US Gas Prices Drop Below $4 After Iran Deal Reopens Hormuz

American drivers received their first broad relief from elevated fuel costs in months as the national average price for regular gasoline slipped to $3.999 per gallon. The decline followed a US-Iran memorandum of understanding that commits both sides to reopening the Strait of Hormuz, a waterway closed since late February that normally carries roughly 20 percent of global oil and liquefied natural gas shipments.

The American Automobile Association recorded the new national figure on Thursday, the first time the average has fallen below $4 since March 30. GasBuddy placed the average slightly lower at $3.98. Prices had climbed sharply after the strait’s closure, reaching a 2026 peak of $4.564 on May 21 before easing as negotiations advanced. The same data show that 28 states now post averages below $4, with Indiana at $3.40 the lowest and California at $5.64 the highest.

Full consumer relief will take additional weeks. Summer driving demand remains elevated, and Gulf producers that curtailed output during the disruption cannot restore volumes instantly. Brent crude fell below $78 per barrel after the agreement was signed, yet analysts note that retail prices adjust more slowly than futures markets. Americans spent an estimated $46 billion more on gasoline during the period of elevated prices, according to GasBuddy head of petroleum analysis Patrick De Haan.

The memorandum was signed Wednesday by President Trump. Pakistan’s prime minister, Shehbaz Sharif, who mediated talks, stated on social media that Iran would reopen the strait immediately while the United States would lift its naval blockade. Pre-conflict national averages stood near $2.98 in late February; current levels remain about one-third higher despite the recent drop.