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

The national average price for regular gasoline fell to 3.999 dollars per gallon on Thursday, according to data from the American Automobile Association. That marks the first time the figure has slipped under four dollars since March 30 and the fourth consecutive week of declines. Fuel costs have dropped 52 cents per gallon over the past month alone.

The move follows the signing of a memorandum of understanding between the United States and Iran that commits both sides to reopening the Strait of Hormuz. President Trump signed the agreement on Wednesday during a dinner at the Palace of Versailles. The waterway, which carries roughly one fifth of global oil supply, had been closed since late February when conflict between Washington and Tehran escalated. Shipments through the strait were largely blocked by early March, cutting off a major artery for crude and liquefied natural gas and driving benchmark prices sharply higher.

GasBuddy recorded an average near 3.98 dollars early Thursday, with twenty eight states now reporting statewide averages below four dollars. Indiana posted the lowest figure at 3.40 dollars. California remained the most expensive state at 5.64 dollars. Diesel prices have also eased from recent peaks but continue to average above five dollars nationally.

The price spike that followed the strait closure was steep. The national average climbed above four dollars in late March and reached a 2026 high of 4.564 dollars on May 21. Crude oil prices moved in tandem with developments on the ground, rising on reports of military action and falling when negotiations appeared to gain traction. Brent crude settled below 78 dollars a barrel on Thursday after the memorandum was announced.

Even with the extended ceasefire now in place, analysts expect pump prices to remain above pre conflict levels for some time. Gulf producers that curtailed output during the disruption cannot restore full capacity immediately, and inventories built during the blockade will take months to clear. The University of Michigan consumer sentiment index showed its first improvement in five months as gasoline costs began to moderate, yet the overall economic mood among households remains fragile.

The episode has already carried political consequences. Multiple polls conducted while prices were rising found that majorities of Americans assigned at least partial responsibility to the Trump administration for the surge. Administration officials have argued that the temporary hardship was necessary to prevent a nuclear capable Iran, but Democrats have seized on the affordability issue ahead of the midterms. The timing of the price drop may blunt some of that messaging, though the underlying volatility in energy markets is likely to remain a recurring campaign theme.

For American drivers the relief is tangible but incomplete. A year ago the national average stood at 3.188 dollars. The gap illustrates how quickly external shocks can erase earlier gains and how long it can take for supply chains to stabilize once those shocks subside.