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

The national average price for regular gasoline slipped to 3.999 dollars per gallon on Thursday, the first time it has fallen below four dollars since March 30, according to fresh data from the American Automobile Association. The modest decline of nearly three cents from the previous day follows the signing of a memorandum of understanding between the United States and Iran that paves the way for reopening the Strait of Hormuz.

The agreement, reached Wednesday evening at the Palace of Versailles, commits both sides to restoring commercial traffic through the vital waterway after months of disruption. Iran had closed the strait in late February, choking off roughly one fifth of global oil supplies and driving crude prices sharply higher. GasBuddy recorded an even lower national figure of about 3.98 dollars early Thursday, confirming the trend across twenty eight states where averages now sit below four dollars. Indiana posted the lowest statewide price at 3.40 dollars, while California remained the most expensive at 5.64 dollars.

The drop caps a volatile stretch that began with prices under three dollars in February. Once the strait closed, the national average climbed steadily, cresting at 4.564 dollars on May 21, the highest mark since 2022 and the most expensive average recorded during either of President Trump’s terms. Diesel prices have also eased from recent peaks yet remain above five dollars per gallon, continuing to pressure commercial fleets and rural households.

Analysts note that oil markets reacted quickly to signs of de escalation. Brent crude fell below seventy eight dollars a barrel on Thursday, its lowest level in more than three months. Still, experts caution that full market rebalancing will take time. Gulf producers cut output during the standoff and cannot restart production overnight, meaning pump prices are likely to stay elevated compared with pre conflict levels even after the strait reopens.

The economic strain has already registered politically. Multiple polls conducted at the height of the price spike showed majorities of Americans assigning at least partial blame to the administration for the surge. Affordability ranks among voters’ top concerns ahead of the midterms, and Democrats have begun testing campaign messaging that links the temporary pain at the pump to the decision to confront Iran over its nuclear ambitions. Trump and his allies have countered that the temporary hardship was necessary to prevent a nuclear armed adversary, though consumer sentiment data released this week showed the first improvement in household mood in five months as prices began to retreat.

The University of Michigan’s consumer sentiment index ticked upward alongside the easing at the pump, yet the broader picture remains mixed. A year ago the national average stood at 3.188 dollars, illustrating how far prices have traveled since the conflict began. The latest decline offers measurable relief for drivers filling up ahead of the summer travel season, but it also underscores how quickly global supply shocks can erase earlier gains. With the memorandum now in place, attention shifts to whether the ceasefire holds and whether further price relief materializes before voters head to the polls.