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Gas prices in the U.S. on Thursday dipped below $4 for the first time in months, after the U.S. and Iran signed a memorandum of understanding (MOU) that calls for the reopening of the critical Strait of Hormuz.
The national average price of a gallon of regular gas is about $3.99, according to the American Automobile Association (AAA).
The AAA reported 28 states with gas prices below $4 on Thursday, while fuel costs in 22 states and Washington, D.C., remain above that threshold.
President Trump and Iranian President Masoud Pezeshkian signed the 14-point MOU on Wednesday.
Pakistani Prime Minister Shehbaz Sharif — a mediator in negotiations between Washington and Tehran — said later in the day the agreement will take “immediate effect,” with Iran reopening the Strait of Hormuz and the U.S. lifting its naval blockade of Iranian ports. The deal calls for the U.S. and Iran to lift those respective shipping restrictions within 30 days.
Gas prices, which were less than $3 on average days before the U.S. and Israel launched the war with Iran, soared above $4.50 due to Iran’s restrictions on shipping in the strait. The move from Tehran rocked the global economy, as roughly one-fifth of the world’s oil flows through the waterway in typical conditions.
Oil prices are down Thursday after Trump and Pezeshkian signed the MOU. Brent Crude, the international benchmark, is trading at less than $78 per barrel as of Thursday morning. During the conflict, the per-barrel price of Brent Crude reached as high as $120 — after sitting at approximately $70 before the war.
Patrick De Haan, the head of petroleum analysis at GasBuddy, wrote Thursday on social platform X the national average could fall below $3 per gallon late this year “if everything goes well” and hurricanes do not disrupt markets. The Atlantic hurricane season began on June 1 and runs through November.
The national per-gallon price of diesel, meanwhile, is more than $5.12 as of Thursday, up from less than $3.60 a year ago, according to AAA. But De Haan noted the price of diesel will fall below $5 “soon” and it is possible it could fall below $4 later this year.
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