For the first time since mid-April, the average American is paying less than $4 for a gallon of regular gasoline. The catalyst: a peace deal between the US and Iran that includes the reopening of the Strait of Hormuz to commercial shipping.
The national average dipped to roughly $4.065 per gallon as of June 15, according to GasBuddy and AAA. That’s a meaningful retreat from over $4.50 in May, when the crisis-fueled premium on every barrel of oil was still very much priced in at the pump.
What happened, and why oil markets moved so fast
The Strait of Hormuz, a narrow waterway between Iran and Oman, handles approximately 20-25% of the world’s seaborne oil trade. When Iran initiated a blockade on February 28, the chokepoint effectively became a tourniquet on global supply.
Brent crude had pushed above $100 per barrel in prior months as the blockade strangled supply lines and rattled markets. But the announcement of the peace deal sent crude into free fall. Brent and WTI both shed up to 11%, with Brent settling around $83.85 per barrel by mid-June.
