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

Americans are finally getting some relief at the pump after months of punishing prices triggered by the clash with Iran. The national average for regular gasoline slipped to 3.999 dollars a gallon on Thursday, according to AAA data, marking the first time it has fallen below four dollars since March 30.

The decline follows the signing of a memorandum of understanding between the United States and Iran that reopens the Strait of Hormuz. President Trump put his name to the agreement Wednesday evening at the Palace of Versailles during a working dinner in France. The waterway, which carries roughly one-fifth of global oil supplies, had been shut down by Iran in late February, choking off shipments and driving crude prices sharply higher.

GasBuddy recorded an even lower national figure near 3.98 dollars early Thursday. Twenty-eight states now sit below the four-dollar mark, with Indiana posting the lowest average at 3.40 dollars. California remains the outlier at 5.64 dollars. Prices began their descent after Memorial Day, falling 52 cents over the past month from a 2026 peak of 4.56 dollars reached on May 21.

The spike traced directly to the Hormuz closure. Oil markets moved in tandem with each escalation and de-escalation, pushing Brent crude above 100 dollars at times before easing on signs of a breakthrough. Diesel prices, still above five dollars nationally, have also retreated from their recent highs.

For millions of drivers the damage was immediate. Families absorbed the higher costs during the spring and early summer, with polls showing widespread frustration over affordability. The University of Michigan consumer sentiment index improved only after prices started easing this month. Trump and his team have argued that confronting Iran was necessary to block a nuclear threshold, yet the temporary pain at American filling stations proved steep.

The new understanding restores shipping through the strait and halts active hostilities. Even so, analysts note that full market rebalancing will take time, as production cuts by Gulf suppliers cannot be reversed overnight. Crude has already fallen below 78 dollars a barrel following the announcement.

The episode underscores how quickly distant conflicts translate into higher costs for ordinary households. With midterm elections approaching, voters will remember the months when filling the tank required an extra stop at the ATM. The Versailles signing may mark the formal end of one crisis, but the economic aftershocks linger.