Andrew Keshner and Myra P. Saefong
Stock markets rally on Wednesday, but drivers shouldn’t hold their breath waiting for a return to prewar gas prices
Just before the start of Operation Epic Fury, drivers were paying $2.98 per gallon on average. As of Wednesday, the national average was $4.16, according to AAA and GasBuddy.
Gasoline prices shot up fast as fighting raged in Iran and shipping through a waterway vital to the world’s oil supply slowed to a trickle.
Now pump prices are poised to creep back down in the wake of President Donald Trump’s cease-fire announcement. But drivers shouldn’t expect a snapback to noticeably lower prices, according to experts.
Pump-price relief will be slow even if fighting ends and tanker traffic through the Strait of Hormuz fully resumes – and there are already indications that’s not happening.
Just before the start of Operation Epic Fury, drivers in the U.S. were paying $2.98 per gallon on average. As of Wednesday, the national average was $4.16, according to AAA and GasBuddy.
Drivers eager for lower prices should wait a few days to fill up, Patrick De Haan, head of petroleum analysis at GasBuddy, said on X. Gas stations could raise prices on Wednesday following Tuesday’s jump in wholesale prices, he noted, but by this weekend, prices could decline by 1 to 3 cents per gallon every couple days, his post said.
“Beyond that, ceasefire/what follows will be key,” he wrote.
But there’s a big caveat: “Decreases only last as long as the situation remains positive. Any new escalations or rhetoric can quickly reverse the expected drops,” De Haan told MarketWatch.
Oil prices were plummeting on Wednesday. Crude-oil prices account for half the cost of a gallon of gas.
It usually takes three to five days for oil-price hikes to show up at the pump, according to Pavel Molchanov, an investment strategy analyst at Raymond James. “But unfortunately for drivers, retail gasoline prices tend to be more ‘sticky’ on the way down,” he said.
“Today’s plunge in the oil market should single-handedly shave off $0.45/gallon, implying the national average pulling back to around $3.70,” Molchanov wrote. It will take at least two weeks for that drop to fully show up at the pump, he added.
“As for further declines in oil, that will hinge on the pace of recovery in exports from the Persian Gulf,” he said.
Stock-market investors were acting boldly Wednesday, but that’s in sharp contrast to the early hours of the fragile truce. At one point, investors trimmed some of their gains after an Iranian news report said tanker traffic through the Strait of Hormuz had been halted again amid Israeli attacks in Lebanon. Iran reportedly is hinging its participation in peace talks on an end to the fighting in Lebanon, according to the Wall Street Journal.
A cease-fire deal is a “meaningful deescalation after weeks of active conflict and escalating threats,” Jason Pride, chief of investment strategy and research at Glenmede, said in emailed commentary.
However, questions remain about how the effective blockade of the Strait of Hormuz will change under this agreement and whether Tuesday’s cease-fire will lead to a long-term peace, “leaving significant tail risk on the table heading into negotiations,” said Pride.
If the cease-fire doesn’t hold, oil and gas prices could surge again, said Michael Webber, who leads the Webber Energy Group at the University of Texas at Austin.
Cease-fire announcements and drops in oil futures prices “are not the same as restoring the physical flows, which were disrupted over a month ago because of shipping that came to a halt, production shut-ins, and damage to major energy infrastructure in the Persian Gulf,” Webber said in emailed comments.
Even if the Strait of Hormuz were to fully reopen, it would still take “at least weeks and most likely more than a month to fully restore shipping lanes and maritime traffic,” he said.
He’s expecting the price of gas, along with diesel fuel and jet fuel, to remain elevated “for a while.”
Diesel fuel powers the tractor-trailers bringing produce and goods to stores, while jet fuel is a major cost driver for airfares. The war led to “an unprecedented spike in jet fuel, with prices roughly double what they were earlier in the year,” Delta Air Lines (DAL) CEO Ed Bastian said during a Wednesday earnings call, according to AlphaSense.
Jet-fuel prices have almost doubled since the start of the war, according to the Argus U.S. Jet Fuel Index.
In Wednesday trading, investors cheered Delta’s response to spiking fuel costs along with its travel outlook. Delta owns its own refinery.
If gas prices are slow to fall, airfare prices are even slower, according to Michael Taylor, practice lead for travel at JD Power. “Prices are sticky. They don’t react as fast as you see at a local gas pump,” he said. That’s due to “the economics of running an airline.”
For one thing, major American carriers now buy their fuel at the current spot market prices, instead of buying based on futures prices, Taylor said. Like drivers, the carriers also have to live with volatility and sticky prices, he noted.
It’s too soon to know if the cease-fire will have an impact on summer airfares, he said. “This is like timing the stock market. You can’t really do it.”
For drivers, there are factors beyond the Middle East that will keep gas prices higher for the foreseeable future.
“This is the high season for gas prices, when demand increases as the weather warms up and summer-blend gasoline begins hitting the market, which is more expensive,” said Aixa Diaz, a AAA spokesperson. Pump prices normally peak around July, Diaz said.
Drivers shouldn’t expect a return to prewar prices for the rest of the year, according to Denton Cinquegrana, chief oil analyst at OPIS. (OPIS is a unit of Dow Jones, the publisher of MarketWatch.)
“It will take a while to reverse the moves of the past month,” he said.
-Andrew Keshner -Myra P. Saefong
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04-11-26 1403ET
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