
Finally, most, if not all, countries on the Persian Gulf have had to shut down production, or military strikes have damaged facilities. They must also restore their wells and processing facilities to pre-war levels. They can’t do that unless the ships carry their own oil, liquid natural gas and fertilizer components. This may take time.Experts told Fortune magazine.
Ships are waiting to pass through the Strait of Hormuz. Getty Images Shady Alasir Anadolu / Getty Images
The perils of this pleasant scenario
In a word: many, including:
The war may not be over. Israel and Hezbollah were at war on June 18, and a team led by Vice President J.D. Vance met in Switzerland to negotiate with Iranian officials. was canceled very suddenly Because of renewed fighting between Israel and Iran’s Lebanese ally Hezbollah.
Russian oil exports have been affected. Taking more Russian oil off the world market will likely push up oil prices, Kilduff says. This could happen as Ukraine continues to attack Russian oil production and distribution facilities. It was Ukraine. Able to attack an oil refinery this week.
Restocking strategic reserves will take time and money. Many countries, including the US and China, used their reserves of petroleum products to cushion the blow from supply shortages and sharply rising prices. Once satisfied that global oil markets are stable, they can begin rebuilding their reserves. This may put upward pressure on prices, The BofA report argues that.
A rising dollar reflects the effects of a huge federal deficit on bonds and interest rates. If left unchecked, rising rates will impact oil and gas production, not to mention housing. Retail sales and the economy.
RELATED: Dallas Fed president takes reality check on oil markets
