Crude oil prices plunged to levels not seen since March on Monday after President Trump declared an agreement with Iran to reopen the Strait of Hormuz, the narrow Persian Gulf passage that carries roughly 20% of the world's oil. Brent crude fell 4.8% to settle at $83.17 a barrel. West Texas Intermediate dropped nearly 5% to $80.75, briefly dipping below the $80 mark in early trading for the first time in three months.
The immediate market reaction was broad. The Dow Jones Industrial Average jumped 579 points, 1.1%, to an intraday record high. The S&P 500 gained 1.7%. The Nasdaq rose 2%.
For American drivers, the question is simpler: when does any of this show up at the pump? Analysts who spoke to the New York Post said relief could begin within one to two weeks, but a full return to pre-conflict prices will take far longer.
President Trump posted on Truth Social on Sunday that the agreement was done:
"The Deal with the Islamic Republic of Iran is now complete. Congratulations to all! I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow!"
Vice President JD Vance said Monday that the United States and Iran had "already signed" a peace agreement ending what he described as a three-and-a-half-month-long war. Pakistan's Prime Minister Shehbaz Sharif, who posted on X, stated that "both sides have declared the immediate and permanent termination of military operations on all fronts."
Officials said the Strait was slated to reopen Friday when a deal is formally signed in Switzerland. That signing is expected to launch a 60-day negotiating process to determine the fate of Iran's nuclear program and the extent of sanctions relief.
The Trump administration had previously announced the deal signing even as Tehran signaled caution on timing. Details released by Iran indicate that Tehran agreed not to build a nuclear weapon and to reopen the maritime route in exchange for the United States releasing $25 billion in frozen assets. The full text of the peace agreement has not yet been released.
The national average gasoline price stood at $4.07 a gallon Monday, according to AAA. That figure was down 10% from a month earlier, but still roughly 36% higher than pre-conflict prices, which hovered just below $3 a gallon nationally.
Gasoline prices typically lag behind crude oil benchmarks by one to two weeks. Matthew Reisener, a senior national security analyst at the Center for Maritime Strategy, told the Post that drivers could start seeing lower prices soon, with a large caveat.
"If the peace holds, expect gas prices to begin dropping over the next one to two weeks in response to the decrease in crude oil prices. However, it will likely take several months for gas prices to reach their pre-war levels."
Reisener pointed to the physical realities behind the numbers. The uptick in oil tankers transiting the Strait in the coming weeks would increase global crude supply and push prices down, he said, but maritime traffic would not fully resume overnight. Many Gulf states suffered significant damage to their oil and gas infrastructure during the conflict, and repairs will take time.
The Trump administration has insisted the cost of gas will come down quickly once traffic through the Strait is fully resumed. That remains to be tested. During the conflict, crude benchmarks had spiked as high as $126 a barrel, a level that hammered household budgets across the country.
Joe Adamski, managing director of ProcureAbility, a supply chain consultancy, offered a more granular forecast. He told the Post that the national average could fall to the mid-to-high $3 range within two weeks if the Strait stays open and the deal looks stable. But the deeper recovery, he warned, is measured in months and years, not weeks.
"It will take up to six months for tanker traffic flows to reach normal; demining and facility repairs will take anywhere from six months to two years, that we don't know until full assessments can be done."
For all the market optimism, significant unknowns remain. The agreement's full terms have not been published. The 60-day negotiating window on Iran's nuclear program and sanctions relief has not yet begun. And the condition that the United States release $25 billion in frozen Iranian assets will draw intense scrutiny, particularly from members of Congress who fought over war powers during the conflict itself.
Reisener struck a cautious note even while acknowledging the deal's potential upside:
"The signing of the peace framework should provide some immediate relief, but consumers should still anticipate paying above-average rates for gasoline for the foreseeable future."
The broader security picture around Iran has not been reassuring in recent months. Separate from the peace negotiations, Iran-linked hackers claimed a breach of FBI drone systems and threatened World Cup team buses, a reminder that Tehran's destabilizing behavior extends well beyond the Strait of Hormuz.
Meanwhile, the path to the agreement itself was not smooth. The administration earlier rejected Iran's version of the deal terms and condemned a drone attack on Indian ships near the Strait, underscoring how fragile the diplomatic framework remained even as both sides moved toward a signing.
The bottom line for American consumers is a mixed picture. The sharp drop in crude prices is real. Markets clearly believe the deal will hold, at least for now. And if it does, drivers should see some relief at the pump within two weeks.
But "some relief" is not the same as a return to normal. Before the conflict, Americans paid just under $3 a gallon. On Monday they paid $4.07. Even the more optimistic forecast, Adamski's mid-to-high $3 range, would leave prices well above where they were before hostilities began.
The infrastructure damage across Gulf states, the months-long timeline for tanker traffic to normalize, and the demining operations that could stretch to two years all point to a long tail on this disruption. The Trump administration's confidence that gas prices will fall quickly once the Strait reopens is a bet on logistics catching up to diplomacy. History suggests logistics moves at its own pace.
That said, the trajectory matters. Prices were $126 a barrel at the peak. They closed Monday at $83.17. The national gasoline average is down 10% in a month. The direction is right, even if the destination is still a long way off.
Markets reward results. So do voters. If this deal holds and prices keep falling, Americans will remember who got it done, and who spent the last three and a half months offering no alternative.
