US gasoline prices sank for the sixth consecutive week, down 14% from their peak in May, after President Trump signed a tentative peace deal with Iran – even as negotiations over a nuclear agreement remained heated.
National average gasoline prices hit $3.93 a gallon Tuesday, according to AAA – down 11 cents over the past week, and a far drop from their peak of $4.56 in May.
Prices plunged in most states, including New York and New Jersey, which each saw gasoline fall 12 cents over the past week – hitting $4.22 and $3.96 a gallon, respectively, according to AAA.
Oil benchmarks have also fallen below the $80 mark – far below highs of $126 a barrel during the war.
Lower gasoline prices could help the GOP hold onto narrow majorities in midterm elections, as Americans have repeatedly cited affordability issues as a top concern.
They could also help ease inflation, which shot above 4% for the first time in three years due to surging energy prices.
But analysts have warned it will likely take months before gasoline prices fully drop below $3 a gallon – and prices could easily reverse course if fighting resumes.
After Trump last week signed a memorandum of understanding with Iran, some crude oil tankers have been able to transit the Strait of Hormuz – though Tehran said over the weekend that it had blockaded the crucial waterway again.
As part of the memorandum, which gives the two nations 60 days to reach a final deal including nuclear agreements, Washington formally waived oil sanctions on Tehran for two months – opening the door for Iran to rake in as much as $10 billion in revenue.
Meanwhile, as The Post earlier reported, Iran is angling for all commercial shipping vessels to register with a newly-formed Iranian agency to transit the waterway – but Western insurance underwriters are refusing to comply, calling it a sanctions trap.
During high-level peace talks in Switzerland on Sunday, Iranian negotiators reportedly stormed out after Trump threatened to seize the strait and “blow the s–t out of them.”
The talks were abandoned after just 80 minutes when the discussions entered a “difficult phase” following “an insulting message by the US president,” Iran’s state news agency reported.
Even if the US and Iran shake hands on a lasting agreement, it could take months for gasoline prices to settle into the mid-$3 range, and the US likely won’t see gas below $3 a gallon until this winter, according to experts.
It will likely take up to six months for tanker traffic flows to fully normalize, and repairs to damaged Middle Eastern energy facilities could take anywhere from six months to two years, according to Joe Adamski, managing director of ProcureAbility, a supply chain consultancy.
Vessel operators need to unload ships that have been stuck in the strait for months and re-load them with energy from topped-off storage tanks, which takes time.
There are also safety concerns after months of reports that Iran has been laying mines in the waterway.