Hormuz risk cools down, U.S. gasoline prices may fall below the $4 mark, giving consumers a "breather" on fuel prices.

The US-Iran peace agreement is about to be reached, the geopolitical risks in the Strait of Hormuz have significantly cooled down, and international oil prices have dropped sharply. For American consumers, the most direct benefit is seen at gas stations—average US gasoline prices are expected to fall below the psychological threshold of $4 per gallon, finally bringing a “breathing” window after months of high fuel price pressure.

GasBuddy oil analyst Patrick De Haan said after Trump announced the agreement, the average retail price of gasoline across the US is expected to fall below $3.75 per gallon before the July 4th Independence Day holiday. However, he also cautioned that hurricane season and tight global inventories remain major variables, and a full recovery of global oil inventories may take months or even longer.

According to Xinhua News Agency, US President Trump posted on social media on June 14, Eastern Time, stating that the US-Iran agreement “has now been completed,” and he has “authorized” the Strait of Hormuz to “open freely” and the US Navy to immediately lift the relevant blockade. According to Xinhua News Agency citing Iranian media reports, the Iranian Supreme National Security Council issued a statement in the early hours of June 15, formally confirming that a memorandum of understanding for a truce between Iran and the US has been reached.

Boosted by this news, both WTI and Brent crude oil dropped significantly, with a decline of 5%. The market has begun to price in the reopening of the Strait of Hormuz.

High Fuel Prices Hit Consumers Hard, Economic Cracks Start to Emerge

According to the American Automobile Association (AAA), as of Sunday night local time, the national average price for US 87-octane gasoline was about $4.074 per gallon. This price has stayed above the critical psychological threshold of $4 for 76 consecutive days.

This round of fuel price hikes originated from energy supply disruptions in the Gulf region. The spot market was strained, and US authorities were forced to tap into the strategic petroleum reserve for emergency relief. Ongoing high fuel prices have become unbearable for consumers, with working-class families feeling the impact at gas stations most acutely.

Moreover, the effect of high fuel prices combined with the end of the tax refund season has begun to reveal cracks in consumer spending, with lower- and middle-income households being particularly affected. Specifically, there have been changes in consumption behaviors across multiple categories: convenience store foot traffic, beer demand, and sales of leisure snacks have all declined to varying degrees.

Positive Signals from the Strait Emerge, Inventory and Hurricane Risks Remain

Patrick De Haan posted on social media that the next few days will be a critical observation window for the market to confirm whether the agreement can be implemented and whether normal ship passage through the Strait of Hormuz can truly be restored. He pointed out: “There are so many obstacles in this situation, it may be unwise to assume the issue has been fully resolved.”

Currently, there are already positive signals from the Strait. According to Xinhua News Agency, ship tracking data from the international shipping information platform “Maritime Traffic Website” showed that the LNG carrier “DISHA” passed through the Strait of Hormuz into the Gulf of Oman on the 15th. This is the first large-scale energy transport ship to pass through the Strait of Hormuz after the US and Iran reached the agreement.

However, De Haan also noted that even in an optimistic scenario, a full recovery of global oil inventories will take more than several months, and the hurricane season will be a major uncertainty for the rest of the summer. Tight global inventories mean that even if crude oil supply recovers, there will be a lag in price transmission downstream.

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